TOKYO -- Yamaha Motor plans to make and sell small cars in Europe starting around 2019, President Hiroyuki Yanagi told the Nikkei Thursday.
The world's second-biggest motorbike maker will invest tens of billions of yen to set up a plant for two-seater automobiles.
Yamaha will offer urban cars for short-distance driving as demand for efficient compacts grows worldwide. The company intends to tap its bike expertise to develop an agile subcompact. "As the auto market grows more diverse, we see business opportunities," Yanagi said.
The company chose Europe as the first market because of suitable city planning. It has yet to decide the proposed plant's location and output capacity.
The car will come in gasoline and electric versions. Yamaha will build 1-liter engines to be developed in-house while buying motors and batteries for the electric vehicles.
Yamaha has know-how in car-engine development, having supplied more than 3 million engines to Toyota Motor through a partnership formed in 1964. Yamaha engines are currently used in models sold under Toyota's high-end Lexus brand. Toyota has a 3.6% stake in Yamaha.
Global automobile output will rise by 21 million units by 2021, research company IHS Automotive projects. Bolstered by brisk demand in emerging markets, small cars are seen accounting for more than 40% of that total, driving the overall growth.
In the 18 major countries of Europe, small vehicles already accounted for 40% of new-car sales in 2013. Daimler sells smart brand two-seaters for about 12,000 euros ($13,400). Volkswagen's up! is another model in this field.
Yamaha unveiled a prototype car at the Tokyo Motor Show in 2013, but this is the first time it outlined business specifics. As it becomes the ninth Japanese automaker, the company seeks to cultivate carmaking into a new pillar of business, along with the mainstay motorbike and boat operations. Honda Motor also began as a bike maker and launched its automobile business in 1963.