Royal Enfield may set up a manufacturing plant in Brazil

Royal Enfield, which makes the popular Bullet motorcycles, is mulling a manufac- turing presence in Brazil. The motorcycle making unit of Eicher Motors Ltd is evaluating a contract manufacturing route to having a presence in that country, said R.L. Ravi- chandran, board member and executive director at Eicher Motors.

Ravichandran spoke to Mint on the sidelines of a Society of Indian Automobile Manufac- turers (Siam) meeting and said a presence in Brazil would help the unit make inroads into the lucrative motorcycle market of Latin America.

Royal Enfield is in talks with some contract manufacturing firms in Brazil and expects to start the assembling unit in the next two years, he said, adding that it didn't make sense for a niche player in the motorcycle market such as Royal Enfield to invest in an independent unit in Brazil.

According to Abdul Majeed, automotive practice leader at audit and consulting firm PricewaterhouseCoopers In- dia, Latin America sees sales of 6-7 million motorcycles and scooters a year and is very sim- ilar to India.

Latin America is also an im- portant market for Bajaj Auto Ltd, the country's second largest motorcycle maker, which exports its vehicles to more than 30 countries.

Royal Enfield's Brazilian venture will also help the unit reduce the risks inherent in exporting to just the US and Europe like it currently does.
Lower demand in Europe has seen the unit's exports fall 60% in Decem- ber, albeit on a low base, according to data from industry body Siam.

The manufacturer of motor- cycles with a cult following in India and some parts of the world sold 5,326 bikes in the domestic market in the same month, a growth of 25% over a year ago.

Waiting periods for some models of Enfield are as long as six months and with no capacity at its Chennai fac- tory, this could contin- ue. Ravichan- dran said that even as Eicher looks at op- tions for a new factory either in Tamil Nadu or Andhra Pradesh, it is look- ing to implement efficiency measures that will help in- crease capacity from the cur- rent 50,000 bikes a year to 75,000.