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Sales of Royal Enfield have seen an average annual growth of over 34% in the past decade. (MINT_PRINT)
Sales of Royal Enfield have seen an average annual growth of over 34% in the past decade. (MINT_PRINT)

Enfield glides as rivals join race

  • The company will continue to grow its sales volume over the near- to mid-term, exploiting younger demography, high disposable incomes and evolving consumer preference towards heavier motorcycles, say analysts

Eicher Motors Ltd-owned Royal Enfield will continue to retain its pole position in India’s market for retro-style mid-sized motorcycles despite a flurry of challenges from rivals Honda Motor Co. and Jawa Motorcycles, said analysts.

At best, the new entrants will be successful in chipping away at Royal Enfield’s commanding over 90% market share of the domestic market for mid-size motorcycles. However, the New Delhi-based company will continue to grow its sales volume over the near- to mid-term, exploiting younger demography, high disposable incomes and evolving consumer preference towards heavier motorcycles, according to the analysts.

“It’s not that India’s mid-size motorcycle segment did not see the entry of new brands with new models in the past. But not one brand has been a direct rival to erode Royal Enfield’s market share," said a Mumbai-based auto analyst, requesting anonymity.

Last month, Honda, India’s second-largest two-wheeler maker, launched its first 350cc retro-styled motorcycle, CB350, in its first-ever direct competition with Royal Enfield best-sellers like Classic and Bullet models.

Honda, which is offering the CB350 in two variants costing 1.85 lakh and 1.90 lakh, is expected to launch more mid-sized motorcycles next year. Meanwhile, Bajaj Auto and Triumph Motorcycles signed a non-equity partnership earlier this year to produce and sell midsize Triumph branded bikes from 2022. With a starting price range of sub 2 lakh, the upcoming models are expected to be the most affordable Triumphs ever..

Sales of Royal Enfield motorcycles have recorded an average annual growth rate of more than 34% in the past decade, strongly retaining its leadership position. Sales grew from 42,538 units in FY09 to an all-time high at 805,000 units in FY19.

Motorcycles in the mid-size segment are powered with 250cc–800cc engines. The segment saw a rapid rise in sales in the past decade as more owners of India’s vast pool of 100cc-150cc bikes chose to upgrade to the premium segment. “While new entrants grew the overall segment, the new model launches focused more on performance over leisure motorcycling. Hence, they did not directly compete with the Royal Enfields. However, with Honda launching its CB350 and Jawa ramping up its production, Royal Enfield will definitely lose some market share in the classic and retro motorcycle space. But we expect that the company will still see double-digit growth over the next few years," the analyst cited above said, adding that Eicher has prepared an extensive product pipeline to ensure volume growth.

Royal Enfield’s chief executive Vinod Dasari told reporters recently that the company will be launching one new model every quarter over the next few years. The company recently launched the Meteor 350 model in a price range of 1.81 lakh to 1.90 lakh. According to analysts, it may be still early, but the initial feedback of Meteor has been positive, and the bike is likely to give a stiff challenge to Honda’s CB350.

“Eicher operates in a segment that has significant brand loyalty and price inelasticity, and competition in the segment is not driven by pricing. A company like Hero MotoCorp or Honda will find it very difficult to invade Eicher’s turf if they use the same mass-market brand," said Md Shaukat Ali of Quantum Securities.

Meanwhile, addressing its long-pending supply chain challenges, Classic Legends Pvt. Ltd, which owns Jawa, is also ramping up production to trim the customer waiting list. Last week, Jawa said it delivered more than 50,000 bikes in the past year.


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