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Yamaha’s third attempt at cars will be worth the detourBack

YamahaLogo“To become a bigger company, we need to try something new”, Yamaha Motor’s chief executive Hiroyuki Yanagi told the FT recently. The novelty in question is a two-seater “city car”, cleaner and more fuel-efficient than existing vehicles, that the motorcycle manufacturer could launch in 2019.

The suggestion seems to have upset analysts. They worry Yamaha Motor will neglect its core business, struggle to compete in a market crowded with tiny two-seater commuter cars, or fail to build a viable sales network.

But in a world where a six-year-old taxi-hailing service and a 17-year-old search engine company seem to be going into competition to develop driverless cars, it does not seem a great leap to imagine a motorbike specialist with six decades of experience transferring its skills from two- to four-wheelers. In fact, looking at the history of Yamaha Motor, puttering over to the adjacent neighbourhood is hardly an epic journey. If anything, its goal may be overly conservative

Expansion is often a fight between sprawl and focus. When something goes wrong at large global companies — as, most recently, at HSBC — lack of control is often the culprit. More insidiously, big companies’ inability to kill off unpromising projects can blight the whole group.

But fear of flying can also ground entrepreneurial ideas for growth. Executives’ concerns about the brand being diluted or managers being distracted can stifle expansion into new areas, until an Uber or a Google comes along and does what the incumbents either did not think, or, worse, did not dare, to attempt.

Yamaha Motor’s range has grown over time to embrace jet-skis, motorboats, unmanned helicopters, wheelchairs and snow-clearers. Each line of business leads from another, with the group’s engine expertise at the top of the family tree of products. Its swimming pool division looks like the odd one out, until you think of a pool as simply a boat with the water on the inside. Pools exploit Yamaha Motor’s mastery of fibreglass-reinforced plastic, which itself grew out of its hull-making technology.

It is true that the group’s earlier efforts to develop four-wheelers foundered on lack of demand, first in the 1960s, when it entered a sports car partnership with Toyota, then, 25 years later, when it designed then scrapped a supercar. But the biggest threat to its third-time-lucky tilt at the market is not the uncertain appetite of customers or the jam of tiny little cars already queueing to get in, but the fact the chief executive is in the driving seat.

Source: Financial Times

Posted by Sue Robinson on 27/03/2015