In the face of escalating competition from global giants such as Harley-Davidson and Triumph, Royal Enfield, under the umbrella of Eicher Motors, has set its sights on outpacing the growth of the premium two-wheeler industry. The company aims to achieve a growth rate double that of the industry’s over the long term, prioritizing expansion over profit margins.
During a post-earnings call with reporters, Eicher Motors Managing Director Siddhartha Lal emphasized the company’s commitment to aggressive expansion, stating, “We want to grow rapidly, we want to grow faster than the industry. That’s our ambition. To grow faster, maybe even 2X of the industry level in the long term.”
Eicher Motors, which also operates in the commercial vehicle segment through its joint venture Volvo Eicher Commercial Vehicles, witnessed a decline in peak operating profit margin from over 30 percent to around 20 percent during the pandemic years. While the margin has since rebounded to approximately 26 percent, Lal indicated that regaining previous margin highs is not the primary objective. Instead, the focus remains on sustained growth.
“As a pure-premium player in the motorcycle market, Royal Enfield has been able to maintain volume and profit growth, benefiting from the resilience of the premium segment even during challenging times for entry-level and mid-size markets,” Lal explained.
However, with competitors like Hero MotorCorp and Bajaj Auto entering the premium market space, Royal Enfield faces intensified competition and pressure on its market share. Lal acknowledged the increased spotlight on the premium segment and expressed confidence that heightened competition would expand the market size.
“The size of the 250cc+ market was less than 1 percent in India 10 years back. Now the size of that market is some 10 percent and is still a small part of the overall market,” Lal observed. “So if that market goes to 20 percent, and we still have the kind of shares close to what we have today, around 85 percent plus, even after the competition, that is great. We want to grow the market, and new entrants will help it grow.”
Royal Enfield’s strategy underscores its commitment to leveraging competition as a catalyst for market expansion while maintaining its dominant position in the premium motorcycle sector. As the industry evolves, the company remains steadfast in its pursuit of sustainable growth and market leadership.
