Royal Enfield counting on new launches and first-time buyers to drive up volumes

B. Govindarajan, CEO, Royal Enfield, with the newly-launched Guerrilla 450

Eicher Motors Limited’s motorcycle making arm, Royal Enfield, is betting on a slew of new product lines such as Hunter, Himalayan, Guerrilla 450 and the updated Classic, to drive sustained growth in its volumes during the upcoming quarters. A senior company official said, in a post earnings call, that prospective customers, who were initially puzzled by the new offerings by its competitors, are now looking to buy its products.

“Customers were actually given a lot many options directly which were competing with Royal Enfield and that was a deterrent in decision making. It is subsiding now as we are seeing the number of walk-ins and inquiries going up, even though the heatwave and elections have had their own impact during the previous quarter,” said B. Govindarajan, CEO, Royal Enfield, during EML’s post first quarter earnings call.

In recent months, the market has seen several new launches by Royal Enfield competitors such as the Speed 400 and Scrambler 400 in the Indian market followed by Pulsar NS400Z, from Bajaj Auto, in collaboration with British motorcycle giant Triumph. Hero MotoCorp, in association with Harley Davidson came up with two products - HD X440 followed by Hero Mavrick 440.

“A lot of product action was happening in the middleweight motorcycle market. There were many new entrants (and) a lot of store additions. Now, the period of the whole confusion is settling down. Sometimes the deferment (by buyers) can take place because there is a bombardment of so much information,  about an alternative model,” added Govindarajan.

During the end of 2023, Royal Enfield launched the Himalayan Adventure Tourer at a starting price of Rs 2.85 lakh (ex-showroom). The bike maker also came up with Guerrilla 450, which is available from Rs 2.39 lakh onwards.

“We have launched the Guerrilla 450, which is about eight weeks old and is getting very good traction. That's why I see in the coming months, that the growth pattern will be back,” added Govindarajan. Based in the same 450cc Sherpa platform, Himalayan and Guerrilla now has a combined monthly output of 8,500 units per month, according to him.

The middleweight bikemaker is also betting big on the Hunter 350, which was launched in August 2022, and is incidentally its most affordable motorcycle (priced at Rs 1.5 lakh). The company CEO said that it is looking to tap many young and first-time motorcycle buyers with this product.

“First time buyers, maybe about 12-13 percent roughly at the portfolio level and Hunter maybe slightly higher at about 19 to 25 percentage level. But there are players who are actually looking at upgrading. Of course, they want to own a Royal Enfield and it is really helping us to get the younger customers to our fold,” noted Govindarajan.

The company has recently unveiled its Classic 350, which will be launched 1st September. “Premiumisation is continuing and we'll be continuously working on the new products. Our (new) Classic (model) is going to see lot of action, stated Govindrajan, adding, “The focus is (also) going to be on Hunter, we are going to do lot of brand building exercise.”

Royal Enfield logged sales of 2,27,736 motorcycles in the first quarter of the current financial year, as against 2,25,368 units in the year-ago period. While acknowledging that the wholesale numbers could be higher, Govindarajan maintained that its retail numbers were positive during the first quarter.

“We were a low single digit at the retail level and that is a positive sign we are seeing. While we could have probably done more wholesales, we took a conscious decision by going for an auto replenishment model. As we are excited about the new Classic, we were cautious that inventory build should not take place in those areas,” noted Govindarajan.

According to Govindarajan, the company aspires to attain a high single digit growth in its total two-wheeler volumes.

“The whole middleweight motorcycle (segment) has to pick up the pace with respect to the rest of the motorcycle (industry)  the with all our actions which are coming up and too much the noise settling down. It will start picking up in few months’ time,” he said.