You know, when you have ninety per cent market share, there is really only one way for it to go. So I will not lose sleep over losing some market share, says a rather sanguine Siddhartha Lal, managing director, Eicher Motors, as he talks about his first love motorcycles and his ‘company’ Royal Enfield.
The maker of premium mid-size motorcycles (between 350-650cc engine capacity) readies to give their iconic ‘Bullet’ brand a rebirth at their state-of-the-art factory at Vallam Vadagal, which incidentally is one of the most sustainable automotive plants in India and also has women contributing 14 per cent of the workforce (with a thirty per cent target by 2030). And the market share comment? Well, that was because in the past few months both Hero MotoCorp (with American brand Harley Davidson) and Bajaj Auto (with British brand Triumph), two of the largest players in the commuter motorcycle space in India, have launched competitors to Royal Enfield products.
You know the story by now, I wrote about it a few months ago right here. Long story short, long-haired scion of a Delhi industrial family, and one of the city’s most eligible bachelors at the time, is sent to Chennai to try and revive a small itsy-bitsy subsidiary that makes about 40-45 thousand motorcycles a year. Few expect him to succeed, but a little under thirty years later, Royal Enfield is poised to cross the million mark in sales this year. However, since Siddhartha Lal lives in London, it is a rare opportunity to meet him and get his thoughts on the market.
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The mid segment market potential
And he is quite clear, there is new competition, but he genuinely expects the market to grow. “The addressable market is a million units in India right now, but had we not survived or even existed for that matter, would the market have been as big as it has become?”, he tells me.
“Even in global markets where we now operate, the ‘mid-size’ motorcycle market was very limited, because there were just no products there. Sure, a big, heavy cruiser is great but when it rolls over, do you want to put out your back picking it up?” he adds. The example of the Himalayan was cited, when it was built it was a whole new segment for Royal Enfield, but also for the motorcycle market as there were no other ‘affordable’ adventure tourers. Far from being worried about potential new competition from the likes of Harley and Triumph, in India and abroad, he is waiting for the competition.
One reason Lal is not worried is the massive new Product Development center attached to Royal Enfield’s global headquarters located in suburban Chennai’s Sholinganallur district. It takes years to develop a motorcycle and to develop good, clean engines. The 450 designers and engineers here coupled with another 150 located in Bruntingthorpe in the United Kingdom, are developing products not just for India but for the world. It was not surprising therefore to see automotive media from Australia, Japan, Korea, Thailand, and the UK at the Bullet relaunch. The competition might be bringing the fight to Lal’s home, but he is also taking the fight to them by going to new markets across the world, with over 12 per cent of sales last year coming from exports.
And that is not the only way Royal Enfield is girding up for the competition. The Bullet has returned in a new avatar. Lal himself says, “Bullet is Royal Enfield and Royal Enfield is Bullet, it is our True North” is just the start. The new Bullet mixes modernity, featuring the J-series engine, the staple new Royal Enfield single-cylinder unit and a reworked chassis, but retaining the classic proportions and the iconic ‘thump’.
Say what you will about the thump, the sound of the cylinder moving up and down the air-cooled unit, if you were a child in the 1980s and 1990s in India sitting on the fuel tank of the bullet, that dug dug and the sensation are your memories. But there is also a new Himalayan on the cards, and four other motorcycles in the next year. And while the apparel business might be a small part of Royal Enfield revenues, they appeal to riders and non-riders both and help spread the brand message.
There are also products like the new Hunter, whose success has even taken Lal by surprise. “In one year since we launched it, we have already sold over 200,000 of them. They have attracted a much younger buyer to the brand because it looks more contemporary and importantly many of these buyers are first-time motorcycle buyers. They are buying the Hunter instead of a 200-250cc motorcycle,” he says. Far from trying to grab a slice of his pie, Lal is going after the lunch of the likes of Hero and Bajaj.
But over a formal interaction with the media, the conversation rapidly shifts to electric vehicles. Yes, the company is working on an electric vehicle, Lal confirms. Indeed, at the product development center and at the new factory, space has already been earmarked for the EV. It has even moved beyond the ‘prototype’ stage and Lal confirms that he has ridden it as well. But possibly because Royal Enfield enjoys such high margins and is one of the most profitable companies around, he states that “Royal Enfield will not launch an electric vehicle for the sake of launching an electric vehicle, because an electric motorcycle has to be enjoyable and frankly I don’t see anybody who has managed to crack that as yet”.
While electric two-wheelers are making a mark, most of them are scooters which are relatively easier to package a battery pack into. The challenges of putting a large, heavy battery where fuel tank and engine on a motorcycle currently exist poses issues around weight and balance.
“We have some of our best and brightest working on it, and we should be able to figure it out”, Lal says, smiling, while refusing to give a timeline. But one thing he did confirm: the electric motorcycle will not have a thump. “You can put out anything through the speakers (he hints at several electric cars that have fake engine noise pumped through speakers), but a fake ‘thump’, that would be like cheating.”
@kushanmitra is an automotive journalist based in New Delhi. Views are personal.
(Edited by Anurag Chaubey)