Home >Companies >News >Motorcycle makers go full-throttle on premium segment

Motorcycle makers in India are lining up new product launches in the 300cc-600cc engine category on expectations of a strong recovery, in line with the revival of the Indian economy from the ravages of the coronavirus pandemic. Companies are also encouraged as the so-called middle-weight segment generates comparatively more profit margins than entry-level motorcycles.

Royal Enfield, which leads the segment, will introduce a slew of products later this fiscal year in a bid to consolidate its position amid intensifying competition. Rival, Bajaj Auto Ltd has collaborated with Britain’s Triumph motorcycles, while Japan’s Honda Motor Co. has created a separate division for its premium motorcycle business in India.

The recent success of Royal Enfield’s 650 Twin motorcycles has further emboldened existing and prospective entrants. “Around 45% or about half of all customers of the 650 Twins are new to Royal Enfield. The remaining are the ones who have upgraded from their existing Royal Enfield motorcycles," said Lalit Malik, chief commercial officer, in a post-earnings conference call on Friday.

The company had launched its twin-cylinder, 650cc motorcycles in FY19, with the intent to grow exports in developed and emerging markets. According to the data from the Society of Indian Automobile Manufacturers (Siam), Royal Enfield sold a total of 20,188 units of its 650 Twins in FY20, up from 5,168 units in FY19.

Last year, Honda Motorcycles and Scooters India Pvt. Ltd (HMSI) created the new division for its premium motorcycle business that will be recognized as an independent division, separate from the one that deals with the company’s mass-market products. HMSI is also gearing up to open separate dealerships for its premium offerings.

Y. S. Guleria, director, sales and marketing, HMSI, said plans related to the premium motorcycle business will be implemented as planned, but with a slight delay.

“We are working with our purchase and research and development team to minimize the impact. We are working with a long-term perspective in mind and will not derail any of the plans due to the short-term impact of covid-19. In the middle-weight category there is a scope for volumes as well," added Guleria.

With the middleweight category commanding more margins compared to lower-priced motorcycles, companies are lining up investments to grab market share. For instance, Eicher Motors, which owns Royal Enfield, once used to report operating margins of more than 30% before sales fell in the last two years due to limited product portfolio in a competitive market and a slowing economy.

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