Royal Enfield eyes global markets for growth

Royal Enfield, a part of Eicher Motors, is eyeing various global markets, including Latin America and South East Asia to grow its international business, as it aims to become a significant player in the mid-sized motorcycle segment in the world.
     
Royal Enfield, which expanded its motorcycle range in the country with the launch of 535 cc Continental GT, said the model has given it confidence and belief to do well in the global markets.
     
"We believe the mid-sized motorcycle segment is between 250 cc and 750 cc, so that's the space we want to play in as Royal Enfield. We believe that this market is totally under-served," Eicher Motors MD and CEO Siddhartha Lal told PTI.
     
There is traction in this segment and it is open for growth in all the developing markets-Latin America, South East Asia in particular and other markets as well, he added.
     
Globally, the mid-sized motorcycle segment is estimated to be around 8 lakh units per annum. In India the size of the segment is in the range of 2 lakh units, he added.
     
"We believe the market is going to move up from small bikes to mid-segment...Nobody is focusing on this segment, so that is the market we want to get into at global level," Mr Lal said.
     
The company has started deliveries of the Continental GT in the UK and some other European countries and believes that growth will come from the developing markets.
     
"In terms of scale, it is going to come from some of the developing markets. So the first market we are ambitious about selling is Latin America. We are going to commit to the market," Mr Lal said.
     
Since the launch of Continental GT in the UK, the company has now started delivering the motorcycle in some of the larger European countries as well.
     
"We are starting customer deliveries in the US right now and Australia and Japan are next, so that is our current spread," Mr Lal said.
     
Expressing confidence of doing well in the segment, he said: "We want to be number one or number two in every market in the mid-sized category, so that is our ambition in the 250 cc-750 cc segment."
     
The launch of Continental GT in UK in September is the point when the company shifted its attention to global motorcycling, he added.
     
"Now, we don't just want to participate in the number of countries...Our ambition is very clear that we are going to make strategic inroads into the international markets," Mr Lal said.

Currently, Royal Enfield exports only 3 per cent of its total production across its two manufacturing facilities in Tamil Nadu.
      
When asked if the company is looking to further expand its motorcycle range, Mr Lal said, "Now we have the capabilities, we have the confidence, have cash to spend and business model which works and we are making money, so now we can invest on new platforms and new products."
      
Without elaborating, he said the company is working on a lot of new projects.
      
"Our idea is to serve the mid-size segment and currently we are exploring various options. We have a pretty solid product plan ready till 2020," Mr Lal added.
      
The company, which sells Bullet, Classic and Thunderbird models, is also looking at enhancing its production capacity to meet up the demand. Some of the models currently have a waiting period of over 6 months.
      
"We are going to close the year at 1.75 lakh units. In 2014, the capacity will be up to 2.5 lakh units but already we are witnessing demand exceeding that. We are now trying to find ways to even get over this number," Mr Lal said.
      
Capacity requirement is going up substantially so there is going to be lot of investment in 2014. The Oragadum plant is already getting into next phase of expansion, he added.
      
Royal Enfield has grown over 50 per cent year on year for the last three years, he added.
      
Mr Lal said the company is in the process of expanding its service network in the country and it plans to close the year at around 300 dealerships.