Royal Enfieldโs huge sales volumes have delivered stellar growth over the past decade on the back of substantial investment by the companyโs owners since 1990, Eicher Motors.
Just one decade ago, capacity at REโs Thiruvottiyur plant in the northern suburbs of Chennai was a mere 40,000 motorcycles a year โ the same factory at which Enfield India production had begun in 1965 when the Redditch-based British parent company teamed with Madras Motors to kick off local manufacture of its Bullet single.
This slim production capacity resulted in a year-long waiting list in India for REโs range of 350/500cc pushrod singles, then sold essentially unchanged from 1955 spec, with separate four-speed gearboxes and chain-driven primaries.
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But then in 2010 Eicher bankrolled the introduction of REโs much improved UCE/unit construction engineering models with five-speed transmission and gear primary drive, while at the same time increasing its two-wheeler divisionโs production capacity to 60,000 annually, still moreover all built in its decidedly elderly Chennai factory. The local waiting list for deliveries had dropped slightly to nine months.
But in 2013 Royal Enfield moved into a world-class modern, spacious new plant 70km away at Oragadam โ and ever since then itโs recorded year after year of stunning growth. In 2014 it registered total domestic sales of 236,370 units, rising 50% in 2015 to 452,812 motorcycles, while export sales grew by 33% to 8,285 units โ a figure that puts into perspective the strength of demand in its home market for a product that is seen as a prestige brand by Indian riders, who still had to wait for between five and seven months for deliveries, depending on the season.
And REโs sales volume continued to grow robustly even as the overall Indian market for sales of bikes under 250cc began falling. Faced with this, the Eicher Motors board headed by its dynamic CEO Siddhartha Lal, decided to increase REโs overall production capacity to 48,000 units a month from 45,000 units via an extension to its Oragadam plant, leading to 576,000 bikes being built in 2016, while the waiting list for Indian market deliveries dropped to around four months on a seasonal basis.
In October 2016 the Eicher Motors board announced construction of a third Royal Enfield plant in Vallam Vadagal near Oragadam, in order to lift its production capacity to 900,000 units annually by 2018. RE had already reported total domestic sales of 50,059 units during March 2016 โ the first time it had sold more than 50K bikes in a single month, and the same amount as it had delivered in a single year in 2010 โ leading to a consolidated year-on-year domestic growth of 53.92% for the 2015-16 financial year.
But just 12 months later, in April 2017 Royal Enfield broke through the 60,000-unit monthly barrier, selling 60,142 bikes that month as part of a 20.8% growth in sales year-on-year. Of these, sales in the domestic market alone accounted for 58,564 bikes, 25% up on the same period a year earlier, mainly led by the popular Classic 350.
This made up over 68% of 2016 Royal Enfield sales, with 416,693 such bikes delivered in the 2016-17 financial year. Currently, the Indian home market is responsible for 96% of Royal Enfieldโs total sales, leaving just 4% sold in overseas markets โ an imbalance which Lal is working hard to redress by enhancing the brandโs footprint abroad. Royal Enfield has opened exclusive stores in Dubai, Paris, Madrid and four such outlets in Colombia, South America โ a key market.
Currently, RE has more than 400 dealerships overseas, against 392 in India at present, with a target to lift this to 500 outlets by the end of this year.
As part of this export drive, in August 2015 Eicher announced formation of its first fully-owned overseas subsidiary – Royal Enfield North America, headquartered in Milwaukee, Wisconsin and led by Rod Copes, headhunted from Harley-Davidson for whom he had previously been the Head of Global Sales. For the past 15 years Royal Enfield had exported motorcycles to North America through an independent distributor, and this strategic announcement demonstrated Siddhartha Lalโs stated objective that RE should become a strategic player and eventually the leader of the global mid-sized motorcycle segment for 250-750cc bikes, with North America representing a priority target for the company.
But with only 450 motorcycles sold in North America in 2016, Copes has a challenge on his hands, with Royal Enfield finding it hard to attract North American buyers via its retro-styled Classic, Bullet and Continental GT singles – in spite of sustained and substantial media coverage – thanks in part to an as-yet limited dealer network. The Himalayan adventure bike and forthcoming 650cc twin will be key elements in extending REโs reach in overseas markets, and especially the USA.
