Royal Enfield’s Backlog Jumps Threefold In Three Months Amid Supply-Chain Issues
The backlog rose to 1.25 lakh bookings as of Thursday from from 40,000 pending bookings in August.
Royal Enfield's backlog jumped threefold in about three months as supply-chain issues continue to hurt the maker of the Bullet and the Classic motorcycles.
The backlog rose to 1.25 lakh bookings as of Thursday from from 40,000 pending bookings in August. That comes as the company has seen demand recover.
“It’s not a generic supply-chain problem,” Vinod Dasari, chief executive officer at Royal Enfield, part of Eicher Motors Ltd., said during an analyst call on Thursday evening after the quarterly earnings. The firm is facing certain supply issues at its vendors and specific models, he said, without specifying details.
Dasari said the company has removed some bottlenecks with minor capital expenditure here and there, and is now looking to increase the capacity by about 5% this year.
Siddhartha Lal, managing director of Eicher Motors, the company has a higher capacity addition target but faces other bottlenecks. Royal Enfield, which sold about 60,000 motorcycles an average a month prior to the pandemic, received 70,000 bookings last month. "We could touch 100,000 in a few years without huge capex or new plant."
Eicher Motors net profit declined 40.13% year-on-year to Rs 343 crore in the quarter ended September, while its revenue fell 3% to Rs 2,134 crore.
The company, already seeing an uptake in demand from tier 2 and 3 cities, now expects it to improve in the metros as they emerge from the lockdowns. Month-on-month sales rose 11% to 66,891 units in October. But at 1,50,519 units, it shipped 9% fewer motorcycles in the second quarter. It has already received 8,000 bookings for the newly launched Meteor, a direct competitor to Honda H'ness CB350.
The company is further looking to bring at least one new bike every quarter as it looks to strengthen its dominance in the premium market, where it has more than 90% share.
“We will look at the mid-sized segment from 250cc-750cc,” Dasari said, adding that the intent is to occupy the entire range with multiple price points.