Royal Enfield climbs up the quality curve

At hall No. 18 at the Auto Expo last month, almost all visitors invariably stopped at the Royal Enfield stand to check out the new Thunderbird 500 that will be commercially launched by mid-2012. But very few would know that the Thunderbird 500 shares something common with the iconic American brand, Victory. “The supplier of the dye for the new Thunderbird’s fuel tank is the same firm which manufactures tanks for Victory,” Royal Enfield’s chief Venki Padmanabhan told Autocar Professional.

Venki shared this to convey that Royal Enfield is climbing up the engineering and quality curve, and that the brand’s growing patronage is not only due to good marketing strategies. Italian design, Italian dyes and Italian robotic manufacturing have also come in to lend that new edge to the products from the big daddy among two-wheeler makers in India which, not very long ago, was struggling for survival. There were also talks then of an equity partnership with a Taiwanese company.

Royal Enfield’s fortunes have changed since. However, it now needs to think of ways to sustain the interest in the brand over the long term. It’s been a decade since the Thunderbird 350 was launched which created the cruiser segment in India. The frequency of new products will be much higher now. “We should have a spanking new category at least every two or three years. Also, mid-model refreshments,” says Venki. The first of those category creators will be the retro Café racer slated for a mid-2013 launch.

The Classic model, launched at Auto Expo 2010, infused new life into the company. Currently, this popular model makes up for almost half of Royal Enfield’s monthly sales and has a six-month waiting period. However, some of its potential affluent buyers now have more choice with the likes of brands like Triumph Motorcycles and Harley-Davidson riding into India.

“ We have spent a lot of time thinking about protecting our turf. Our reaction to it is somewhat counter-intuitive. These guys coming in is the best thing that can happen to our brand. It really legitimises the leisure-riding brand,” says Venki. The company is a niche player but it feels that the aspiration of even a small percentage of the millions of two-wheeler buyers holds potential that is yet untapped. The new plant at Oragadam, which hikes Royal Enfield’s annual capacity from 70,000 to 150,000 units, will be useful, if that happens. "We currently sell around 7,000 bikes a month, and plan to reach 9,000 next,” says Venki.

Currently, Royal Enfield has a customer base of over half-a-million riders, many of them riding older machines that are low on quality or reliability. But Venki says that is history. Now his main concern is how to meet the demand of the thousands waiting for one. “We know the potential. Last year is a very good example. Sales were up 40 percent. In 2010, we made 52,000 bikes and in 2011, 74,000 bikes. There was a waiting period of seven to eight months. After making 42 percent more bikes, it’s gotten worse. We have to handle the capacity question,” admits Venki.

Venki’s other focus is to put Royal Enfield in local markets where it does not have a presence yet. While this year has begun with the unveiling of the new Thunderbird, 2013 will see a new growth phase.

Sumantra Barooah