Eicher Motors Net Profit Drops 40% In Q2 2020-21

Eicher Motors Limited, the parent company of Royal Enfield, reported a sharp decline in profits in the July to September quarter, as sales remain under pressure. Eicher, which also makes commercial vehicles in a joint venture with Volvo, reported a 40.13 per cent year-on-year decline in net profit to Rs. 343 crore in the second quarter of the current financial year. A year ago, Eicher had reported net profit of Rs. 573 crore in the same period. The company's total revenue from operations was recorded at Rs. 2,134 crore, down by 3 per cent, compared to Rs. 2,192 crore in the corresponding quarter of FY 2019-10.

Also Read: Royal Enfield Sales Down 7 Per Cent In October 2020

The Royal Enfield Classic 350 contributes to over 80 per cent of the brand's motorcycle sales

Earnings before interest, tax, depreciation and amortisation (EBITDA), a measure of operational profitability, fell 13 per cent to Rs. 472 crore. Royal Enfield motorcycle sales during the period stood at 1,49,120 units, a decline of 9 per cent from the 1,63,390 motorcycles sold over the same period in FY 2019-20. In October 2020, Royal Enfield sold 66,891 motorycles, which has seen a gradual recovery since the lockdown and negative market sentiment over the past several months. Monthly sales are still down compared to last year, and with the ongoing festive season, as well as brand new model launch in the Royal Enfield Meteor 350, Eicher Motors will be looking to ramp up some sales in November as well.

Also Read: Royal Enfield Meteor 350 Review

The Royal Enfield Meteor 350 is the brand's newest model, based on an all-new 350 cc platform

Commenting on Eicher Motors' performance, Siddhartha Lal, Managing Director of Eicher Motors Ltd, said, "This quarter, we witnessed healthy demand and pick-up in business activities in the automotive industry. It has been encouraging for our motorcycle business at Royal Enfield as we have seen increased revival in consumer sentiment and demand. We have a robust order book and booking numbers are ahead of pre-COVID levels. We are working to ensure sustainable volumes in the forthcoming quarters.

Also Read: Royal Enfield Introduces 'Make It Your Own' Motorcycle Personalisation Program

Siddhartha Lal, MD, Eicher Motors Limited, riding the new RE Meteor 350

"We are very excited to have launched the Royal Enfield Meteor 350 earlier this month. The Meteor 350 takes our cruising legacy to the next level from the Thunderbird, and is a gorgeous, accessible and easy cruiser. Initial response from consumers as well as from automobile experts has been very good. We are confident that the Meteor 350 will redefine the highway cruising space in India and globally. In the commercial vehicles industry, the sentiments are improving with a gradual pick-up in the demand from certain sectors. At VECV, we continue to remain focused on our long term objectives, including driving modernization in commercial vehicles. We are happy to have achieved the milestone of being the first and only commercial vehicles company to have introduced 100% connected trucks and buses through advanced telematics."

Also Read: Royal Enfield Sets Up First Overseas Assembly Plant In Argentina

Royal Enfield CEO Vinod Dasari with the new Royal Enfield Meteor 350

Speaking on Royal Enfield's performance, Vinod K. Dasari, CEO, Royal Enfield said, "At Royal Enfield, consumer demand and our order books have been growing consistently since June this year, and we are happy to report that we are ahead of pre-COVID levels of bookings. We have been working consistently towards enhancing and improving the purchase and ownership experience of customers. We recently launched the Royal Enfield Meteor 350 along with Make It Yours - a first-of-its-kind initiative in the two-wheeler industry which allows buyers to personalise, accessorise and configure a motorcycle at booking stage itself. MiY is now available on the Meteor 350 as well as on the 650 Twin motorcycles. We are very proud to be the first Indian motorcycle manufacturer to offer such a wide choice of personalisation options to consumers. Innovative initiatives such as Service on Wheels and Home test rides have received encouraging response from customers. We have also expanded our network during the quarter, by adding 25 new stores and 133 studio stores across India, and 6 new exclusive stores in International markets."

The Indian auto industry has been facing the heat of the worst slowdown in over two decades, even before the COVID-19 pandemic struck. With the lockdown enforced in India, auto manufacturers were forced to halt operations, leading to a washout in production sales in the first few months of the current financial year. Sales have gradually begun picking up after the country restarted most activities to revive an economy that has already been under pressure, and heading towards one of the worst slowdowns. The ongoing festive season will bring some hope and respite to auto manufacturers while they push inventory to dealers in a period which has traditionally seen the highest sales numbers.