Royal Enfield was a brand of the Enfield Cycle Company, a British manufacturing firm. It started in India for the Indian Army 350 cc bikes were imported in kits from the UK and assembled in Madras. After a few years, the company started producing the 500 cc Bullet.
In the famous 1975 Bollywood movie Sholay, Dharmendra and Amitabh used it to ride down a bumpy road singing to the tunes of ‘YehDosti’ which marked the peak of this well-known motorbike brand in India. Royal Enfield India is known for its rugged bikes having a superior build quality, and vintage design. It was formed in the year 1955 when British Enfield motorcycle Company partnered with Madras-based Madras Motors in order to produce bikes for the Indian Army and was named as Enfield of India. The first bike assembled in India was a 350 cc bullet an overhead valve single cylinder four-stroke motorcycle which is one of the oldest bikes with a longest continuous production run of 75 years.
Parts were imported from England and assembled in Madras before 1957. In the year 1957, the company started importing technology to make the components in India; by the year 1962, all the components were being made in India. In 1972, the original Redditch, Worcestershire based company was dissolved though the Indian brand ‘Enfield of India’ was still thriving, which then bought the rights to use the name Royal Enfield in the year 1995. The Indian brand is currently a subsidiary of Eicher Motors, an Indian automaker. Its products include Royal Enfield Bullet and other single cylinder motorbikes.
Royal Enfield currently sells bikes in more than 50 countries including the UK. It surpassed its competitor Harley Davidson in sales in the year 2015.
Decline
In the 70s and 80s, there were only a handful of competitors for Royal Enfield Bullet. During that time, bikes were mainly used by urban people as a utility vehicle for transport. Though market share of Yezdi and Rajdoot was higher than that of RE but because of strong inherent brand values even the second-hand bullet had a good value.
In the early 90s and late 80s, preferences of buyers began to change as they started considering quality, mileage and other parameters while buying a bike which RE neglected. Also after the liberalisation of 1991, the entrance of Honda and Kawasaki Bajaj with fuel efficient motorbikes changed the market dynamics. RE’s market share came down from 25% in the 70s to a mere 5% in the late 90s.
Revival
Siddhartha Lal, the third generation CEO and MD of Eicher Motors came to the rescue of RE. He decided to do away with the 13 businesses and focus on only 2; one of them being Royal Enfield. His strategy was clear; instead of being mediocre in 15 businesses, it was better to be a master in 2. RE decided to focus on a niche market instead of competing with 11 other companies making bikes at that time. The niche segment that Lal focussed was mid-sized leisure motorcycle with target customers being Indian. In this way, he found a right positioning for RE in the crowded market.
Royal Enfield touched a new high by selling 25,000 bikes a year by the year 2005, which then reached 50,000 per year by 2010. But the bikes were being made on three different platforms which added to the cost of production. Lal decided to do away the other two and produce it on a single platform and also increased the scale of production in order to spread out the fixed cost over large output and maximise economies of scale.
With the launch of Royal Enfield Classic, the sales of RE shot up 6 times from 50,000 in 2010 to 300,000 in 2014. It sold 400,000 bikes in FY 2015 the number increased by 50% to 600,000 bikes in the FY 2016. RE also solved the problems of electrical failure, oil leakages, engine seizures, snapping of accelerators and other major changes were made to the manufacturing process and supply chain. New engines with 30% fewer parts, lighter, powerful which improved efficiency, lower workloads and fewer warranty claims. The focus now is on mid-size segment targeting commuters using scooters and commuter bikes.
Royal Enfield Product Profile
Royal Enfield Bullet 350
With 18 bhp power from air cooled 4-stroke single cylinder 346 cc engine, fuel tank capacity of 13.5 litres the bike has got all the features to get excited about. It has got a traditional design of a bullet, superior design, comfort and is a flagship offering of the company, with other bikes being more of a derivative of Bullet rather than standalone products.
Royal Enfield Bullet 500
A 499 cc, 13.5-litre single cylinder 4 stroke, twin sparked air cooled engine featuring electric start. It provides a higher torque at a low engine rpm, making the drivability easier. Though it looks similar to the 350cc model but a high power and capacity of the engine make it preferable for long journeys.
