Honda Motor Co. and Yamaha Motor Co. have begun talks on a business tie-up for their moped units. The market for 50 cubic centimeter scooters in Japan is shrinking.
Honda would assemble the vehicles and supply them to Yamaha on an original equipment manufacturer basis starting in 2018, if an agreement is reached.
The companies announced the plans on Wednesday.
The two companies hope to join forces in development of future models for business use and to promote the market for electric motorcycles.
Speaking at a news conference in Tokyo, officials from both Honda and Yamaha acknowledged tough conditions in the 50-cc scooter sector. It was Yamaha that first approached Honda about a tie-up.
"We chose this path to working with Honda after we held in-house discussions about what we should do to maintain the segment," said Katsuaki Watanabe, a managing executive officer and director at Yamaha.
Watanabe said 50 cc motorcycles are "extremely important" as entry-level motorbikes. The engine category is mainly marketed in Japan.
The envisaged partnership comes as Japan's overall motorcycle market has been shrinking in recent years as the birth rate falls. In the past, Honda and Yamaha were engaged in intense competition for a bigger share of the domestic market.
Consumers in Japan have more options nowadays for short distances, including motor-assisted bicycles and minicars.
Still, Honda Operating Officer and Director Shinji Aoyama said both companies believe in the potential of scooters as an easy-to-use means of transportation, despite the current challenges.
"We are on the same page in wanting to energize the two-wheeled vehicle market and culture," Aoyama said.
Annual sales of two-wheelers in Japan dropped to around 370,000 units in 2015 after peaking at 3.28 million units in 1982, according to data from the Japan Automobile Manufacturers Association.