When Siddhartha Lal took over as the Chief Executive of Royal Enfield in 2000, as a young 26-year-old, it was seen as a decision by his father, the venerable Delhi industrialist Vikram Lal as a chance to get his son to learn the ropes at a small and inconsequential part of the larger Eicher Group. The Royal Enfield Bullet did have a loyal following back then but was seen as an anachronism, a remnant of India’s colonial past, much like the Hindustan Ambassador. The younger Lal, despite his formidable educational qualifications, was seen as most scions of large industrial groups — another spoiled son.
The story of what the younger Lal has done in the two decades since is legend, and will fill up the pages of business school case study books for years to come. It is also one of modern India’s best examples of how a family business was not only brought back from the brink but made into a global leader. It is a story that has been told and retold many times, but one that could do with yet another retelling.
The zeal to innovate
It began, according to Aspi Bhatena, the Editor of Bike Magazine India, around 2009. “They had just launched their Unit Construction Engine (UCE) and Sid asked me for feedback. And he wanted honest feedback, and I gave it to him, the mistakes they had made, and the changes they should have made. Siddhartha told me that ‘they’ (the company’s old guard) won’t let me make the changes I want, but I will do something. I think that is when he decided to set up their new technical centre in the United Kingdom.’
Ask anyone in the motorcycling community and they will admit that a lot of Royal Enfield’s renaissance is due to the products that have been developed at this new centre in Leicestershire. But as Bertrand D’souza, Editor, Overdrive magazine and Chairman, Indian Motorcycle Of The Year (IMOTY) jury said, “They have not built their brand around technology, they have built their brand around passion. It is not that they make bad motorcycles, they make very good motorcycles. After all, Royal Enfield products have won three of the last five IMOTY awards, but the level of engagement that they drive with their community is incredible.” That is evident with the Royal Enfield ‘Rider Mania’ festival, an annual event hosted by the company in Goa, which is the most attended motorcycle festival in the world with nearly 54,000 footfalls over three days and nights.
While Siddhartha Lal, who now heads up Eicher Motors, the parent company of Royal Enfield, and resides in the UK was not available to comment, this writer spoke to B. Govindarajan, CEO, Royal Enfield to understand the comeback and going strong story of the middle-weight category leader.
Govindarajan argued that one key to the company’s success was its ability to provide “good quality at a good price, across different segments. Making sure that we can appeal to someone who wants a lighter, entry-level product like the ‘Hunter 350’ to replace your standard commuter or someone who wants something more for adventure, like the Himalayan. And another major reason is that, from Siddhartha downwards, we all ride motorcycles ourselves in the management. We relate to the community, because unless you understand the community, you can’t make the products they want. The brand belongs to the community.”
And how successful has this ‘understanding the consumer’ strategy been? In the financial year 2021-22, Royal Enfield sold 521,243 motorcycles in India, according to data released by the Society of Indian Automobile Manufacturers (SIAM). In the 2022-23 year that just ended, the company sold 734,840 motorcycles. That is a growth of 41 per cent, compared to the over all two-wheeler industry’s growth at a shade under 17 per cent last year. These are record numbers for the Chennai-based manufacturer and adding to the success was the 100,000 plus motorcycles the company exported.
Digging further down into the recently released numbers by SIAM, Royal Enfield wallops the competition in the 250-350cc segment with a 92 per cent market share. It also dominates the 350-500cc segment and the 500-650cc segments. It is no surprise then that in the past two weeks alone, both Hero MotoCorp, which partners American firm Harley-Davidson in India, and Bajaj Auto, which partners (and has a significant stake in) British two-wheeler maker Triumph, have announced plans to develop and produce ‘middleweight’ motorcycles in the 400-500cc engine categories within the next 12 months. Royal Enfield’s success has been so dramatic that Eicher Motors’ share price (adjusted for splits) has gone from around Rs 60 in January 2010 to Rs 3,200 today. No matter how you look at numbers, that is meteoric, and it isn’t surprising that Royal Enfield’s latest product is called the ‘Super Meteor’—the 650cc cruiser that was launched in January this year.
And if you thought that Royal Enfield’s success is because of a large market of men trying to ride out their mid-life crisis, according to Govinadarajan, that isn’t the case: “Five-six years ago, you could have said that our average customer was 45 plus. Today, with the introduction of products like the Hunter and Meteor, which we believe appeal to younger riders in their twenties, the average age for a Royal Enfield customer is around 36-37.”
And D’souza backs that up, saying “They have managed to build a community that spans everyone from 18-80, I genuinely do not know of many brands in any sphere that have pulled that off.” Of course, one aspect is true, that motorcycling remains for the large part, a largely male pursuit.
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The expansion gear
While competitors line-up to take on Royal Enfield, the company is not sitting idle. It has a whole host of new products lined up, including those with a new 450cc engine. And Govindarajan also talks about the company’s aggressive international expansion plans. “We are in nearly 60 countries today, and we have not gone down the distributorship route but have our own subsidiaries. We are available in almost 950 outlets globally, of which 190 are exclusive outlets. Like in India, we are understanding and building a community, we believe that there is a massive addressable market for our products at our price points across the world. We believe that there is an addressable export market for over a million units.” Several global celebrities such as The Tonight Show host and motorhead Jay Leno and comedian Dave Chapelle ride Royal Enfields. A marker of the brand the motorcycle maker has become overseas.
What is truly remarkable about Royal Enfield’s success is that no one really saw it coming, when they started to change their products. It was believed that it was a last-gasp as foreign motorcycle companies flooded the market. Yet, Royal Enfield did not just survive, it excelled. Govindarajan makes clear that the company is working towards the future as well. “I’m not saying that the combustion engine is going anywhere, but we are in the development phase for an electric vehicle as well. We have invested in an electric bike maker Stark Future, which is in the motocross space and are co-locating development work and technology transfer from them. Hopefully, we should have a product in the next couple of years.”
Given their success, one should not bet against them on this as well.
@kushanmitra is an automotive journalist based in New Delhi. Views are personal.
(Edited by Anurag Chaubey)