Interviews 2 May 2019

Industry: Yamaha Motor Australia’s Brad Ryan

Insightful interview with director, COO and group general manager of financial services.

As a director and the chief operating officer of Yamaha Motor Australia (YMA), Brad Ryan is an influential and incredibly knowledgable figure in the Australian motorcycle industry. Ryan is also the group general manager of YMA’s financial services, including Yamaha Motor Finance (YMF) and Yamaha Motor Insurance (YMI), placing him in a very credible position to understand the current state of motorcycling and the business of bikes in this country. CycleoOnline.com.au recently spoke to Ryan about YMA, YMF, YMI and the industry in general, making for an insightful Industry interview that sheds light on all types of matters that are extremely relevant at this moment.

Image: Russell Colvin.

We’re over three months into 2019 already, so at this stage of the year, how is everything travelling for Yamaha Motor Australia from your perspective?

I would love to say that we’ve seen a massive recovery over 2017 and 2018, but unfortunately, that’s not the case. The market appears to be down – mildly scarily – and it’s possible that we could go three years in a row at 10 per cent down, which could be greatly disturbing from our perspective. Some brands are up, some brands are down, however, I’m pleased to say that we have done quite well over the last 12 months. All that really means is that even if we just hold ground it increases market share, but market share doesn’t put food on the table for ourselves or for our dealers. It is an extremely challenging situation. The temptation is there to slash and burn, the temptation is there to get into the various price wars that occur from time to time, to cut the value out of our motorcycles and – in my view – therefore out of our brand. We’ve tried very hard not to do that. Obviously campaign by campaign everything differs, but wholesale price reductions are something that none of us can afford. I don’t think that there’s a lot of evidence to show that it makes much difference anyway, as we have and other brands have tried the price-down approach in the past and any market share seems to be a blip and profit goes out of the transaction for everyone as a result. So we are doing our best to maintain margin, particularly for our dealers, and to meet our budgets for Japan.

In addition to an expansive dealer network, Yamaha is clearly very proactive in event activations, customer activities, press launches and supporting a wide range of racing programs, etcetera. Is it a matter of refining every step and attempting to maximise each opportunity available to move forward?

That’s exactly what it is. Firstly, when I came into this role we spent a fair bit of time looking at who we need to focus on. Ultimately, we decided that focusing on our excellent dealer group and end-customers is far more beneficial than our own needs because in focusing on the dealers and customers, our needs are inevitably met. An example of that is that the traditional way we would work is to beg, borrow, steal and threaten and try to get stock into dealerships – whether they wanted it or not and whether it was marketable or not. That helped us because it got it out of our warehouse, but the reality, of course, is that the dealers become absolutely full of stock that they can’t sell, so their entire attitude and approach changes and they become very resistant. From our perspective, that was creating a very negative environment for us to work from, so the first thing we did was focus on our dealers and the second thing we did was focus on our customers. I think that’s why we’ve had a relative degree of success here. The second part of your question, in regard to experiential marketing and our involvement in a great number of areas, that is intentional. Brand-wise, our activities have become relatively efficient, but they have expanded and obviously, we’re putting more money into it. Experiences like the YZ65 Cup are actually invigorating, they create energy that we didn’t expect, and it has had a growth effect across the board. It’s not just the 65 Cup, because we have the huge involvement down at WSBK, we are still sponsors of the ASBK albeit not the title sponsor, we’ve got the MX Nats sponsorship, the AORC sponsorship and we’ve got all levels of racing sponsorship covered. What we have done, however, is focus on where we can get the best value. Pulling out of the ASBK title sponsorship was not an easy decision, because YMF and YMI have had a very good relationship with Motorcycling Australia and the ASBK team, however, we could no longer justify that amount of money in that particular area when we had so many opportunities that had a direct experiential benefit. For us, it’s a case of being far more picky with the branding exercises that we do, but not being shy of spending a little bit more money where we do see that value.

It’s certainly quite obvious, the presence of the bLU cRU in the market. You see the Yamaha brand, as well as YMF and YMI in so many areas, so it’s an extremely broad program isn’t it?

