Royal Enfield Targets 20% Of Revenue From Overseas Market In Coming Years
“Our journey is no longer about India, it’s about becoming global,” Siddhartha Lal says at a pre-launch event for the Meteor 350.
Royal Enfield would like for at least a fifth of its revenue to come from from overseas markets in coming years as India’s biggest premium motorcycle maker looks to boost scale and growth.
“We continue to focus a lot on global market and take small steps. It’s a long game we are playing in the international market,” Siddhartha Lal, managing director at parent Eicher Motors Ltd., said at a pre-launch media briefing for the Meteor 350, Royal Enfield’s upcoming cruiser that’ll replace the Thunderbird. He, however, didn’t quantify “coming years”.
Dasari said that he doesn’t expect the international brand push to substantially alter costs or margins. But the management offered no further detail on planned investments or foreign market share targets, except to say they weren’t looking to add manufacturing units outside India.
The company, which leads the premium market with 96% share in the 250cc and above motorcycle segment, is facing a stagnating market, according to an Elara Capital report. The pandemic has exacerbated the situation - sales fell 7% year-on-year to 66,891 units in October this year.
Competition in the segment has started to pick up, with Honda launching Highness CB 350, and Harley-Davidson Inc. and Hero MotoCorp Ltd. agreeing to develop premium motorcycles for the Indian market.
When asked about the impact of the Hero - Harley Davidson deal, Dasari shrugged it off by saying the competition would only result in greater public exposure for bikes. Yet, the over 100 year-old Indian brand knows it needs to revitalise the local market and and expand internationally to achieve a stated target of 1 lakh to 1 million (10 lakh) bikes. In the last fiscal, Royal Enfield sold 6.97 lakh units of which some 40,000 were exported.
What brought us here is not going to take us into the future, Dasari admitted before discussing details of a new growth strategy. RE 2.0 will focus on a wider range of products, sharper customer focus, international growth, aftersales engagement and digitalised sales.
Some of the efforts include expanding distribution, offline and online.
Royal Enfield has added 200+ studio stores in the last two quarters. The goal is to reach 1,000 by the end of the year to reach customers in tier three and four cities in India.
An app that allows customisation -- a shift from ‘made-to-stock’ to ‘made-to-order’ as Dasari put it. Earlier 10-15% of the customer enquiries were online, that’s now risen to 60%, the company said.
When you stop at a traffic light no two Royal Enfield bikes should look the same, Dasari emphasised.
The company, which now has more than a billion dollars in cash, isn’t aggressively looking at mergers and acquisitions, but will invest in future mobility. “If elements of future mobility (electric vehicle) require partnerships, we aren’t averse to that,” he said. “Whether it requires strategic investment in a new capability or development cost, we won’t back away with that too.”
When asked about technology tie-ups as a strategy to expand, ala Hero - Harley Davidson, Lal said: “10 years ago, we were looking for technology from overseas, but instead of working with a partner, we decided to invest in our technology and build capability, and now we have (resources) within us, and don’t need to rely on third parties.”