JAMA - April, 2012                                                                                                                                                                                                            

The Japan Automobile Manufacturers Association is pleased to release the results of the survey it conducted in fiscal year 2011 (ending March 31, 2012) on motorcycle market trends in Japan. Primarily targeting new-model purchasers, JAMA conducts this survey in odd-numbered years in order to track changes in Japan’s continuously evolving motorcycle market.

The latest survey drew 5,150 responses, and adjunct surveys were carried out simultaneously to clarify the situation behind the prolonged decline in demand that has come to characterize Japan’s motorcycle market.

Trends in Motorcycle Demand in Japan, Fiscal 1991-2010

1. Main Survey (Purchasers of New-Model Motorcycles): Principal Findings

• Ownership declined among users in their 30s or younger, but increased among users in their 50s or older, underscoring the continued rise in the average age of motorcycle users.
• Replacement demand accounted for 59% of all new-model purchases, up from 57% in the 2009 survey. First-time purchases accounted for 15% of the total, not significantly different from the previous survey’s figure but underscoring a sustained decline in first-time motorcycle purchases.
• Over 70% of owners in Tokyo (i.e., its main 23 wards) reported experiencing difficulties in finding parking space for their motorcycles.
• Respondents expressing the desire to continue riding motorcycles in the future totalled 87%, down from the 92% recorded in 2009.

2. Adjunct “Special Topics” Surveys

1) On Reasons for the Decline in Motorcycle Demand: Principal Findings

Responses by engine capacity:

• Class 1 motor-driven cycles (50cc & under): “No further need for use (commuting to work/school, etc.),” “Retired from work/Quit job,” “Started working/Changed jobs,” “Purchased power-assisted bicycle,” “More convenient to take train or bus.”
• Class 2 motor-driven cycles (51-125cc): “Difficult to park at destinations,” “Difficult to park at home,” “Motorcycle was stolen,” “Cited for motorcycle parking violations,” “Retired from work/Quit job.”
• Mini-sized motorcycles (126-250cc): “Difficult to park at home,” “Lost confidence in own strength and stamina,” “Fewer friends and acquaintances to ride with,” “Less time for motorcycling due to other interests,” “Difficult to park at destinations.”
• Small-sized motorcycles (251-400cc): “Work schedule leaves no time for motorcycling,” “Daily activities leave no time for motorcycling,” “Less time for motorcycling due to other interests,” “Fewer friends and acquaintances to ride with,” “Difficult to park at destinations.”
• Small-sized motorcycles (401cc-): “Had children,” “Motorcycle upkeep costs,” “Work schedule leaves no time for motorcycling,” “Daily activities leave no time for motorcycling,” “Family members/others increasingly opposed to my motorcycle use.”

Responses by age group:

• Teens/20s: “Started working/Changed jobs,” “Purchased automobile,” “Purchased mini-vehicle,” “Spending on travel instead,” “Spending on audio-visual equipment instead.”
• 30s: “Got married,” “Moved,” “Purchased real estate,” “Motorcycle upkeep costs,” “Rent payments on residence/land.”
• 40s: “Work schedule leaves no time for motorcycling,” “Daily activities leave no time for motorcycling,” “Motorcycle upkeep costs,” “Education costs (rider/family members),” “Difficult to park at destinations.”
• 50s: “Lost confidence in own strength and stamina,” “Purchased power-assisted bicycle,” “Retired from work/Quit job.”

2) On Secondhand-Motorcycle Purchasers: Principal Findings

Note: References to new-model purchasers are based on information obtained from the main survey.

• In the Class 1 and Class 2 motor-driven cycle categories, the percentage of men purchasing secondhand models was higher than the percentage of men purchasing new models.
• In all motorcycle categories, the percentage of persons in their 30s and 40s purchasing secondhand models was higher than the percentage in their 30s and 40s purchasing new models.
• The percentage of secondhand-model repeat purchasers was higher than the percentage of new-model repeat purchasers.
• Reasons for purchasing secondhand models: “The model and engine capacity I wanted had to be within budget,” “Don’t have the financial leeway to purchase a new model,” “Secondhand models can be handled with less concern [for damage, etc.] than new models.”

