Unfazed by the recent premium motorcycles rolled out by homegrown two-wheeler makers, Royal Enfield affirmed that it is well geared to maintain its market leadership in the domestic middleweight market. Siddhartha Lal, Managing Director at Royal Enfield's parent company Eicher Motors Limited (EML) said on August 3 that the entry of new products will only expand the 250-750cc market, which currently stands at 1 million units per annum.
“We are not obsessed about competition, which in fact, our competitors do very often. We obsess about the consumer and his wants. We are obsessed about stuff that we believe is tangible reality for our consumers, (which is) to have a better ride to have a to have more enjoyment. So yeah, really, we built a fortress. It's not going to be easy for, let's say robbers, to penetrate,” Lal said at the post-earnings virtual media conference.
Lal’s comments were in response to Bajaj Auto MD Rajiv Bajaj’s comment wherein he told a TV channel, “If Royal Enfield is where the money is, then we have no choice but to rob the bank.”
When quizzed on the edge that Royal Enfield still has over rivals, Lal asserted, “Just because they're not that sexy, but the really important stuff like the resale value of a motorcycle like that of a Classic 350, which is tremendous. Even after three years, in percentage terms, it is double of that of our competitors. If the competitors are selling it at 30 percent after three years, we are doing it at 50-60 or even 70 percent. So, there's a lot that we have done to keep to create that mode.”
It may be recalled that while Hero MotoCorp had rolled out Harley Davidson X440 at a starting price of Rs. 2.29 lakh (Ex-showroom India), Bajaj Auto had introduced Triumph Speed 400 and at an introductory price tag of Rs 2,23 lakh (ex-showroom, India).
Lal maintained that Royal Enfield is no stranger to competition since it really “started succeeding” 10-15 years ago when it had a lot of growth. In his words: “We had waves and waves of competition coming in different ways. The largest guys, the biggest brands, the global guys (Harley Davidson), the Indian guys (Bajaj Auto), everyone's been coming in there's no dearth of competition for Royal Enfield. Of course, competition hasn't done very well in our in our segments.”
With the newly launched middleweight motorcycles, Bajaj Auto and Hero MotoCorp, two of India's largest motorcycle manufacturers, aim to crack the 250-500 segment of the two-wheeler market, which is largely reigned by Royal Enfield.
Lal said he is excited that the segment has got a “bit of action” and a “bit of excitement”.
“The share of midsize (motorcycle) should grow as new competition comes in, because then there is a new offering and more interest in the segment, etc. So, we really believe that the outcome of all of this will be that the size of the midsize market will grow. And I believe as leaders we will benefit tremendously from the growth in the segment, ” the executive added.
As per data shared by industry body Society of Indian Automobile Manufacturers (SIAM), sales of motorcycles with engine capacity ranging upwards of 250cc to 750 cc went up by 38 percent during last fiscal at 791,878 units, from 574,675 units in FY 2021-22. Last fiscal, Royal Enfield had 93 percent market share in the 250-750cc segment.
However, Lal acknowledged that the company may not be able to hold on to 90 percent market share and will be satisfied with “an 80 percent market share” of a segment, which is set to expand to 1.5 million units in the medium term.
“It depends on which timeframe we're looking at in terms of (our) market share. So, we are about 90 percent (currently) and it is not going to grow much further north. We will never cede our market share and will fight hard for every last pie. But we believe the market will grow tremendously over the next few years. Also, there is a entire trend of premiumization.”
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
