diff --git a/lib/generators/init-generator.js b/lib/generators/init-generator.js
index efd7db24439..2e3b07c00d7 100644
--- a/lib/generators/init-generator.js
+++ b/lib/generators/init-generator.js
@@ -409,9 +409,9 @@ module.exports = class InitGenerator extends Generator {
 			})
 			.then(() => {
 				asyncNamePrompt();
-				this.runInstall(getPackageManager(), this.dependencies, {
-					"save-dev": true
-				});
+				const packager = getPackageManager();
+				const opts = packager === "yarn" ? { dev: true } : { "save-dev": true };
+				this.runInstall(packager, this.dependencies, opts);
 			});
 	}
 
diff --git a/lib/utils/package-manager.js b/lib/utils/package-manager.js
index 819f3ba0a35..cb67afa9539 100644
--- a/lib/utils/package-manager.js
+++ b/lib/utils/package-manager.js
@@ -64,11 +64,19 @@ function spawnChild(pkg) {
  */
 
 function getPackageManager() {
-	if (spawn.sync("yarn", [" --version"], { stdio: "ignore" }).error) {
+	const hasLocalNPM = fs.existsSync(
+		path.resolve(process.cwd(), "package-lock.json")
+	);
+	const hasLocalYarn = fs.existsSync(path.resolve(process.cwd(), "yarn.lock"));
+	if (hasLocalNPM) {
 		return "npm";
+	} else if (hasLocalYarn) {
+		return "yarn";
+	} else if (spawn.sync("yarn", [" --version"], { stdio: "ignore" }).error) {
+		return "npm";
+	} else {
+		return "yarn";
 	}
-
-	return "yarn";
 }
 
 /**
diff --git a/lib/utils/package-manager.test.js b/lib/utils/package-manager.test.js
index c99fa0bbf79..b0d5ee6c4ed 100644
--- a/lib/utils/package-manager.test.js
+++ b/lib/utils/package-manager.test.js
@@ -34,6 +34,22 @@ describe("package-manager", () => {
 		mockSpawnErrorOnce();
 	}
 
+	function mockUpdateYarnOnce() {
+		fs.existsSync.mockReturnValueOnce(false);
+		fs.existsSync.mockReturnValueOnce(true);
+		fs.existsSync.mockReturnValueOnce(false);
+		fs.existsSync.mockReturnValueOnce(true);
+		fs.existsSync.mockReturnValueOnce(true);
+	}
+
+	function mockUpdateNPMOnce() {
+		fs.existsSync.mockReturnValueOnce(true);
+		fs.existsSync.mockReturnValueOnce(false);
+		fs.existsSync.mockReturnValueOnce(true);
+		fs.existsSync.mockReturnValueOnce(true);
+		fs.existsSync.mockReturnValueOnce(true);
+	}
+
 	spawn.sync.mockReturnValue(defaultSyncResult);
 
 	it("should return 'yarn' from getPackageManager if it's installed", () => {
@@ -59,7 +75,7 @@ describe("package-manager", () => {
 	it("should spawn yarn upgrade from spawnChild", () => {
 		const packageName = "some-pkg";
 
-		fs.existsSync.mockReturnValueOnce(true);
+		mockUpdateYarnOnce();
 
 		packageManager.spawnChild(packageName);
 		expect(spawn.sync).toHaveBeenLastCalledWith(
@@ -84,8 +100,7 @@ describe("package-manager", () => {
 	it("should spawn npm update from spawnChild", () => {
 		const packageName = "some-pkg";
 
-		mockSpawnErrorTwice();
-		fs.existsSync.mockReturnValueOnce(true);
+		mockUpdateNPMOnce();
 
 		packageManager.spawnChild(packageName);
 		expect(spawn.sync).toHaveBeenLastCalledWith(
diff --git a/package-lock.json b/package-lock.json
index fa5139cf6d8..aec79ae11cb 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,6 +1,6 @@
 {
   "name": "webpack-cli",
-  "version": "2.1.3",
+  "version": "0.0.0-development",
   "lockfileVersion": 1,
   "requires": true,
   "dependencies": {