ROYAL ENFIELD Archives

RE factory at Oragadam, Chennai Royal Enfield, the country's biggest maker of premium motorcycles, is unlikely to offer last minute, stock-clearance discounts as part of the BS-VI transition, given that strong festival sales helped clear out much of its inventory. According to company officials, the festival sales this year have been so strong that they have effectively cleared out any build-up seen in bike stocks in the last several months. Like other automobile manufacturers, Royal Enfield -- which makes bikes such as Bullet, Classic and Thunderbird -- too saw a sharp decline in sales in the last 4 months or so due to an overall slowdown in the economy. For July-September, the company's total sales fell 22% compared to the same period last year. The industry-wide slowdown, coupled with the natural pressures and challenges of matching production and demand down to the last bike, had led to hopes that automakers would offer attractive discounts over the next couple of months to clear out their inventory. According to data for last month, the company's India sales declined by around 4% to 67,538, even as new entrant Mahindra & Mahindra ramped up deliveries of its Jawa-branded motorcycles. However, said Siddhartha Lal - MD of Eicher Motors - strong sales during the rest of the festival season has helped bring down stocks, and from now on, his company will ensure that production and demand go hand-in-hand to avoid a year-end pile-up. For the festival season as a whole, the company has witnessed double-digit growth in sales this year, Lal said. "It is our highest ever...our best ever...Inventory is very very low," he told analysts. Including the stocks at dealers, company go-downs and in transit, total inventory is less than three weeks of sales, he said. "In the last week of October, there were many stores in Bombay and Delhi which were stock-outs and we got desperate calls from dealers for more stocks. "The retail and the wholesale are going to follow each other as we move towards BSVI, because we don’t want any kind of a buildup, anywhere." MORE STUDIO STORES COMING UP Company officials also said that Royal Enfield will also open more 'studio stores' in the coming months. The company started rolling out the new format stores around July, hitting the 250 mark by the end of August. As of mid-October, the company reported around 500 such stores, taking the total retail outlets in India to around 1,400. Studio stores are smaller in size compared to full-fledged dealerships, and are generally opened by an existing dealer in a nearby, smaller town. These stores are designed to break even at sales of around 8 bikes a month. "Right now, everybody is over that, but it’s too early," Lal said. In terms of customer response, he said, there was nothing doubtful about the model. "As pilots, we’ve been running these stores for more than a year now in some places. "The model is proven, the cost-structure, the investment pattern, everything is in place...Dealers are happy, we are happy, and customers are happy buying from these stores. So, we will add more stores," Lal said. The company, he said, plans to add 200-300 more such stores before the financial year is out. Part of the reason for the expansion would be to do with the launch of Jawa from Mahindra & Mahindra. Lal, however, maintained a confident tone, saying that RE is not overly worried about the challenge from the newcomer. Jawa bikes are priced in the Rs 1.5-1.75 lakh range -- which is also the sweetspot for RE bikes. They also cater to the retro market, where RE used to enjoy a market share of 90% or more. BULLET X One of the ways the company has responded to the challenge has been to launch two, lower-priced variants of its most popular models -- Bullet X and Classic S. The Bullet X will cost around Rs 20,000 less on road compared to the regular Bullet -- making it the cheapest offering from the company at about Rs 1.3 lakh -- while the Classic S costs Rs 12,000-13,000 less, at around Rs 1.65 lakh. The Rs 1.65 lakh mark is also Jawa's sweet-spot. The Classic S is still in the process of hitting the dealerships, while the Bullet X is available across the country. Lal said the idea behind launching Bullet X was not to simply offer a price cut. Instead, the model is expected to draw in price-sensitive customers, who can then be exposed to the full-range of options in the showroom. "We actually limited the Bullet X production, because it was a way to get the customer into our stores, and then given them all the options we can offer," officials told investors, adding that the product has met with an "extremely strong reception" in the company's traditional, core markets such as Kerala, Punjab and Delhi. "[The launch of Bullet X] is not just about price, but about giving lot more options and colors, and letting the customer choose what he wants the bike to look like," they said. RE Classic "Even with Classic, if he wants only single channel ABS, he gets it. If he wants different colors on it, change the fuel tank, he gets it." However, they pointed out, it is too early to judge the impact of Classic S. "Classic S is still [in] early days. The few towns that we’ve launched have clearly given us incremental volumes. So we’ll how pan-India works," Lal said. BSVI The company also said it was "fully ready" for the BSVI transition. After March 31, no auto dealer will be able to sell any automobile that is not certified under the new emission norms, which will require two-wheeler makers to use fuel-injection-enabled engines. Royal Enfield also said it has completed its previously announced factory expansion projects. Faced with a demand of around 90,000 bikes or so per month, the company had early last year announced an investment of Rs 800 cr to expand its Vallam Vadagal factory in Chennai. At the time, the company's production facilities were stretched to the breaking point, churning out around 78,000 bikes a month. The company said that expansion is now complete, but did not answer a question about how much the new production capacity is: "Suffice to say, if you order the bike, you'll get the bike very very soon!"

Tag: ROYAL ENFIELD

BS-VI Transition: Last-minute discounts on Royal Enfield bikes unlikely

Royal Enfield sales down 22% in July-September

Hero MotoCorp, Tata Motors, Royal Enfield posts sharp falls in August auto sales

Royal Enfield waiting period down to zero as Jawa readies to vroom

Mahindra Jawa sold out till September, launch “soon”

Royal Enfield to set up new production unit near Chennai at Rs 800 cr

Royal Enfield sales up 31% in January, led by lighter models

Royal Enfield targets “a new era” with new 650 cc models

Royal Enfield Bullet sales up 18% in October 2017

Royal Enfield August sales grow 32%, sells 55,721 units

Royal Enfield production disrupted for 14 days by Chennai floods

Royal Enfield expands to North America, to set up showrooms across US

Royal Enfield Bullet sales jump 50% in June