I think it’s unusual for a finance and insurance company in particular to have that kind of approach. There are lots of examples the other way – let’s say – an unnamed brand, who made a fortune out of the motorcycle industry and just threw money at race-tracks and other things by way of pure promotion, but they didn’t put anything else into it or back it with boots on the ground. At WSBK for example, we have 20 to 30 staff down there in support, whereas that unnamed brand might’ve had two or three at the show and a couple of tables of VIP that are enjoying themselves and that’s all. From the finance and insurance side, something that I did from the moment that I started is that if you are going to enter something, you do it the right way and you make sure you have the boots on the ground to support both the promoter and also the team that is involved. To be completely honest, the staff seem to really enjoy it and they get a kick out of the fact that we are Yamaha – why wouldn’t you want to get the blue out there and show it off? And the unnamed brand just exited the industry when they couldn’t make any more money out of it and they left a trail of damage. We take a different, more long-term view. We need to turn a profit obviously, but YMI and YMF are here for the industry because they belong to Yamaha, so they put back in.

Image: Foremost Media.

What are your thoughts on the motorcycle shows and expos? Do they still hold the relevance and provide the returns that such a massive involvement suggests?

We have been staunch supporters of the shows and same on the marine side in the past. That’s all well and good, but we’re not there to stroke our own egos – we’re there to invest in the brand and hopefully sell more motorcycles. The connection between Sydney and Melbourne shows and the market is just not as clear as it used to be, so I would have to agree that it’s more and more difficult to invest that kind of money into something like that. We would much prefer, and I suspect other brands are much the same, an opportunity where customers could get involved, something that has meaningful customer activations – not just a virtual reality booth or being given a couple of balloons that you can take home. Anyone who wants to see our product can see it in a dealer and that’s where we want them to see it if that’s what they’re after. Online research is a staple now and there would be very few customers who don’t do their research before they go out and buy, so many times they know more than the person trying to talk to them about the bike because they’ve picked out a bike, zeroed in on it, read yours and other reviews, read every single specification on our own website and then they turn up a full bottle. What are we really doing then? Well, we’re showing them the bike in the flesh, but then we’re reluctant to put them on it because we’re wary of people falling off and scuffs on the bike and that kind of thing, so it’s very difficult to do the same kind of investment that we have in the past. If, however, we can combine it with activities and if we can have rides on the day to promote the industry in one big event/festival, if that can be done then we’re all for it. I think, hopefully, the customers would get into it a bit more as well.

One area in which Yamaha is very good at, which we have minor involvement in from a Foremost Media point of view, is that you engage with the people on the ground at events, but then you also collect content and showcase the brand’s involvement through appropriate digital channels to reach a broader audience. Not everybody is at every event, however, YMA ensures its followers are connected through that strategy and it appears to be a success so far…

Digital marketing has been around for a while now and it is tempting just to have the odd picture on Instagram or short video on Facebook, but if you’re going to do it then you need to do it properly by linking in all of the areas. I’d love to say I was happy with the work that we’re doing, but the reality is that we’ve only barely scratched the surface and I know that everybody is trying to improve in that area. CRM, digital marketing and e-commerce, they’re not just buzzwords, you have to be involved, and they are expensive to do properly. Digital marketing of any kind, whether it’s something as easy as Google Adwords – easy, but expensive – banner ads, sponsorships and cross-collateralisation with various social media channels, none of those things are straightforward. Yet, there are efficiencies to be gained by doing them to a certain scale and I would like to think that’s about where we are now, getting as much coverage as we can. We’ve got a long way to go and I’d be naive to think that every other brand wasn’t thinking the same thing.

In terms of motorcycles, the product is why so many people get on two wheels or are involved in the industry. Yamaha continues to evolve with new models such as the Ténéré 700 that’s on its way, the new R3 launched recently, the WR450F is new, as is the YZ250F and, of course, the Niken has made headlines, so there is a lot of excitement in the brand and so much good product is emerging on a yearly basis.

We’ve got some great ranges. You mentioned the YZ range, the R series and I guess you’d add the MT, so there is so much that we look forward to. Every year, virtually, there are a couple of new opportunities in those ranges and we’re really lucky in that respect that the factory does an incredible job. Obviously, Yamaha has a long history of being innovative and bringing out a beautiful product, but it’s the passion for those products that make the difference. I think that’s true whether we’re talking about staff, dealers or customers – in all cases it’s the passion for the brand or those products that really get us over the line. Mobility and Mobility as a Service (MaaS) are current global buzzwords, but the reality is that in Australia we buy motorcycles because we love motorcycles, not as a transport appliance.

