Sept. 22, 2008 – Charging ahead
September 22, 2008
Filed under Features
By Steve Bauer
LAS VEGAS — Even with an economy that continues to drag on consumer confidence and spending, Yamaha made it clear to its dealers at its recent national meeting that it has no intentions of slowing down.
Gaining market share in both the ATV and motorcycle segments in 2007 and 2008, the company hopes to continue that momentum with the introduction of two new sport bikes, the FZ6R and YZF-R1, which are designed to attract both new and returning riders.
“Our strategy for success in this current marketplace is fairly straightforward,” said Henio Arcangeli, president of Yamaha’s Motorsports Group, commenting during the dealer meeting. “First, build the best products and support them with the best marketing. Second, retail those products to our best dealers, and third, maintain a relentless focus on customer satisfaction. While many of our market competitors are holding back on producing new product, we’re accelerating our efforts.”
Arcangeli’s comments were reinforced by the introduction of nearly a half-dozen new vehicles for 2009 (not including Yamaha’s early release models), including several new sport bike models, a segment that the company believes is going to be a hit for them next year.
“Our new 2009 products are targeting very specific areas of the sport bike segment,” said Bob Starr, Yamaha’s director of corporate communications. “We’re really focusing on introducing new products to meet specific sport bike market demands. We have seen that the R6 was one of the top selling sport bikes in the market in 2008, and we fully expect that segment of the industry to be an important growth area for us in 2009.”
Besides sport bikes, another area of large growth in 2008 for Yamaha was its scooter sales. Starr says that the company expects similar growth in 2009, and is manufacturing a greater number of units to ensure production keeps pace with demand.
“Our sales were up significantly this past year, and we’ve introduced two new models for 2009,” he said. “We feel we have the broadest lineup in the industry. We are certainly increasing production to meet demand. It’s always a balance however, trying to make sure you produce just enough, which we did a good job of this year. On the two-wheeled side, inventory is down significantly, so there is definitely demand there.”
Starr believes that scooter sales will continue to be strong even if gas prices maintain their downward trend of late, saying Yamaha’s research suggests more consumers are switching to scooters for lifestyle reasons rather than just for fuel cost savings.
“I’m sure like most people, I’m seeing more scooters out on the roads than ever before,” he said. “I think that’s going to help foster more sales, it’s not just gas prices, part of it is truly a lifestyle change. I think Americans are much more willing to embrace scooters than they were two years ago, no question about it.”
When asked why he believes Americans are now more ready to embrace scooters, Starr says the biggest reason is the broader concept that consumers, especially Gen Y riders, aren’t as concerned with style and flash as they are with helping the environment and practicality.
“Younger customers are the driving force behind the scooter sales increase,” he said. “Gas prices certainly haven’t hurt, but I think we’re going to see this trend continue for the long term. There’s been a fundamental shift in the way consumers think about transportation.”
One area that Arcangeli says has been a tremendous success for Yamaha in the past year is the development of both its Pro Yamaha and Yamaha University programs. Both were introduced in September 2007, and have been successful in terms of participation and end results in customer satisfaction.
“In research we have done, 48 percent of our customers said that customer service was the most important thing for them in deciding to purchase a bike,” he said. “Price was 14 percent and product quality was 38 percent. So nearly half of all customers walking into a dealership are looking for that great overall experience, which is what we’re trying to accomplish with Pro Yamaha. We’ve found that the more satisfied a customer is, the less price sensitive they become.”
The program, which rewards dealers monetarily and otherwise for hitting certain levels of customer service scores, has been in place for six months, with more than one-quarter of the company’s dealers having signed up for the program.
“Our dealers are realizing what a huge benefit customer satisfaction can have on their bottom line, and we’re continuing to encourage even more dealers to sign up for the program so they can see the benefits that come along with retaining customers, positive word of mouth, etc.,” Arcangeli said. “Our ‘Cool Nights, Hot Bikes’ promotion, for example, brought in thousands of people to dealerships. That was really an eye-opener for a lot of our dealers.”
Yamaha University, which also was launched at last year’s dealer meeting, has been successful as well, with nearly one-third of dealers taking advantage of the training programs.
Sluggish Rhino sales
One challenge Yamaha has had to face in 2008 is the decrease in sales of its popular Rhino lineup. Despite lower Rhino sales, however, Yamaha officials believe that the side-by-side market is affected more than other segments because of the vehicles’ price tags, and say that the Rhino continues to lead the segment in overall sales.
“Yes I would agree that Rhino sales have retreated a little bit, but I think it’s a combination of things,” he said. “I believe the economy is probably the leading issue. Every day in the news there is something negative on the economic front, and it’s hard to justify purchasing these types of vehicles when you’re worried about mortgage payments and family needs first.”
Still, Starr believes the Rhino hasn’t suffered on the sales side because the competition is beginning to catch up.
“The Rhino, certainly from the utilitarian standpoint, the functionality is fantastic, and being really the original side-by-side vehicle, we still have that momentum going from a selling standpoint,” he said. “However our research has indicated that as the economy has been affecting people’s recreational income, it’s negatively impacted Rhino sales as a result.”
Starr continues that the company has no immediate plans to redesign or otherwise radically change the Rhino.
“It is the No. 1 selling side-by-side on the market and I can tell you we have no plans to make any major changes to it,” he said. “I’m not saying there won’t be some adjustments in the future, but there’s nothing planned at this moment.”
Big hopes for Star lineup
With the successful launch of its Raider in 2008, and the introduction of V Max 950 this year, Yamaha believes it can gain even more market share in the mid-size cruiser market, competing with Harley-Davidson and metric manufacturers to attract customers interested in a more edgy, modern design.
“Our Star motorcycle line, each year we seem to be gaining more traction in the mid- to large-size cruiser category,” said Kevin Foley, media manager for Yamaha’s motorcycle division. “I think the mid-size cruiser category will be an area where we expect some good growth for 2009.”
Foley says the success of the Raider in 2008 shed some light on a segment of the market that Yamaha felt it could capitalize on the following year.
“We saw there was a growth opportunity in the entry-level segment, where a rider wouldn’t necessarily outgrow the bike after a year or two,” he said. “We feel the V Max 950 really fits well into that category, and that it will be a success for us in 2009. The dealers haven’t been able to keep their hands off it during the show, which is always a good sign.”
A positive outlook
Despite a seemingly continuous flow of negative financial news for the U.S. market, Yamaha officials believe that now would be a bad time to stop creating new products to attract customers to dealerships.
“The motorsports industry is going through changing times right now, and to be honest very challenging times in many parts of the country,” Arcangeli said. “But we also know that these times won’t last forever, as we’ve been through these cycles before.”
Arcangeli says that the market share that Yamaha gained in the ATV and motorcycle segments in 2007 and 2008 are signs that consumers are still eager to buy new products if the product development and innovation are there.
“The minute you stop innovating, then your product gets stale and customers move on, looking for a better product,” he said.
Arcangeli insists that the key to growth in a down market is to ensure that customers not only want to return to a dealership, but that they want to make it a part of their lifestyle, and include their friends as well.
“The relationship between a dealership and a customer can’t end once the sale is made,” he said. “And I’m happy to see our dealers really embrace that mentality, because ultimately that is what will make both them and us profitable in the future.”