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Mahindra & Mahindra's is looking to tie up with Yamaha India in the two-wheeler segment.
The partnership is believed to be a technical tie-up from M&M's end as the company lacks technology for the two wheeler business. Yamaha on the other hand is looking to gain from M&M's distribution and dealership network.
In 2008, Mahindra & Mahindra entered into the two-wheeler segment by acquiring 80 per cent stake in Honda's former Indian partner Kinetic Motor Company Ltd for Rs 110 crore.
Sources told ET Now that the capital infusion in the JV could be between Rs 200-300 crore and Mahindra will pitch in 51 per cent of the capital and Yamaha will bring in 41 per cent.
The parent company of Yamaha, located in Japan, is looking to reduce its' stake in the India operations. There may be a posibilty of a third strategic investor in the Mahindra-Yamaha joint venture.
As understood currently, the partnership would be similar to the Hero-Honda pact before they split. Yamaha will continue to sell products in its independent label. The deal is believed to be ready for closure in the next six to eight months.
Yamaha India reported 26.82 per cent increase in its total sales in October 2011 at 47,240 units. The company sold 3.8 lakh units in 2010 and is planning to sell 5.2 lakh units this year. Yamaha plans to tap the rural markets by launching more models in the affordable price range.
Yamaha has an installed annual capacity of 6 lakh units at its two manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana and plans to further strengthen production to 1 million units by 2013.
After resisting the demand skid that hit the car industry earlier this year for two quarters, two-wheeler demand has come down sharply in October, down from 1.4 million units in September 2011 to 1.3 million units in October. Auto industry experts say this demand trend is an indication of an across-the-segment slowdown in the auto industry and a pointer towards rural demand losing speed.
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