Sunday , May 22 2022

"Roial Enfield played a game from 350cc to 650cc.


Siddhartha Lal of Royal Enfield is not upset about the upcoming competition in his stomach 350-500cc motorcycle in India. Photo: AFP

Siddhartha Lal of Royal Enfield is not upset about the upcoming competition in his stomach 350-500cc motorcycle in India. Photo: AFP

New Delhi: Roial Enfield, the motorcycle unit of Eicher Motors Ltd, has been dominant in the middle motorcycle segment in India for almost two decades, but will focus on the challenges of domestic and international companies such as Bajaj Auto Ltd, Triumph Motorcicles, BMV, Harlei-Davidson and recently restored Java Motorcycle in the next two years.

Classic Legends, a subsidiary of Mahindra and Mahindra Ltd, re-launched Java Motocycles in India again on Thursday in three variants: Java, Java Forti Tvo and Java Perak bobber at prices that shift them directly into the territory dominated by the Roial Enfield Classic 350.

Siddhartha Lal, Executive Director of Eicher Motors, is not upset.

In an interview for On the after launching the Interceptor 650 and the Continental GT 650 in Goa last week, Lal said that the competitive cost structure and scale of operations set up in India would allow Roial Enfield to grow international motorcycle-selling operations at prices that will bring good margins.

Although the next range of Roial Enfield motorcycles will hit the roads only in 2021, since more stringent emissions are planned in India in April 2020, each of these products will develop with a view to global markets. Roial Enfield will also reiterate its international strategy for domestic traders, expecting them to reimburse operating expenses from the sale of clothing, equipment and services, while motorcycle sales revenues are considered profitable.

Changed extracts from the interview:

What is the strategy for launching 650cc motorcycles in India?

In India, motorcycles over 500cc are very expensive and normally imported. On the market of 20 million motorcycles, only 10,000 to 15,000 units are in the 500cc segment and more, because the market is not well served. Our goal is the way in which we have provided the entry of a mid-size motorcycle with 350cc offers, we want to repeat the same with the upper mediums. That's the direction we're entering.

Today we have about 3.5 million customers driving in Roial Enfields, and most have improved them from 150cc or 200cc motorcycles to 350cc. With the new 650 Tvins (Interceptor 650 and Continental GT 650), we want to give a similar leap in sophistication, precision and speed, but with just one step of jumping into accessibility. Our goal is to broaden the segment of the cycle of mid-size motorcycles in every market in which we will enter.

Will 650 Tvins play a key role in expanding the Roial Enfield brand globally?

It's not just about India. So, when we thought of the 650 twins, we had a global concept in mind. We are already present in markets outside India and know what people want. Customers on the outside prefer a modern classic concept of Roial Enfield products, but with a little more power, sophistication and highway worthy.

We are collecting a team of professionals who have been doing this kind of work over the past four years, since we did not do this kind of business in India. So, our technology center in the United Kingdom now has 140 engineers and designers compared just about five years ago. This was a collaboration project between the global team that is sitting in the UK and our Technology Center in Chennai. So, this should always be a global project, and 650 Tvins are our business card for the world.

From a business point of view, what are the advantages of trying to establish a company globally?

There is a huge vacancy in modern classic mid-size motorcycles, and most European and American motorcycle manufacturers have switched to larger motorcycles, as they prefer to have a small volume and earn high margins. On the contrary, we go on a scale.

So, the market there usually starts at 850cc and we come down below 650cc, but it has similar attributes. So, we have a domestic market, which is gigantic in terms of size and gives us the right cost structure, and we also value our products to get a balance. And with lower cost structures then we can get some cracks (read, extremely competitive) prices for international markets.

Customers are delighted with our prices in the United States, the United Kingdom and Europe. In order to establish a brand, we have greatly expanded the distribution network and provided great support and service even beyond the distribution network. It's a long-term strategy. It took us nearly 15-20 years in India to come to this point and maybe we'll be in the next few decades, we can get the same success in other markets.

What about protecting your business in India from competitors who will enter the market in the next few years?

So most companies do. They see how one works well in a particular segment and earns high margins and tries to get the share of pies. This is not so easy because there is a reason for the success of the current one in a competitive market, and it's not that the companies have not tried to enter our market earlier. To be honest, so far, there was a lot of failure.

In a competitive market, the current has advantages such as critical mass, distribution network, deep consumer knowledge and we have the entire ecosystem around our motorcycles.

Also, we are not yet sitting in our new events. We have new development motorcycles for the existing segments we are in. Also, we pushed the game. Since everyone is watching our 350-500cc segments, we've been playing at 650cc, which will take another 3-4 years for others, and there are no shortcuts.

Also, people value the Roial Enfield brand together with the product, and our products have a great value for resale, it's like a liquid that's hard for others to replicate.

() The positive thing is that the market will grow with others who are coming.

When are new products expected and what is your expectation of growing volume in India?

Everything that is completely different from our existing portfolio, such as Twins, will be launched by 2021, because in 2019 and 2020, our existing product portfolio will be revamped due to new standard emissions. Every Roial Enfield product in the future will be made with a global lens.

I think the isolation came for us in the sense that we have a book of deep books, so that the curvature for us is not a straight linear curve upwards … now it will curse some ups and downs.

So, the days of 50-60% growth in the last 6-8 years are completely unknown and we are through it. Now we have established ourselves in normal growth. Now, if the Indian passenger market market targets a growth of 6%, then we will target 12%.

Is there a new dealer strategy in India along with global expansion?

Already our clothes and accessories become strong companies, although they will always be dwarfed by the sale of a motorcycle, because it is a huge number.

For our dealers in India, and especially outside of it, having a range of clothing and accessories is necessary for their profitability, since they earn more money from the sale of motorcycles – especially in foreign markets. Overtime in India also, we want the profit of apparels, supplements, services and parts to be the main part, not the sale of motor vehicles. They should be able to cover the costs of them, and motorcycle sales revenues should be profitable for them.

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