Royal Enfield, the motorcycle business arm of Eicher Motors, is seeing good traction in its international business but believes it is important to be circumspect since many markets are going through regulatory transitions.
The company made these observations at a recent conference call following its second quarter results. The entire transcript has been uploaded on the Eicher Motors website. As B Govindarajan, CEO of Royal Enfield said, Europe is going to be “very different” because of the OBD2 (onboard diagnostics) situation concerning emission control systems.
Royal Enfield expects a lot of pre-bookings and pre-registrations to take place as a result. “So, we are very cautious about those inventory buildup…there should be no inventory, it should be a pull. Market level, product level, the mix which we are trying to do…and then see what sort of a marketing initiative which has to happen,” he added.
Latin America also has “some weaknesses” in Argentina and Colombia due to a host of “issues which are going around” and the region is not so positive as a result. The company does not see it as a “very jubilant” market and is of the view that it needs to stabilise first.
New plant in Brazil
Brazil has a quota issue which will be addressed by Royal Enfield with a second CKD (completely knocked down) plant that will be ready in by December. “We are opening up the retail outlet also and that is going to give growth, because as a company we are very touchy about our ecosystem’s profitability for the long term,” said Govindarajan.
The company will go for expansion of the retail outlets in the Brazil market. “The products are also very well accepted. Himalayan just got launched and it is getting accepted, it is a market for those sorts of products,” he added.
Royal Enfield has been managing Mexico from its North America operations but looking at the region’s growth pattern and potential will be moving a team exclusively to focus on this market. “You will see the results coming out of it (Mexico) in time to come,” he said.
New Zealand and other markets are not “very high” but Australia is “very good” with the green shoots clearly visible. “So, the acceptance and the product…there is a bit of a velocity which is taking place in the market and that is a good sign,” added Govindarajan.
As for South Asia, Royal Enfield is already in Nepal and entered Bangladesh more recently. “I can happily say that there is a huge booking backlog at Bangladesh which is a very positive surprise for us,” he said.
No sudden shocks
The company does not see “a major jerk” happening in international markets like Europe and is hopeful that growth will gradually increase. Even while could be “a blip” in a few quarters, the positive trend will continue.
According to Govindarajan, Royal Enfield has has a “very busy and exciting Q2” where it sold almost 225,000 motorcycles of which India accounted for almost 2.06 lakh units. The company was able to achieve a “very special milestone” in October when it reported sales of over one lakh units. “This is a testament that our existing and new motorcycles continue to perform very well,” he added.
Some of the new launches included the Guerrilla 450 Roadster on the Sherpa 450 platform. “It is an amazing motorcycle, and we believe it is the best in the category. We have received a great reception from riding enthusiasts across the world, said Govindarajan.
August saw the launch of the 2024 Classic 350 with upgraded features where, once again, the response has been “overwhelming”. Rural demand in India has been going up while the urban growth rate is “slightly lower”, a trend that is evident in the company’s motorcycle sales.
Urban, rural demand
“But now, there are some products which are urban-centric too like say, Guerrilla 450. We are picking up those areas where it has a higher traction and are going to work on it during these two quarters because it is a new brand, new product,” said Govindarajan.
Himalayan, likewise, is doing better in urban markets while Bullet and Classic have good traction in rural areas. “Hunter used to be very high in the urban market, now I am seeing there is a traction which is coming up in the rural market. So, product-to-product it varies,” he explained.
The leadership team also observed that the heartland of the Bullet market, especially Punjab, Chandigarh, Uttar Pradesh and Haryana, gave the bike a cold shoulder when it was launched with the J platform engine. “With the market feedback we got, we also brought one more product which is Battalion Black,” said Govindarajan.
According to him, Royal Enfield was quick to accept the fact that product intervention was required at the earliest. Normally, this takes a longer period of time but the Bullet “dependency” on a few markets was very high: one to the consumer and the other towards dealer viability.
“When the dealers spoke to me, we sent a team there and understood that there are some things on the Bullet, a few features, which they really felt is what they can relate to as a Bullet,” he continued. These included a bench seat and a rear shrouded tail lamp holder which are “major things” for the rider.
Arresting Bullet decline
“We started losing business because consumers were not taking a decision to buy and dealers were having a huge pressure on their profitability,” said Govindarajan. With the Bullet decline now arrested because of timely intervention, Royal Enfield is hopeful that it will now gain greater acceptance among its loyal buyer base.
Meanwhile, EICMA, the Milan motorcycle show, had the Bear 650 and Classic 650 making their debut at the Royal Enfield pavilion. The Bear 650 “perfectly combines” authentic scrambler styling with versatility and agility. Based on the Interceptor 650 platform, it has been launched in the US, India and Europe.
The new Classic 650 offers riders a “powerful new blend of old school aesthetics and effortless power delivery”. The bike has been launched in the UK and Europe with India to follow early next year.
EICMA also saw Royal Enfield showcase its all-new electric motorcycle brand, the Flying Flea and its first electric motorcycle, the FF C6. The Scrambler style FF S6 will be coming later and the company is gearing up for the launch in early 2026.
Gearing up for electric
“We are approaching EVs with the same singularity, focus and unconventionality with which we have grown the global midsize market in the ICE world. We have made huge investments in growing our capabilities and capacities in the EV world,” said Govindarajan.
Right now, there is a 200 plus “strong and competent” EV team dedicatedly working for design, engineering etc. “We have already filed almost 28 patents in the EV world. Flying Flea will house our electric mobility ideas and is a blend of heritage and modern tech,” he added.
Terming the Bear 650 “an outstanding product”, Govindarajan said it was meant for the rider who wants to have his own path and space. Classic, on the other hand, is in high demand as a brand and consumers from India and overseas have been asking for a 650. “Both the products have come in and are answering that call,” he said.
