Royal Enfield's new CEO Vinod Dasari has said that the worse of the current slowdown in the auto industry is over, and he expects sales volumes of Royal Enfield motorcycles to accelerate from now on, possibly in double digits. The Royal Enfield CEO was speaking to the Economic Times in an interview, and the record retail sales in October 2019 has given him the confidence to look ahead with optimism. The turnaround in October came after sales declined in double digits this year. In July this year, Royal Enfield's monthly sales fell below 50,000 for the first time in three years, with 49,182 units, a massive drop of 27 per cent over sales in July 2018. In August too, sales of Royal Enfield again fell 24 per cent.
Now, Royal Enfield CEO Vinod Dasari says the brand will get back to double-digit growth led by sustained product action and increasing reach, both locally and internationally. Buoyed by the demand pick up in the domestic market, as well as increasing exports, the CEO seems pretty confident that Royal Enfield will bounce back to double-digit growth soon. But there's also a pertinent mention of new products, possibly a brand new 350 cc platform, as well as other products, including an updated Himalayan.
"I think we have hit the bottom. Given the range of products that will come, it (a double-digit growth rate) is possible. The general economic sentiment has also got to improve," Dasari is quoted as saying in the interview. "High-end vehicles get hit much worse during downturns. But the minute the sentiment improves, the fastest growing segment will also be this."
In fact, apart from positive retail sales in October 2019, Royal Enfield's exports grew by a massive 987 per cent, although volumes are still miniscule compared to domestic market sales. In July 2019, Royal Enfield's exports crossed 5,000, and in October too, overall exports, led by the new 650 Twins, stood at 4,426 units. In March this year, Royal Enfield set up its first assembly plant outside India, in Thailand, and there are plans not just to set up more assembly plants around the world, but also to kickstart an electric motorcycle program, if it's already not in place, and to focus on building existing capability.
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"Just because there was a downturn, we did not cut down on our capex. I don't think we'll spend any more on any large (facility). Most of our capex will go into capability building, new products, electric and other stuff. And it will also go into many small assembly plants around the world," Dasari is quoted as saying.
Royal Enfield has come with a new strategic vision called Royal Enfield 2.0, which will largely focus on four broad areas - expanding product range, geographical reach, solution selling and leveraging digital platform to build a 'global consumer brand from India'. And increasing reach will not just mean new global markets, but also across Tier II and Tier III cities in India, where Royal Enfield has shown tremendous growth in the last few years. Along with that, the immediate future will most likely see new and more improved motorcycles, possibly even an all-new 350 cc engine platform, as well as a fully-updated Himalayan, and more models under the 650 cc platform to take on the global mid-size motorcycle market.