Royal Enfield To Set Up New Assembly Plants, Consolidate Revenue From Exports

Royal Enfield is increasingly looking towards cementing the brand's position as a leader in the global mid-size motorcycle segment. To make the Indian motorcycle marque a global brand, parent company Eicher Motors is looking to expand its dealership and assembly footprint across the world with a concentrated focus on South East Asia and Latin America. The company's first assembly plant outside India, in Thailand, is expected to be fully operational in the next six months, and Royal Enfield is also exploring opportunities of setting up another assembly facility for the Latin American market.

Royal Enfield's apparel and accessories division is headed by Puneet Sood

Under the company's new vision RE 2.0 strategy, Royal Enfield Chief Executive Officer Vinod Dasari expects international markets to contribute 20 per cent of total revenue. Another 20 per cent of Royal Enfield's revenue is expected from apparel, accessories and other services, and 60 per cent from the domestic market. In an interview to The Economic Times, RE CEO Vinod Dasari said this distribution of revenue is an attempt to spread risk and eye new business avenues to grow business.

The Royal Enfield Classic 350 is the brand's largest-selling model

Currently, more than 90 per cent of Royal Enfield's sales are from India by selling one type of motorcycle, Dasari said, alluding to the bestselling Royal Enfield 350 model, adding that the emphasis going forward will be on diversifying revenue base and tapping into new opportunities.

"We will continue to bring in many new products. But I want to have faster growth on solutions and I want to have faster growth internationally. So, we're going to invest a lot in both these things," the Royal Enfield CEO is quoted as having told Economic Times.

The Royal Enfield 650 Twins are the brand's mainstay in export markets

Under the new strategic vision, Royal Enfield has classified global markets into three categories - India-like markets, mature markets and long-shot markets - and devised strategies that cater specifically to each category in terms of products, sales and business models. The company intends to launch one new product, including variants, every quarter for the coming three to four years.

The brand has already gathered momentum in international markets with the new 650 Twins - the Royal Enfield Interceptor 650, and the Royal Enfield Continental GT 650. In July this year, Royal Enfield's exports crossed 5,000 units, and in October 2019, Royal Enfield's exports grew by a massive 987 per cent, compared to October 2018, although volumes of 4,426 units are still miniscule compared to over 70,000 units sold in the domestic market in the same month.

The Royal Enfield Interceptor 650 has established the brand's credentials as a manufacturer of modern and efficient motorcycles

In fact, exports in the first eight months of the current financial year (April - November, 2019) have grown 125 per cent to 26,621 units. But slowly and certainly, Royal Enfield is looking at overseas markets with a decided push, expanding its global presence to 600 stores over the past five years, as compared to a dealership footprint of 900 stores across India.

Almost half of the 650 cc models are now shipped abroad and share of exports to the brand's overall business has increased to 5.51 per cent from 2.06 per cent in the April to November period. But with the brand's strategic vision of establishing itself as a leader in the global mid-size market, the challenge will be to increase the revenue from exports, something which Royal Enfield seems to be taking very seriously with its RE 2.0 vision.

Interview Source: The Economic Times