New Delhi: Royal Enfield, the oldest surviving motorcycle marque in the world, which makes the Bullet brand of bikes here, plans to introduce a range of two-wheelers with new engines, including a special one for the export market, as it battles increasing competition at home.
Ten months ago, Eicher Motors Ltd, which owns the brand, said it is keen to hive-off the motorbike unit and offer a stake to a partner so it can gain access to better technology. Now it says the company has developed better technology with support from vendors, such as Keihin Fuel Systems and will export bikes with fuel-injection technology, a more fuel-efficient, smoother and reliable alternative to the traditional carburettor technology in motorbikes.
Royal Enfield exports 2,500 bikes a year to the UK and the US, out of the 33,000 motorcycles it makes.
“We’ve met that (fuel emission norms) and got clearances,” said Siddhartha Lal, group chief executive officer of Eicher Motors.
The company, which has the capacity to make 35,000 motorcycles in its Chennai factory, plans to ramp up capacity to around 40,000 units as it seeks to increase exports to around 10% of its output. The export market is also a more lucrative one for the company, which currently sells its top end bikes there for as much as Rs3 lakh, almost three times more than its comparable price in India.
In India, which forms the bulk of its market, a 500 million strong middle-class that is driving demand for products and services from mid-sized cars to vacations in Europe is prompting companies such as Harley-Davidson Inc.,Honda Motor Co. and Yamaha Motor Co. to look at the bigger bikes segment in India.
“Up to 5% of the (motorcycle) market will be leisure-oriented” in India, said Lal. “That’s the market we want to tap.” Royal Enfield, which is the only local maker of bikes with engine capacities greater than 350cc, sells 30,000 bikes a year, which is 0.5% of India’s 6.5 million units a year motorcycle market.
“Owning such a bike defines an attitude,” said Rajat Dhawan, partner with McKinsey & Co. “The challenges are pricing and how you can create an aspiration.”
Lal says he is is unfazed about the competition he will face. “We see it as helping us, as suddenly, a Rs1 lakh bike doesn’t seem expensive after all,” he said referring to the higher price tag of the imported bikes.
A 100% plus duty regime will meanwhile force foreign entrants, most of whom will import the bikes, to price bikes as high as Rs4 lakh for their entry level models. The cheapest car in the country now is priced at half that and next year may see a new car at Rs1 lakh.