Royal Enfield to invest ₹1,000 cr in EVs, petrol bikes

Eicher Motors, the maker of Royal Enfield motorcycles and part of the Volvo Eicher Commercial Vehicle joint venture, plans to invest ₹1,000 crore this financial year to build its first electric motorcycle factory and also expand its current portfolio of petrol-driven motorcycles, a senior company executive said on Thursday.

The company is also seeking a bigger share of the global mid-weight motorcycle marketplace, which crossed 1 million units in total sales in FY23.

“We are currently working on blocking capacities with suppliers, working with them to figure out our requirements and developing our product. We will think of what capacity we put up at a later stage,” B. Govindarajan, chief executive at Royal Enfield said on a conference call to discuss March quarter results. “Our intent is to create very uniquely differentiated electric motorcycles with a strong Royal Enfield DNA. We have started our deep investments, we are committing ourselves in the product development area, in infrastructure, testing and development. We have laid out a strong product and technology roadmap, what products we have to do at what point of time and all with all the supply partners we have started engaging in the development cycle.”

The automaker reported a 48% rise from the year earlier in March quarter net profit at ₹905.6 crore. Quarterly revenue hit a record at ₹3,804 crores, up 19.1%, while Ebitda margins climbed 23.3% to ₹934 crores.

Royal Enfield has been steadily gaining market share in the Indian market for motorcycles above 125cc, with its share reaching a record close to 30% by fiscal year 2023. India’s two-wheeler market is seeing a dramatic shift as buyers shift from entry-level segments to more premium motorcycles. Royal Enfield sold 214,685 motorcycles in the Q4FY23, up 18% from a year earlier.

“In FY23, we crossed the 100,000-mark in exports. For us, I think it’s a real inflection point; it kicks off a virtuous cycle in export markets. We started our completely knocked-down assembly (CKD) operations in Brazil, which has extremely high potential market for us, and now takes us to four CKD markets overall, including Argentina, Colombia and Thailand in addition to Brazil,” Siddhartha Lal, managing director and CEO, Eicher Motors Ltd said.

As part of its plans to market directly in the UK, Royal Enfield will hire its own dealers instead of distributors. Despite export volumes halving in April, the company expects to beat the market in terms of international business growth and is betting on the segment doing well in key markets abroad as well as at home.

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Meanwhile, Eicher’s commercial vehicle business, VE Commercial Vehicles, also reported its highest-ever quarterly revenue from operations at ₹6,200 crores for Q4FY23, a growth of nearly 44% compared to the same period in the previous fiscal year, when revenue was at ₹4,307 crores. VECV’s EBITDA grew by 114.7%, from ₹288 crores to ₹619 crores during the same period.

VECV sold 26,376 units in the quarter-ended March 31, up 31.3% compared to 20,093 units sold during the same period last year.