Royal Enfield will Focus on 200-650cc Bikes; No plans for High-end bikes

Iconic bike maker Royal Enfield is ruling the 300cc market for almost 5 decades, and it is still the biggest player in the segment. However, in past few years some new players like Harley-Davidson, Hyosung, Triumph, etc. stepped into this space and increased competition, though they are not in direct competition to the bike manufacturer. The Indian market showing a good demand for high-end bikes and Royal Enfield could acquire almost 90% of the Indian mid-size motorcycle market, but at present the company has decided to focus on motorcycles upto 650 cc displacement range. The company has commenced production at its brand new plant in Oragadam near Chennai, which will manufacture 1.5 lakh motorcycles annually.

"We have thought about a higher displacement cruiser bike but it's a no for the five year horizon," said Siddhartha Lal, MD & CEO, Eicher Motors, the parent company of Royal Enfield. He described that the mid-size market has enough potential for him to scale up without getting into what's traditionally been the happy hunting ground for American and European lifestyle bike brands. "Globally the mid-size market is under-served and if we can replicate the Indian success story in 5 or 10 other markets, that's good enough for us," he said.

Royal Enfield bikes are very popular not only in India but in the European and other international markets as well. Thus, the 1.7 million units global mid-size market has a huge potential for the heritage bike maker, which is currently dominated by the likes of Honda, Triumph, Ducati and Harley Davidson. Most of these brands focus on higher-end, faster and bigger bikes whereas the Royal Enfield range keeps smaller displacement motors "that allows more interaction with the terrain and offers purer biking," said Lal. "We don't want to dilute this focus."

RE's new facility in Oragadam - which will take its total production capacity to 1.7 lakh units by the year-end will increase its production by 55% over 113,000 units clocked last year. RE is further planning to scale up it to hit a peak capacity of 500,000 units to fulfill the demand of domestic market and larger its geographical spread in terms of exports. Already the second phase has been initiated so production can hit 250,000 units in 2014. "We were taken aback by how quickly demand scaled up and when the new capacity comes on stream the waiting period on the bikes in India should come down from 8 months to 6," said Lal.

Source: Times of India