Royal Enfield mantra for overseas motorcycle retail, Auto News, ET Auto

New Delhi: As Royal Enfield begins to spread its global presence, the growth mantra is quite simple and devoid of too many complexities.

“Very simplistically, we divide our export markets into two. One is the richer countries such as the US, Europe, Australia, Japan, New Zealand and Korea, where the markets are there. They are not growing, maybe even declining, but affordability is very strong,” said Siddhartha Lal, Managing Director and Chief Executive Officer of Eicher Motors, the parent company of Royal Enfield.

These remarks were part of the Q&A session with analysts held on May 11 following the Q4 FY24 results. As Lal said, even though growth was slowing in some of these countries, the conclusion of was that their residents still had enough disposable income to purchase a medium-sized motorcycle.

“If people like something, they’ll pick it up. I mean if it’s $5,000, $6,000, $7,000, that’s not a problem. The offer is great. The bike is relatively affordable for these guys and an absolutely amazing value. Our recall is very strong in these markets,” he said.

Simply put, this group represents a set of markets where there is not huge growth but still offers enough potential for Royal Enfield, although this is “in the market spectrum rather than market growth as such”. Needless to add, these markets are also very important from the point of view of profitability.

Smaller indies

Then come the high-potential markets of Latin America and Southeast Asia, where there is an opportunity to create “mini Indias.” Lal said this will be the guiding lever in these countries, having absorbed some important lessons in recent years.

“We’re focusing on some of them to really dig deeper, to make it an India-like idea for us. So we are in a virtuous cycle in India where we have strong distribution, strong demand, strong residual value, strong service network, great brand recall and again promoting all these things. The more demand comes in and then it’s a virtuous cycle, which is what we’re trying to do in some of the markets in South America and Southeast Asia,” he said.

From the company’s point of view, they are similar to new domestic markets in terms of creating a similar infrastructure, be it distribution areas or dealers. “We might even have our own store from time to time, but it’s actually getting into some of these markets where we see long-term potential over the next 5, 10, 15 years,” he explained. This would ideally translate into solid growth and emergence as a major motorcycle player in these countries.

B Govindarajan, CEO of Royal Enfield, added that ultimately people should enjoy owning and riding the company’s bikes. “In a situation where the macro economy is not so good, it’s not the time to go and actually look at expansion in an aggressive way. We are an aggressive long-term company and we don’t do anything short-term,” he explained.

Riding community

The need of the hour in the international markets was to have our own subsidiaries along with a team on the ground constantly looking at market growth, brand building and community building along with creating races “where we can be a part of the community them and let’s ride motorbikes”.

Currently, the world is still volatile, with geopolitical tensions lingering in the form of two wars raging in Europe and West Asia with no signs of ending anytime soon. A number of countries are also holding elections this year, meaning new leaders could review trade policies.

Big nations like the US and Europe are already turning protectionist when it comes to imports of electric cars made in China. “When the market opens up, you will see Royal Enfield riding the wave in the international market. I see some good green shoots now,” said Govindarajan.

Lal reiterated that FY24 was “absolutely stellar” for the company, which went from strength to strength every quarter and broke new milestones in commercial and financial performance. “In terms of product development and production and quality, we have continued to push the boundaries and are now absolutely among the best in the world. This is evident from the fact that we have the best cruiser in the world and possibly the best adventure bikes in the world,” he said.

Extreme focus

In his view, Royal Enfield’s performance and success last year was “extraordinarily special” as it achieved all this in the light of a new wave of competition. “It’s about our dedication to premium motorcycling with extreme focus and of course the belief that our products are one step ahead,” added Lal.

The bright side is that even though the product cycle is four to five years from conceptualization to finally hitting the road, the company has always been one step ahead of the competition and even when new rivals were coming. “We have already anticipated. consumer demand more than the competition and was ahead of the curve,” he said.

At the end of the day, it was the whole holistic consumer experience that mattered and that is what we are ‘obsessed’ at Royal Enfield and something that everyone in the ecosystem thinks about on a daily basis. “More than competition, more than investors, more than anything else, we think about our consumers and we’re on the bikes, riding and understanding the future bikes, competition bikes and e-bikes,” said Lal.

As he said, the entire Royal Enfield team is absolutely obsessed and focused on that level of consumer experience. Beyond that, it’s about getting a better understanding of their pains, joys, and what will motivate them. “And that’s the difference. It’s a holistic and truly detailed experience that we provide to our consumers. And we continue to remain very focused on doing just that,” Lal signed off.