A Business Tie-Up Between Yamaha And Honda: Is This The End Of Competition?

Honda and Yamaha have started negotiations to form a business tie-up for the development and production of 50-cubic centimeter motorcycles for the domestic market of Japan. Once an agreement has been reached, Honda will be supplying assembly of the motorcycles at its factory in southwestern Japan to Yamaha on the basis of an original equipment manufacturer (OEM). The goal of the two companies in joining forces is the development of future motorcycle models that can be used for business as well as for the promotion of electric motorcycles.

In a news conference, both Honda and Yamaha officials acknowledged that the present domestic market situation for 50-cc motorcycles is quite tough because Japanese consumers have other feasible transport options. For example, there are motor-assisted bicycles and mini-cars available in the domestic market for short distance travel.

The partnership between Honda and Yamaha was conceived because Japan’s overall market for motorcycles has been shrinking in recent years due to the rapid decline in birth rate. In the past, Honda and Yamaha were in stiff competition with each other to gain a bigger share of the domestic market. Yamaha chose to work with Honda after holding in-house discussions so as to maintain the 50-cc motorcycle segment. The 50-cc motorcycles are mainly marketed for Japan’s domestic market because it is an extremely convenient and effective entry level vehicle.

Both companies believe in the potential of 50-cc motorcycles as an easy and convenient means of transportation in spite of existing challenges. Yamaha and Honda want to energize the market and culture for the two-wheeled vehicle considering that annual sales have dropped to about 350,000 units in 2015. Based on data provided by Japan Automobile Manufacturers Association, during its peak in 1982, motorcycle sales reached 3.28 million units.

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