President Hidaka
Question and
Answer Session
on the Current
Progress Related
to the Long-term Vision

On December 14, 2020, President Hidaka gave an interview to journalists in Japan. The following are the questions and answers regarding the current progress of the long-term vision.

* President Hidaka's remarks were as of the time of the interview on December 14, 2020.

I would like to hear your views on emission regulations and EV uptake transitions.

I have always said that there are two perspectives on the electrification of powertrains. One is the value to customers, and the other is the societal demand. Although it is still far from the actual needs of customers, I feel that regulations have been rapidly accelerated. When the "Environmental Plan 2050" was announced in 2018, it was stated that the overall goal was to reduce CO2 emissions by half by the target year 2050 against the base year 2010. (The goal of "halving" was set since motorcycles themselves had a low environmental impact.) However, when considering global leaders’ remarks, there is no doubt that they will "accelerate" this further. Up until now, we have dealt with this by observing the movements of Europe, which has been leading the trend of environmental regulations, but I have the impression that these regulations are getting more important throughout the world. Including management, there is a common understanding and discussion, that reductions need to be accelerated and the "Environmental Plan 2050" to be reviewed.

How do you think you will come to terms with the costs and infrastructure required for electrification?

First of all, as I don’t think the government is going to tighten regulations without considering the user's point of view, so I would like to have discussions with the government, the Japan Automobile Manufacturers Association (JAMA), and other related industries. Considering infrastructure issues, energy, and Well-to-Wheel perspectives, I think that we will set goals while discussing infrastructure investment and whether government subsidies will be provided or not.

Can you give us any additional information regarding the electrification of motorcycles?

As mentioned above, I understand that "electrification" is seen as a social consensus. It doesn’t mean that things can’t be electrified. On the other hand, what are the current merits of "electrification" from the customer's perspective? The current view is that the value and convenience of gasoline-powered vehicles for customers is quite high at the moment. However, there should be a range of ways to introduce electric based products. If society demands it, we need to make products and try them on the market. To be honest, the "moped sector for daily transportation" is our first area to focus on. It is too early to consider electric-powered recreational vehicles. The hurdles are quite high to convert, for example, a one million yen sports bike to electric, because the price would go up to two or even three million yen, being heavier or having worse fuel economy (extra charging required etc.). However, in that sense, commuting is one area that can be achieved in terms of distance. This has to be done together with infrastructure development for charging facilities etc. For products that are not so large, such as those used in recreational items, the manufacturing cost can be relatively low, and therefore can be of benefit to customers. There is still a possibility of realization if there is cooperation with the government (e.g., subsidy-based policies such as those promoted by the Taiwanese government). However, there are some things that a private company is not able to cover independently. We would like to collaborate with JAMA and other related ministries and agencies if possible.

What is your view on the status of electric motors for automobiles and their future growth?

I briefly covered this last year, and I received around 300 inquiries - probably due to help of the media. However, although we received all those inquiries and wanted to try out some prototypes, the COVID-19 pandemic prevented overseas manufacturers from coming to Japan to see them. Due to the situation, we also saw a drop in focus from Japanese manufacturers. However, communicating with these companies and other organizations remotely, we have reached the point where we have concluded a supply contract of prototype with one company. I hope I can explain more about it in the near future.

How do you think about digitalization with COVID / after COVID?

For when customers want a product but can’t go out to buy it, or when they want to search for a product, we want to provide our customers with means to learn about our products, sales channels, and sales promotion channels, etc., including through the internet and other methods. To this end, it is important to have digital customer contact points with our customers. We will do this at considerably high speed. The system, created as a pilot at the head office, was supported in collaboration with the local IT department in India. In India, quite a lot of people have smartphones but many of them are using a 2G network communication environment. To meet the local situation, we are planning content suitable for 2G. Customers can make a reservation on their smartphones and then pick up their bikes at the store. We will then continue to provide support for the after-sale motorcycle life & maintenance through the various sales channels. We wish to expand these services to Indonesia, Vietnam, ASEAN, etc., while attracting more customers by conducting activities that connect the virtual and real environments.

We have heard you mention the lessons learned from GFC, but are you planning to rethink the COVID-19 strategy for both now and when it starts to settle?

We are currently in talks with the executives and offices on the fact that we need to adapt our strategies to deal with this pandemic. This is about what we know, what we learn, and how we will incorporate this knowledge and experience into our business going forward. Throughout this process, there is a significantly higher perception that people have become much more sensitive to "sustainability." In our "ART for Human Possibilities" vision, we have been very conscious of and expressed our awareness on sustainability, SDGs, and ESG, which, in this respect, I feel we are heading in the right direction. However, additionally I think there are four areas where we need to pick up the pace.