Image: Foremost Media.

From a YMF perspective, late last year the flex commissions ban was implemented, so how has that been for the business? There has been a lot of movement in that area, as well as in insurance with the YMI brand.

It has affected things, but the biggest effect I think has been felt at the dealer end. They’re the ones that we’re trying to make sure we can help through this challenge because they’ve taken a lot of hits recently to income with regard to insurances in particular, but then also the flex commissions… It just keeps on going and it’s hard to see anything other than that the regulator has dealers in its sights. In some cases, I’m sure that’s justified, but in many cases, it’s simply not and they’re just a victim of the activities of a few if you like. As financiers and insurers, we need to take responsibility for that as well. In 2013 as an insurer we saw the writing on the wall with regard to add-on insurances and the appropriateness of the commissions being paid at the direct cost to the consumer. We then got caught up in the process that ASIC went through and tarred with the same brush, even though we tried very hard to do the right thing by consumers with the YMI product from way back then. Dealers are the ones that I’m concerned about because if the market’s down by 10 per cent year-on-year for three years and they’ve been taking a hit on their add-on insurances commission and they’ve taken a hit on their finance commission, how are they going to survive? How are we going to help them survive? That is something that keeps me up at night. They’re our dealers, therefore our responsibility, they’re our partners and they’re our friends – they’re equally as passionate about the brand and we have a responsibility to them, as they do to us. A Rolex dealer will make five times more profit on a $10,000 watch than a motorcycle dealer makes on a $10,000 motorcycle, with only a fraction of the expenses, yet it’s the motorcycle dealer that’s copping the brunt of all this intervention. That’s the bit that bothers me with the flex commissions and the market is still trying to find its new norm, I think it’s fair to say. The market is still trying to find a new normal with this and things are pretty volatile. With all changes like this that are government-run, I think it will be a few more months before we find the middle ground and things settle down.

Another product that I wanted to touch on is the YMF Blue Card that has been introduced, which is a line of credit that offers choice and flexibility. It’s quite a simple process from what I understand, so how has that been received?

The YMF Blue Card launched about a year ago and it was a bit of a slow burn, but we saw a distinct pick-up toward the end of last year and that’s continued now into this year. It’s certainly becoming a very popular card, directly targeting that Zip Pay style of transactions where those finance companies will charge the dealer a significant merchant fee. What we offer is that our dealers will be able to put a customer onto that interest-free period that’s so popular these days and a reasonable interest rate when it comes off of that interest-free period, but there’s no merchant fee for the dealer. So, they have a much greater level of flexibility to deal with the customer on whatever terms the customer wants. Plenty of people will still use their standard credit card to buy, but this gives them an alternative and it remains a line of credit until they no longer need it. It’s a terrific product and hugely successful in the US, where they do things quite differently – buying motorcycles on a Yamaha credit card, for example, is equally or more popular as buying one with a standard loan. Here, it’s not as popular, so we’re just dabbling on the edges, but we’re having success with the fun bikes, with accessories and things like that. Our dealers and consumers are finding it extremely useful.

In the end, I suppose, what it all comes back to is that synergy between all of Yamaha’s divisions to evolve, assist dealers as much as possible and to maintain the brand. It all comes together in the big picture and that appears to be what’s driving the success and it also becomes for the good of the industry.

For the good of the industry, hopefully for the good of the customer, and what we would like to see is that whatever they need for their motorcycle, Yamaha can provide. Obviously, that was the logic that brought us to create YMF back in 2002 and then YMI in 2013 as well, also the genuine parts and other services that we offer. Whatever the customer wants, we want to be there for them, which is good for us and good for the dealers as well, because focusing on the customer like that tends to get good results. And I should add that it’s a genuine team effort – we’re incredibly lucky to have the staff we have. They buy into the vision, they help each other out, they truly love the brand and boy, do they work hard! The culture at Yamaha is awesome and it’s the guys on the ground that are making the leadership look good.

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