3) On New-Model Users’ Perceptions of Motorcycles: Principal Findings

• A large percentage of women respondents viewed motorcycles as a “Means of transport” and “Lifestyle commodity,” while a significant percentage of male respondents considered them a “Hobby item.”
• A high percentage of users in their teens viewed motorcycles as a “Means of transport,” while a high percentage of users in their 60s or older saw them as a “Lifestyle commodity.”

See the original article in full at http://www.jama-english.jp/release/release/2012/120404-4.html

JAMA - September 30, 2011

In 1994 Piaggio launched its first subsidiary in Vietnam to manage the importation of scooters, particularly the Vespa brand which enjoyed a favorable image in the mind of the Vietnamese. In order to stimulate domestic manufacturing, the government followed the example of other South East Asian countries and applied import tariffs on completely assembled units lacking in local content. In view of the market's potential, Japanese makers set-up manufacturing operations soon after (Suzuki in 1996, Honda in 1997 and Yamaha in 1998). Following a price and quality war with Chinese assemblers, by 2005 the Japanese makers had begun to dominate, with top products selling for under $2,000.

Introduction

Successful strategies often combine the tangible and the intangible with a smattering of complexity, but those that endure are difficult to copy. One of the techniques used by firms to delay pursuit by competitors is obviously secrecy, though sometimes it's impossible to keep all elements of a strategy secret if they fall into the public domain. What if hiding the final piece that completes the picture is enough to prevent the whole image coming into focus until it is virtually complete? When this occurs, it leaves the competition with what appears to be an insurmountable mountain to climb. Honda is credited with manufacturing about 20% of the world's motorcycles, but how can it position itself to maintain or even improve that? Here's an example of how.

Part 1 - Racing

It's 10 years since Honda and the other Japanese constructors phased out there last 2-cycle road bikes in developed markets. This simple fact was enough for them to cajole the FIM (the federation that governs motorcycle racing internationally) into ending the historic 500cc 2-cycle Grand Prix Championship and transitioning to the the 1000cc 4-cycle MotoGP Championship in 2002. As the premier class it garners most attention, but subsequent to that change the 125cc and 250cc classes continued as 2-cycle havens.

The disconnect between the 4-cycle products being manufactured and sold with the 2-cycles being raced became difficult to justify from a marketing point of view for Japanese constructors. Furthermore, in a world ever more conscious of pollution, the reputation of the 2-cycle engines being raced seemed inconsistent with a general drive for a reduction in gas emissions. So together with championship organizers, DORNA (a sports management company), who had their own concerns over the cost of participation and lack of competition, Honda managed to lobby for the end of the 250cc 2-cycle championship in 2009. It was replaced by a 600cc 4-cycle championship called Moto 2 with each entrant using a standard engine provided by Honda, prepared and maintained by a neutral company. No major production motorcycle manufacturers entered the championship as racing with a Honda engine represented a significant marketing obstacle. It was of utmost importance that this was a success for Honda and indeed it was. The racing was close and entrants were many.

2011 will now be the last year of the 125cc 2-cycle championship. In 2012 it will be replaced by a 250cc 4-cycle championship, but with engine supply open to all comers. In advance of this, Honda developed and launched the NSF250R. A version of this bike will be campaigned in the 2012 world championship and at the same time a version will be made available world wide for amateur racers.  

The NSF250R is powered by an all-new liquid-cooled single-cylinder 249cc four-stroke engine specifically designed for racing. Technical highlights include an engine layout with the cylinder tilted back 15 degrees to concentrate mass. To generate strong power throughout the high-rpm range, the NSF250R incorporates titanium valves for both intake and exhaust to reduce friction and lighten the valve train. Furthermore, the design reduces friction between piston and cylinder and improves durability by offsetting the cylinder center line and applying nickel silicon carbide (Ni-SiC) for the cylinder surface treatment. The cassette gearbox design was selected for quick and easy gear set changes for the close-ratio, six-speed transmission, thereby allowing gear selection to be optimized over a large variety of racing circuits. This lightweight, well-balanced machine offers impressive power output and superb handling to achieve a great blend of high performance plus rider-friendly traits well suited to up-and-coming racers. The suggested retail price in the USA is $28,599.