Royal Enfield Bullet Electra 4S
Due to problems in kick start of its 350cc Bullet, due to CB point ignition system, Electra was introduced with CDI ignition system. This also paved way for newer bikes to have digital TCI as a part of standard package.
STP Analysis
SWOT Analysis
Competitors
- Bajaj Auto Limited
- Hero Motor Corp (Hero Honda)
- TVS
- Suzuki
- Harley Davidson
- Yamaha
- Ducati Superbike
PAT Graph
2013-2014: 279 crore
2014-2015 : 559 crore
2015-2016 : 1230 crore* (January 2015 to March 2016)
*Eicher switched from an earlier January-December FY cycle to April-March in compliance with the Companies Act, 2013.
Source: Eicher Annual Report 2015-2016
The profit growth has seen a phenomenal jump over the past 3 financial years. The marketing strategies employed by Royal Enfield are finally paying off their dividends.
Units sold graph
2013-2014 : 178121
2014-2015 : 302592
2015-2016 : 508099
Source: MoneyControl
Royal Enfield has seen a phenomenal growth in the mid-size motorcycle segment. Fueled by an aggressive marketing blitz-krieg and a loyal fan-base, the sales have rocketed over the years. This has ushered in huge profits for the company which ironically has a waiting period of 3-6 months on each order placed. That definitely does not seem to be a deterrent as customers value the brand and waiting period being the least of the concerns for an association with Royal Enfield.
Source: Eicher Annual Report 2015-2016
The Indian motorcycle market, when segregated on tank capacity, gives a clear indication of the customer preferences. A huge chunk of the 150cc+ and 250cc+ bikes sold are by Royal Enfield.
Royal Enfield Rides
A way to create a strong brand awareness is by capturing the masses’ imagination. And that is the purpose that is served by the Royal Enfield Rides. The company promotes RE owners to undertake such road trips with other fellow riders in the process building a strong rider community.
Media Campaigns
“Handcrafted in Chennai”
The latest campaign by Royal Enfield is a tribute to Chennai, its home. The advertisement captures how each Royal Enfield motorcycle is assembled and handcrafted in their Chennai plant unlike other bikes of today which are mass produced. The plant also boasts of Royal Enfield Bullet 350cc which has the longest production run for any motorcycle passing 75 years of continuous manufacturing.
The Chennai plant now also conducts factory tours for enthusiasts from all over wherein they are allowed to see the assembly process in action.
“Leave Home”
Royal Enfield launched this campaign to promote their spirit of free riding with nothing binding the rider down. The campaign was released in print media aimed at capturing the imagination particularly of the 18-25 age group customers to explore with the rides.
The Royal Enfield has been immortalised by a perfect product placement (unintentionally on most occassions). It has been long associated with Bollywood movies from epic blockbuster “Sholay” to more contemporary flicks like “Bhaag Milkha Bhaag”. The trademark bullet engine sound has been embedded in the masses’ memories.
Though firmly perched at the top with a cult status to the brand, the position is threatened by Harley Davidson and the likes. The customer associate RE with a luxury brand and a status symbol. The long history behind the brand makes it an even more enticing product.
In a world of Ducati and Harley Davidson, Royal Enfield has held its own among the customers. The classic analogue dials and the shiny chrome tanks bundled with the trademark piston pumping has created a community of riders who share the same passion. RE has tapped into this tactfully coming up with merchandises and rider festivals to create a brand awareness not seen by other brands.
Below is the link of Royal Enfield advertisement of Royal Enfield Himalayan (a bike built specially for riding in tough conditions of Himalayas)
Here is the advertisement’s narrative to inspire the explorer inside you..:
Journeys are not great or small, they just are..
Explorers were not born heroes, they were just curious,
The earth awaits you, answer it,
The sun will light your path, follow it,
Valleys will not stay quiet, and even time will not stand still,
Sometimes the first step..is the final frontier
Don’t turn around….!
The mountains call us all,
The only difference..is what we say back..
References
Business Standard, Economic Times, Royal Enfield, Eicher Motors Annual Report
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