1. Electrification: We need to focus on speeding up this area now.
2. Digital customer contact: In terms of DX, this is a very wide area for us to work on going forward. Quickly creating a state of being digitally connected with customers is required.
3. Further improvement of SCM/BCP: We have sped up the production to return to a full recovery. Once the brakes were put on, everything could be stopped quickly. However, there are many areas that cannot catch up instantly just by "pressing the accelerator." As the global model production base is being shifted from Taiwan to Indonesia, there was a source of anxiety that if we only have one location, the world supply chain would be affected if the plant went into lockdown. Also, in search for greater efficiency, from the perspective of parts procurement in Asia, we focused on and placed orders in the most cost-competitive locations in the QCD. But similarly, if any of these areas were affected with stoppages, procurement around the world would also stagnate. Going forward, we will continue to improve the level of the supply chain and procurement, and review the roles of global factories, multi-sourcing, and the stockpiling of essential inventory.
4. Remote Working Models: In terms of the good/bad side of the remote working, we will look at keeping the good, while eliminating the bad. Offering working style choices.
I want to implement these with a greater sense of urgency.

When will Collaborative Robots be ready for the market? What are the expectations? *

As a major trend, China and developed countries are inevitably affected by the declining birthrates and labor shortages. We have also witnessed that humans were not capable of "manufacturing" during a pandemic. How can we operate the factories while taking social distance initiatives? These situations could be significantly improved if collaborative robots can be put into practical use. Avoiding the 3Cs will be also possible (Closed spaces with poor ventilation, Crowded places with many people nearby, Close-contact settings) for example by having one person working with two robots. In this environment, we expect that needs will increase in the future. We are instructing our various business divisions to speed up these initiatives so that these products can be put on the market and actually used in the field within the year 2021 **.

* We have unveiled the prototype on the same day.
News release of "Collaborative Robot"
** The product will be used by some Sier (systems integrators) companies on a trial basis in 2021 and we will conduct the final confirmations for sales in 2022.

What are your expectations in terms of LMW models as the demand declines for domestic motorcycles?

We have now introduced 300cc models. Technological innovation has gradually progressed to the point where these units will basically "not tip over." But, I think the assist function can be even better. We have had lots of questions from customers about whether it is okay to ride these models only with an ordinary driver's license. These questions basically come from the idea that "If it’s a bike that does not topple over, I should be able to ride them on a regular driver's license." If so, as a manufacturer, I would like to provide LMW models and leaning vehicles that can be used even on an ordinary driver's license. We want to offer "the joy of riding motorcycles" to a new range of customers. However, this is not that easy. In Europe, the TRICITY model can be ridden with a normal car license. This comes down to the license system in each country. Although it is not easy, I would like to see the uptake of these models in Japan as well.

African markets - Current status/progress

There are companies offering last mile options for platform businesses in developed countries, such as Uber and Grab etc., and on top of these, there are e-commerce platformers such as AMAZON and Rakuten. For Yamaha Motor, in countries where these companies are already well established, it is a little too late to make a start. On the other hand, in countries with emerging markets such as Africa, there are a certain number of venture companies, which has helped create a leapfrogging situation. I therefore think that there is a possibility of business models originating in Africa going forward. Our initiative is to invest in and collaborate with African platformers to create an ecosystem of mobility services. Two in Africa for example, starting with East Africa and West Africa. In countries such as Nigeria (West Africa) and Kenya/Uganda/Tanzania (East Africa), which have large populations, and have their own GDP. There is also a great source of talented people graduated from MIT in the United States and have returned to these areas and are actually starting various businesses. One example I can use here is the motorcycle taxi. This is treated as a private business in the so-called informal sector. This sector needs to be changed to a formal one. Together with the venture companies, we can encourage riders who need work and rent/lease motorcycle assets and tools. The platformer prepares work and monitors the rider's workloads. The rider earns money, and the income goes directly to the platformer via online payments. We get a monthly lease fee, and the platformer pays the rider. We also keep in mind that it is our role to lease the bike with necessary maintenance services as a package. The goal is to create an ecosystem that covers the entire workscape. In Nigeria, we are partnering with organizations such as MAX, Tanzania WASSHA, Uganda's Courier Mate, etc., for investment and collaboration. By doing so, we can divide the market appropriately, for example, this area would be good for Yamaha, but this area is more suited for a platformer, and this area is better for e-commerce. At the moment there is a little confusion in e-commerce applications between Chinese and American capital-based systems. Under these circumstances, we can see the need for mobility service business to function like a post office (delivery to areas without address, data collection of address information, etc.). I therefore would like to create these services through various collaborations.