Enfield dreams big, guns for California

The romance of motorbikes took on a new dimension in the consumer psyche acrossthe globe after the highly rated 1969 American road movie Easy Rider in which Peter Fonda and Dennis Hopper ride through the American southwest with the aim of achieving freedom.

America’s biking country, California, also the Wild West of yore, is ready to get a taste of a new bike -- shipped all the way from India to mark its presence along side the legendary Harley-Davidson in its own backyard.

Chennai-based manufacturer of Bullet motorcycles, Royal Enfield Motors, is preparing to launch its Classic range of 500cc bikes in the state of California, which accounts for half of the US motorcycle market.

“We are already present in the US for many years now. We are looking at California since it happens to be more of a year-round market because their winter is not that severe. We have the products ready and our first shipment is already on its way,” said Siddhartha Lal, MD and CEO of Eicher Motors, the parent company of Royal Enfield Motors.

The numbers may be small as of now. Royal Enfield at present sells about 500 bikes of its various models annually in the US market, but not in California. That’s way behind the 160,000 units sold by Milwaukee-based Harley-Davidson. But the pricing is just right for Enfield’s Classic to find itself a place on the highways snaking through California’s desert lands or speed down The Strip in Las Vegas.

According to RL Ravichandran, CEO, Royal Enfield Motors, the company plans to price the Classic at around Rs 3.2 lakh. In comparison, the cheapest Harley-Davidson available in America sports a price tag of around Rs 3.7 lakh. “We do not fix retail pricing in the USA; the distributors do it. In India, our Classic 500cc model is retailed at Rs 1.5 lakh.”

One can pick up a basic Harley-Davidson motorcycle in India for Rs 6.95 lakh and the price range goes up to Rs 34.95 lakh.

The launch of Royal Enfield’s Classic bikes in California, powered by a single-cylinder 500cc unit construction engine, supported by electronic fuel injection, is expected to yield significant sales for the company.

More importantly, even though it may be a long haul for the Classic to hit top gear in California, the sheer presence of the model in America’s bike country is likely to provide a significant brand rub-off on its sales back home.

During January-July 2010, the company exported 1,934 units to various markets compared with 1,100 units in the same period in the previous year, according to SIAM. The total heavyweight motorcycle sales in the US last year were about three lakh units.

Royal Enfield motorcycles are primarily exported to the UK, the US, Germany, France, Spain and Italy, among others. The company seeks to expand to markets like Latin America and Canada later this year. Nearly seven per cent of Royal Enfield’s sales come from exports.

“I do not expect, even at 100,000-unit capacity level, exports will be more than 10 per cent maximum. However, we will continue to develop export markets as our product has global appeal,” said Lal.

He pointed out that the Indian market would be extremely buoyant, and, over the next 18 months, the real issue will be supply. So, in the short and medium terms, the company’s entire efforts are towards improving supply.

“We produced around 25,000 units in the first half, but certainly that is lower than our expectation. In our march towards 100,000 plus motorcycles, there is absolutely no question that the current family of vehicles will certainly be able to support us to reach that capacity. We expect good growth out of current segments that we are in for the next five to eight years, even longer. The margins are good, competition is minimal, and the opportunity for exports is excellent,” said Lal.