August 24, 2022
Blog Admin
Royal Enfield : Gameplan, Work underway in EVs
India demand – industry recovery and new products to drive volumes: As per the management, the opportunity in Premium Motorcycle stands at 3.2m units (FY19 peak volumes). In this segment, RE has 36% market share in 1QFY23 (v/s 24%/~5% in FY17/FY12). It enjoys a substantial share of customers’ voice (32%) and search (~28%), but its market share in domestic Motorcycles stands ~6%. This gap implies desirability and the opportunity lies in making RE products more accessible through various means (new products, easy financing, rentals, subscriptions, etc.). The recently launched Hunter is aimed at new customers, including the first-time rider. Similarly, RE will launch products over the next 1.5-2 years to entice its existing customers to upgrade and replace.
The story is just starting in its international business: The international business is at a similar juncture to where India was in FY11. As of FY22, the global volumes for mid-sized Motorcycles stood ~0.82m (REs exports were ~74k). Like in India, its approach to the international market is of experiential marketing to create a pull for its products. It already commands an 8-9% market share in mid-sized Motorcycles in the targeted markets of Europe, North America, LatAm, and APAC. All its products, since the 650cc Twins, are developed keeping the global markets in mind. It already has three CKD assembly units in Columbia, Argentina, and Thailand. It is considering one in Brazil.
Product pipeline – more to come: It currently has three engine platforms, excluding the UCE engine used in the Bullet, with one engine platform currently under development. On its J-series platform (350cc), it may launch two additional variants beyond its existing products. On its Twins platform (650cc), it currently has two models and has scope to deliver many more models or variants. A new engine platform is under development, with which it can offer four-to-five models or variants.
Non-vehicle revenue a good driver of growth and margin: Adjacencies like accessories, merchandise and apparel, and spares are large growth opportunities, and also helps to strengthen the parent brand. Unlike the past, the management is identifying accessories and apparel opportunities at the design stage of the product itself. Some of its initiatives like Studio Store and Make it Yours (MY) has helped drive traction in non-Motorcycle revenue, which has reached ~15% of RE’s revenue. While spares are clocking a monthly run-rate of INR1b, it has seen an over 2x growth in accessories per bike since moving to MY. Its service market share now stands at 53%.
Work underway in EVs, but launch unlikely in the next four-to-five years: EIM has been working on its EV program for the last three-to-four years to understand the technology and its customer’s needs. It is not looking at an EV launch in the next four-to-five years to achieve its energy density-cost balance, although any regulatory change may be a joker in the pack. The management believes EVs will allow it do things it couldn’t do with ICE and allow it to enter into markets which it couldn’t enter hitherto.
Study Car-world updates @ http://www.biggaddi.com/blog/cars/
To buy Used EVs, click http://www.biggaddi.com/used-cars
To study about Investments click chanakyanipothi.com