Construction to begin on new motorcycle factory and production base in southern India

Yamaha Motor Co., Ltd. signed a Memorandum of Understanding with the government of India's southern state of Tamil Nadu today approving the construction and operation of a new motorcycle factory in the state. The new facility will join the currently operating factories of India Yamaha Motor Pvt. Ltd. (IYM) in northern India (outskirts of New Delhi) to meet the rising demand for motorcycles in India.

The new factory is to be constructed on an acquired lot of approximately 440,000 m² in an industrial park in Vallam Vadagal on the outskirts of the city of Chennai, Tamil Nadu, with start of operations scheduled for 2014. Plans call for a production capacity of 1.8 million units annually by 2018. With this new factory and the increased production capacity of the northern IYM production bases* (Surajpur, Uttar Pradesh/Faridabad, Haryana), Yamaha Motor will have a combined motorcycle production capacity of 2.8 million units in place in India by 2018.

*Northern IYM production bases: In 2012, an investment of 12 billion yen will be made to boost current annual production capacity from 600,000 units up to 1,000,000 units.

The new factory will employ a "theoretical-value-based production" concept that operates on a system of completely synchronized manufacturing of parts and assembly of complete motorcycles. Furthermore, the new Chennai Factory will be the first in the Yamaha Motor group to have a "vendor park" in its nearby vicinity that will bring together the production operations of main external parts suppliers, thus enabling complete synchronization of external supplier parts production as well. This system will reduce losses in the areas of production management and distribution to extremely low levels in the overall engineering, manufacturing and marketing process, and make the new production base a highly efficient and profitable plant.

The Indian motorcycle market has continued to grow year by year thanks to factors such as the country's stable political and economic conditions, the spreading availability of finance programs. In 2011, motorcycle demand in India exceeded 13 million units, making it the world's second largest market, and demand in 2018 is estimated at 25 million units. Aggressive introduction of new models in the up-scale, higher priced categories and comprehensive promotions around the country have contributed to a growth in the number of units produced by IYM, from 380,000 in 2010 to 520,000 in 2011, and further growth to 600,000 units is projected for 2012.

Moving forward, we aim to expand business scale in India with this new factory and increases in production capacity, along with strengthening product competitiveness and expanding the dealer network and export business even further.