Royal Enfield sales surge even as two-wheeler market slows

Two-wheeler sales in India may have hit speed bumps last few months, demand for Royal Enfield, which is known for making iconic motorcycles like Classic Chrome and Bullet, continues to accelerate. The company sold around 75,000 units in 2011, up from 53,000 units in 2010 and is on track to sell over 1 lakh units this year, says Siddhartha Lal, MD, CEO Eicher Motors  , which owns Royal Enfield.

The company on Thursday launched a new 500 cc and 350 cc Thunderbird motorcycle, which has been positioned as a highway cruiser.  The original Thunderbird was launched a decade ago with a 350 cc engine and the company has been selling around 1,000 units per month of the same. Royal Enfield has fazed out that model and now hopes it will be able to sell more Thunderbirds with the two new models it has launched now.

The company will also launch the much talked about Cafe Racer next year, which should boost sales further.

The 500 cc Thunderbird will cost Rs 1,82,571 ex-showroom Mumbai and the one with 350 cc engine will cost Rs 1,43,346. The new Thunderbird has a 20 litre petrol tank and the company says the 500 cc can travel up to 500 km on a full tank and has 27.2 bhp power output and 41.3 nm torque. The Thunderbird 350 cc can travel up to 600-700 kms, it says.

The 500 cc Thunderbird is up for grabs from today, but Dr Venki Padmanabhan, Royal Enfield's CEO, said that the company would first deliver the 350 cc motorcycle to customers who have already booked the earlier model, and would want to shift to the new machine. New buyers meanwhile will have to wait for the 350 cc Thunderbird. And the wait could be long.

Royal Enfield currently has only one plant at Chennai, which is running at full capacity and waiting periods for its motorcycles still stretch to 6-8 months.

The company is setting up a new plant at about an hour's drive from the existing factory, which it hopes to start in January-March quarter of 2013. The new plant will have a capacity to produce 1.5 lakh units in the first phase.

Padmanabhan said that the company will initially produce only the new Thunderbirds at that plant and depending on the demand will then start producing other motorcycles there. The company hopes that the overall waiting period for its motorcycles will come down once the new plant starts.

He also said that the company was only using a small part of the 50 acre plant for the first phase and so expanding there in the future wouldn't be a major issue.

Royal Enfield exports to 35-40 markets, but for now, the Thunderbird will be only available in India. But it does have big export plans for the Thunderbird and its other motorcycles in the long-term.

"Our export volumes are still small compared to Indian sales. Well over 90% of sales are in India. As a very long term strategy, we are convinced that we want to be a global motorcycling brand. But the next 1-3 years we will still focus on satiating Indian demand. Because it is on the back of a very strong India, that we can actually have the courage to put in the kind of investment, the kind of new product that is required in the international market. The work on international markets is very much ongoing. But the international growth phase will come 2015-2020...A lot of our long-term product planning has a very strong bearing on what the international markets will want," Lal said.

Meanwhile, back in the domestic market, the company is also strengthening its dealership network to stay ahead of the competition. It has 237 dealers now, compared with 140 in 2009. In Maharashtra, which is one of its biggest markets, it has doubled its dealer base to 20, which will further go up to 30-32 in a year's time.

Royal Enfield on Thursday also launched a whole range of accessories like leather and mesh jackets, T-Shirts, boots, gloves etc for bike riders. These accessories, primarily targetted at the Royal Enfield rider will be available at its dealers.