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How Royal Enfield is racing ahead of the likes of Harley Davidson

Rahul Gupta by Rahul Gupta
30 August 2022
in Business
How Royal Enfield is racing ahead of the likes of Harley Davidson
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The rise of the middle class and young population has given rise to the demand for two-wheeler bikes in India. Competitive price and usability make it one of the most preferred motor vehicles in India. According to the purchasing capacity of consumers, a country transitions from bicycles to motorcycles and motorcycles to cars. Similarly, India is currently running in the motorbike age.

According to price and product qualities, the world’s top companies are trying their best to expand their base in the country. However, in almost all bike segments, Indian brands are dominating the Indian market. Leaving behind giants like Harley Davidson, the Indian Company Royal Enfield is racing ahead in Bullet and Hunter bikes segments.

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Pacing Numbers of Royal Enfield

The growing craze of Royal Enfield bikes has exponentially enlarged the investors’ interest in the company shares. Reports suggest that in the past month the company’s stock gained 13%. After a subtle dip, the company’s stock has gained over 30% year-to-date.

Due to increased regulatory compulsion in the last three years, the input costs of the company rose to an unprecedented level. Royal Enfield was forced to hike the prices of products to almost 30%. Despite the price rise, Royal Enfield maintained its dominant position.

Reports suggest that in the 250cc+ bike segment, Royal Enfield has a market share of more than 85%. Moreover, in 125cc+ segments, the company increased its market share to 36% in the first quarter of the Financial Year (FY) 2022-23 from earlier 33%. Axis Securities reports suggest that Royal Enfield is now the top brand in the 125cc+ bike segment.

Market analyst Prabhudas Lilladher believes that the Indian bike giant has significant growth potential in the next few years. The rise was also driven by the export potential of Royal Enfield. In the fourth quarter of FY 2021-22, Royal Enfield exported around 25000 units of bikes. On the other hand in FY 2022-23, the company recorded its highest quarterly exports of around 29000 bikes.

Also Read: Despite being America’s favorite, why Ford could never make a mark in India

Cracking the Psychology of Market

To enlarge any business, it is very important to understand the product’s consumer. The purchasing capacity of consumers and the quality of products are the basic things to expand the market. Royal Enfield deeply engaged in both of the required things.

On one hand, they did not let the prices of their products rise above the threshold. On the other hand, they launched products considering the ‘young’ demand of consumers.

With the raw market analysis, they realized that there is a set of customers who want cruiser bikes that are much lighter than the available Royal Enfield bikes. The idea was to make it more accessible and manoeuvre friendly. Considering the consumer demand, Royal Enfield conceptualized the idea of ‘Hunter’ in 2016, which is about 13kg lighter and easy to handle.

The launch of Hunter 350 in the price range of 1.5 – 2 Lakh increased its volume in the market. The fancy model, lightweight, non-cruiser and variety of colours made it suitable for urban riding and expanded the market base.

Also Read: The Phut-Phut of the Desi Bullet is now a global phenomenon

Royal Enfield rightly understands the Indian market. They not only broke the price range of the Indian market but they also perfectly mastered the dream of young Indians. In lower per-capita income countries like India, it is very important that prices are kept in a competitive range. It is also important that the product matches the demand of young customers.

Royal Enfield, cracking the formula to dominate, launched a variety of hunter bikes. They balanced the price and product quality in an equal manner and dominated the Indian market. On the other hand, companies like Harley Davidson remained a non-accessible bike to most Indians and failed to crack the regulatory and other market determinants. In the Indian market where Royal Enfield is leading with 85% market share, Harley Davidson is closing its showrooms in India.

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