To summarize, the change to Moto GP from 500cc, to Moto 2 from 250 2-cycle and Moto 3 from 125 2-cycle all seem to be compatible with Honda's outlook. After winning the 2011 Moto GP world championship, the next goal will be to popularize 250 4-cycle racing globally and win the Moto 3 championship in 2012 for which they are earnestly prepared.

In 2008 global production of vehicles under 250cc was a least 40 million or 80% of the total. Although many markets have regulations and legislation that favor displacements under 200cc, the 250cc displacement physically resembles smaller vehicles and the segment is destined to grow as regulations change.

Customers in developing markets are now expecting more advanced products that provide an improved riding experience and safety.

Many markets in the developing world enjoy a thriving low cost production based racing scene. Apart from a full event calendar in each of the main markets in Asia, the underbone class is also part of an Asia Road Racing Championship which is sanctioned by the FIM with rounds in Malasyia, Indonesia, India, Japan, China and Qatar.

Part 3 - Product

In November 2010 Honda announced that following the launch of the PCX 125cc scooter in March 2010, Thai Honda would start production of the new CBR250R road sports model. This CBR250R has the largest engine displacement of any vehicle produced by Thai Honda and was its first road sports model. The CBR250R ia a global model for export to a wide range of countries such as developing markets in ASEAN but also Japan, Europe, North America, and Australia from spring 2011. The bike was immediately visible at the winter's International Motorcycle Shows touring the USA.

Honda Motorcycle and Scooter India (Pvt.) Ltd. planned to start production of the CBR250R in spring 2011 and extend sales from India to South America.

The CBR250R is equipped with a newly-developed liquid-cooled 250cc 4-stroke 4-valve single-cylinder DOHC engine that is easy to handle. It uses an electronically controlled fuel injection system (PGM-FI) as well as an O2 sensor and exhaust catalyzer.

The CBR250R incorporates Combined ABS, a world first for a 250cc-class road sports model. In Japan the basic model retails for JPY 449,400 including tax, whereas the class leading Kawasaki Ninja 250R built by Kawasaki Thailand (launched October 27th 2007 at Tokyo Motor Show) retails for JPY 533,000 including tax. That's 15% cheaper.

The Ninja 250R already occasionally features in the Asia Road Racing Championship mentioned above. The Yamaha R15 (150cc) has a one make championship in India and there are many other examples of small displacement bikes being popularized on the track, and although Yamaha are preparing an entrant for the Moto 3 championship, they lack a low cost 250 sports bike. As yet Kawasaki has not announced an entrant into the Moto 3 championship and therefore find themselves unable to promote the Ninja 250R sufficiently. Although the CBR250R is different to the NSF250R, cosmetic changes to the road bike are inexpensive. There's an obvious marketing link to capitalize upon.

Part 4 - Market-in approach

By the the year 2000, Honda manufactured products in 33 countries as part of their self-termed "market-in" approach. The advantages of manufacturing near target markets may include lower labor costs or exchange rate risk mitigation but the primary advantages involve an increased awareness of customer needs and the circumvention of import tariffs, positioning Honda to win cost leadership battles. 

Honda started production in Thailand in 1964 enjoying 36 years of experience before starting the manufacture of the CBR250R. This provides important guarantees in terms of workforce know-how and systems as well as supplier coordination, know-how and reliability. Of course all of the 36 years are not needed to prepare for this step, but the complexity should not be underestimated and by incorporating the CBR250R into their globalization strategy they raise the stakes.

Conclusion

If we count back in time we can see how the pieces fit together. The idea of a Moto 3 championship occurred at least 2 years ago, and with it came the NSF250R. About the same time the CBR250R was conceived. The push for the Moto 2 championship seems like an intermediate step in order to establish Moto 3. Today Honda has the prospect of:

·          A 250cc prototype championship with a truly global appeal and they offer the first competitive entrant

·          A massive 250cc street bike global market

·          An inexpensive but fully featured 250cc road bike with a refined production and supplier platform

·          A 250cc product with global appeal that combines the low-end in developed markets with the high-end in developing markets

The obvious and foreseeable next step is the promotion of rounds in the Asia Road Racing Championship to host Moto 3 races in the World Championship. The targets are Indonesia and India, by which time Honda's virtuous circle is closed.

Those ready and able to compete, please step forward.