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Rivals Honda, Yamaha to partner on scooters in Japan

TOKYO -- Japan's Honda Motor and Yamaha Motor will join forces in motorcycle production and development, a move that will see Honda manufacturing scooters for its biggest rival in a shrinking domestic market.

Their fight for Japanese dominance in the years around 1980 turned so bitter it became known as the HY War. The two companies released several dozen models a year between them during that time, heavily discounted to try to capture market share. Both were saddled with unsold inventories as a result.

But now the erstwhile foes have been brought together by a common threat. Japan's market for two-wheelers has diminished by around 80% since the 1980s as demographic changes have taken a toll.

Both market leader Honda and second-ranked Yamaha will benefit from the alliance. Yamaha will shift production of 50cc scooters for the home market from Taiwan to Honda's Kumamoto factory in southern Japan. Yamaha currently imports about 50,000 scooters a year from its Taiwanese operations. Declining sales for these scooters have forced Yamaha to change its approach to production.

Honda likely will start supplying the scooters to Yamaha on an original equipment manufacturer basis around 2018, giving its Kumamoto factory a much-needed boost in activity. The plant's fiscal 2015 output totaled 156,000 units, despite a capacity of 200,000.

As for development, the two manufacturers will team on a new 50cc scooter model designed as a delivery vehicle, as well as on electric scooters. They aim to cut development costs to gain an edge in pricing in the domestic market.

A standard automobile driver's license is enough to operate a 50cc scooter in Japan, where these models make up nearly half of the two-wheelers sold. The scooters are built according to Japanese standards and do not lend themselves to export, while their low prices leave little room for profit. Besides Honda, Suzuki Motor still builds 50cc scooters in Japan, while Kawasaki Heavy Industries has chosen to focus on midsize and large motorcycles.

Motorcycle sales in Japan fell nearly 10% in 2015 to 406,591 units. Honda led with a 43% market share, followed by Yamaha at 27.2% and Suzuki at 12.1%.

Japanese motorcycle makers seek growth abroad, particularly in youthful emerging markets in Southeast Asia, South Asia and Africa where demand for two-wheelers remains strong.

(Nikkei)

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