Eicher to invest Rs 600 crore in Royal Enfield in 2016-17

In line with its goal to make deeper inroads into mature and developed markets and become a leader in the global mid-size motorcycle market, Eicher Motors – the parent organisation of the iconic Royal Enfield brand – is planning to invest Rs 600 crore in the company in 2016-17.

Informing about the company’s investment plans Siddhartha Lal, managing director & CEO, Eicher Motors said: “Royal Enfield has been investing in building strong foundations across all areas of its business. We will be investing Rs 600 crore towards product development, setting up of the two technical centres, in Leicestershire, UK and Chennai, India, enhancing our manufacturing capacity and market development activities across geographies.”

Revealing the company’s production plans for the new fiscal, Lal said that the company plans to manufacture around 675,000 motorcycles in 2016-17, which will be a near 32% jump from the total of 511,611 units manufactured in 2015-16 and a whopping 100% rise from the 336,801 units produced in 2014-15.

“Our immediate business outlook remains strong and Royal Enfield continues to grow consistently, competitively and profitably towards leading and expanding the mid-sized motorcycle segment globally,” added Lal.

Domestic and international expansion

Over the last year, Royal Enfield strengthened its retail footprint in India with the addition of 145 new dealerships, taking it to 500+ stores in the country currently.

In May 2015, Royal Enfield also launched its flagship gear store along with its online gear in April 2015. The company also introduced its first ever limited edition of motorcycles inspired by the Despatch Riders of the World Wars.

Continuing with its focused strategic international thrust, Royal Enfield opened its first direct distribution subsidiary in Milwaukee, North America. It also opened exclusive stores in nodal cities like London, Paris, Dubai, Madrid, Bogota and Medellin. It also entered two of the biggest two-wheeler markets in the world, with the launch of its first exclusive stores in Jakarta, Indonesia and Bangkok, Thailand.

Among the key highlights of the past year was the decision to buy Harris Performance, motorcycle engineering and design firm based in UK, which collaborated on the chassis design of the recently launched Himalayan.

According to the company, the progress of Royal Enfield tech centres in Chennai, Tamil Nadu and in Leicester, UK continues to be on track. The UK tech centre will be operational by the latter half of FY 2016-17 while the Chennai tech centre will be operational by 2017-18. 

Commenting on Royal Enfield’s performance over the last fiscal, Lal said: “This has been a milestone year for us with the launch of the Himalayan- our first ever completely ground-up motorcycle. With Himalayan we introduced a purpose-built and versatile motorcycle that makes adventure touring more accessible in India. The motorcycle has been extremely well received by the community and customers, which is reflected in our strong order book for the Himalayan.”

The company is currently working on the higher capacity models, which are likely to have an engine displacement of more than 600cc. With product development being the central focus for the company, Eicher’s decision to increase the capex by Rs 100 crore this fiscal (over the Rs 500 crore spent in 2014-15) seems justified as well.