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Business

Motorcycles, electric rickshaws take Japanese startup into India

NEW DELHI -- Japan's Terra Motors is now trying to tap into India's market for three-wheel vehicles, similar to Thailand's tuk-tuks.

Teppei Seki, country director of Terra Motors India, poses with one of the electric rickshaws his company makes in Gurgaon.

     It is the latest step that the company hopes will put it on the same path as big Japanese companies like Suzuki Motor and Honda Motor.

     An early step was to use motorcycles, which are affordable to a larger swath of India's consumerdom, to introduce the Terra Motors brand. India is the world's largest motorcycle market. Some 16 million of the things were sold there in fiscal 2014, up 8% from the previous year.

     In July 2014, Terra Motors set up Terra Motors India, in Gurgaon, in the state of Haryana, immediately south of Delhi. The subsidiary developed and in June began selling its Y4 electric three-wheeler for 110,000 rupees ($1,604), about the same as what competing electric rickshaws go for.

     Terra Motors sees advantages in that the Y4 needs little maintenance yet is made by a company that emphasizes after-sale service. The Y4 has thus attracted support from rickshaw drivers, who cover long distances every day. Terra Motors has been selling 500 to 600 three-wheelers a month.

     The Y4's strength lies in the long life of its battery. These batteries cost 23,000 rupees, 10% more than similar batteries. But they can be recharged 500 times, 200 times more than other batteries.

     Terra also adopted a simple design for the rickshaw so users can fix their vehicles even if they lack spare parts.

     Terra Motors also provides Japanese-style after-sales services. Warranties guarantee free repairs for a year. In addition, 20 to 30 engineers are assigned to stores across the country to ensure any repair work can be handled promptly.

     It is rare for motorcycle makers to provide after-sales services in India, which does not oblige producers to fix defective products.

     Terra Motors has also entered the Philippines and Vietnam. Its successes in Southeast Asia convinced it to expand into India, its sixth market.

     It has not been an easy ride. Teppei Seki, country director of Terra Motors India, said the company's products did not sell at all at first.

Putting down roots

Cost-conscious consumers make it difficult for foreign companies to foray into India. It is said even rich Indian consumers ask about the kilometers per liter they can expect when shopping for a Ferrari.

     No surprise, then, that Terra Motors is in a fierce price war with Indian rivals such as Hero MotoCorp and TVS Motor.

     For India, the company simplified three-wheelers that had proven popular in Southeast Asia so that they would appeal to India's penny pinchers. The body is now easy to repair, and the battery lives a long life.

     In India, employees are more willing than their Japanese counterparts to sell their skills to the highest bidder. In fact, whole teams of engineers are often poached by competitors. This happened to Terra Motors India early on, with some employees leaving the company and taking information on Terra Motors' products and sales strategy that the company would have liked to have kept confidential.

     Cumbersome regulations are another source of worry. Extensive paperwork needs to be filed and patience exercised before marketing licenses are granted.

     The country's undulating tax system also perplexes foreign companies.

     So far, few Japanese manufacturing startups have entered India. The country presents an attractive market, but doing business there can be burdensome. Even Toyota Motor struggles in India.

     Terra Motors is navigating through this difficult market with vehicles meant to lay a foundation for the brand and a sales push into rural areas.

     "We want," Seki said, "to follow in the footsteps of Suzuki Motor."

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