Enfield confident of keeping leadership seat
Royal Enfield, known for its Bullets, is confident of keeping its leadership position in the 250-ccplus motorcycle segment in the country, despite claims of competitors.
“If you look at the 250-cc-plus motorcycle market in India, every 19 of 20 products are sold by us… That is a reality. It is not that easy to unseat someone who is doing this,” Siddhartha Lal, managing director and chief executive officer of Eicher (which owns Enfield), told Business Standard.
Bajaj Auto, which entered the 350-500cc motorcycle segment in December, claimed to have overtaken Royal Enfield in February, in volumes. The claim was based on one month’s performance of the Dominar, its new 373-cc premium sports motorcycle.
Japanese two-wheeler major Honda is also reported to be working on a motorcycle to cater to this segment.
“It is very clear. There will be people entering (the segment). Just that it is still a very small segment. If more players enter, it may help grow the segment,” said Lal.
Enfield gets the lion’s share of its sales by dominating the 250-350-cc motorcycle market in the country, estimated at close to 50,000 units a month. In the 350-500-cc market, it controls 80 per cent (data for the first 11 months of FY17). This is a much smaller segment, with monthly volume of 5,300 units.
Lal added the company was doing a lot, on and off products.
“Our dealerships are unique and don’t cater to mass products. It is not like a factory shop. We are working to improve and enhance the experience. And, on the product side, a lot of things will happen. I am sure there will be good and interesting motorcycles from others. But we don’t want to cater to everything. If somebody comes and creates a new segment, good for them. We want to stick to our core and do what we do well,” said Lal.
Royal Enfield, a highly profitable business for Eicher, brings in over 80 per cent of the company’s consolidated profit (~1,278 crore in FY16), even though it accounts for just 40 per cent of the ~15,689 crore.
Commercial vehicle is another business segment. As the next leg of growth, Lal is now focus sing on growing the motorcycle business overseas. Export snow contribute to just about two per cent of the total motorcycles sales (0.66 million in FY18) but Lal said the story is just getting “started”.
Shipments grew 64 per cent in FY17. The strong motorcycle performance has powered a surge in stock price and the company now enjoys a market capitalisation of ~70,254 crore.
He said the India growth story for Royal Enfield was known. “The new story over the next 5-10 years — what we are working on now — is the global story.”