Auto India, Car India

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Interesting news for two-wheeler segment is that Mahindra & Mahindra is looking to join hands with Yamaha India. This move is seen as an aggressive comeback by M&M in the market. With this tie up M&M aims to receive technical support and advice for its two-wheeler business from Yamaha and the latter aims to make use of the distribution and dealership network of the former. It is a beneficial and rewarding move for both the companies and it could help their business significantly.

Mahindra & Mahindra ventured into the two-wheeler market in 2008 by obtaining 80% stake in Kinetic Motor Co. Ltd at the cost of Rs 110 crores. Sources suggest that in this tie up M&M is likely to be putting 51% of the capital and the remaining 41% of the capital will be pitched in by Yamaha.

The total capital in the joint venture between the two could be an approximate Rs 200 to 300 crores. Yamaha India is said to be happy to pitch in less capital as its parent company based in Japan is aiming to reduce its stake in its operations in India. Due to this factor, there is also a likelihood of a third investor in this joint venture between M&M and Yamaha India.

As far as the performance of Yamaha is concerned in India, it has been doing quite well with figures suggesting an increase of 26.82% in its total sales in the month of October 2011. In 2010, Yamaha India sold 3.8 lakh units in the country and in 2011 it aims to sell 5.2 lakh units. The company also aims to cover the rural markets by making more models available at an affordable range.

The deal between the two companies is said to be closed within the next 6 to 8 months. With the fact that the two-wheeler segment as a whole is not doing that well, the joint venture between the two companies should sure come with new strategies in order to benefit from the deal.