Business News/ Companies / Retro revival as Royal Enfield bikes take off

New Delhi: “The fundamentals have finally clicked." So says the Detroit-trained boss of the world’s oldest motorcycle company, the long struggling but now thriving Royal Enfield.

The India-based group is an essential piece of two-wheeler history and its main product the “Bullet" is a design classic, dating back to 1932 when it was unveiled for the first time by the original British manufacturer.

In 1949, the bikes came to India under a contract for the army and manufacturing has continued ever since, in glorious isolation and long after the British bike died out.

Chief executive Venki Padmanabhan told AFP in an interview from company headquarters in the southern port city of Chennai that the group had turned a new page in its illustrious history.

“Finally the things that needed to be cleaned up got cleaned up and they have had a very subtle but very significant impact," he said.

The problem — or beauty, as some fans would say — was that Enfields had remained largely unchanged in 50 years, with the factory in Chennai churning out small variations of the original Bullet model.

The gearbox was agricultural and oil leaks, along with regular trips to the mechanic, were as much a feature of the single-cylinder engine as its deep thump-thump sound.

But in what will likely be seen as a watershed moment in the history of the firm, Enfield dared to offend the purists by overhauling the engine in 2009, launching the brand-new Classic.

Initial orders for the bike, which retails at 150,000 ($3,500), were expected to be 150-200 a month, but the company quickly found itself processing about a hundred a day.

Suddenly, the previously niche manufacturer had an eight-month waiting list and production at the creaking factory in Chennai — described as a “relic" by Padmanabhan — has since been ramped up by 40%.

The chief executive — who previously worked for Chrysler, General Motors and Mercedes — arrived at the firm just before the Classic hit the market.

He compares managing the company, owned by the Indian industrial group Eicher for the the last 16 years, to caring for a Chinese bamboo tree.

“You have years and years of experimenting and figuring out what works, working out how to protect the plant. And then finally it grows eight feet."

“I think this is what we are beginning to see," he says. “The fundamentals have finally clicked."

Demand is so great that Eicher, which came close to shutting Enfield at one stage, has agreed to invest in a new 100 crore ($22 million) greenfield factory near Chennai that will double production capacity from 70,000 bikes a year to 150,000 in 2013.

The expansion plans are ambitious: the company is taking the export market seriously for the first time, building overseas sales networks in Britain, the United States, Germany and France.

In India, the potential is huge as the company draws riders trading up from smaller motorbikes and wealthier car-owning customers looking for a thrill at the weekend or on holiday tours.

Though foreign luxury bike brands such as Harley-Davidson, Triumph and BMW are increasingly investing in India, Royal Enfield expects this to raise awareness about leisure biking rather than reduce its own sales.

The key to the success of the new model was keeping enough of the old features to retain the heritage of Royal Enfield, while removing the problems that turned off potential buyers, says Padmanabhan.

He cites BMW’s successful re-engineering of the classic Mini Cooper as another success story of breathing new life into an old brand, though the redesign of the Bullet is far less radical.

“We converted over from the cast iron engines. We have our own engine now that is modern in a retro sense. It doesn’t have all the niggly things," he says.

Even though some critics say the new Classic sounds tinny compared to older models, Padmanabhan reasons that this is a small price to pay for greater reliability and better fuel efficiency.

“At some point, you don’t love something so much if it’s off the road all the time," he says.

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Updated: 03 Aug 2011, 11:40 AM IST
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