(Reuters) – The “thump” is gone, but sales are booming.
Royal Enfield, a 119-year-old
Anglo-Indian motorcycle maker with a cult following, has brought its distinctive bikes into the modern era with new and
quieter engines and can’t make them fast enough to meet demand.
The
once-sleepy company sold 74,600 motorcycles in 2011, a 40 percent increase, all made at its 57-year-old factory on India’s
southeastern coast, and is spending $30 million this fiscal year in a push to double capacity and upgrade manufacturing
technology.
For now, customers must wait six to nine months to get their bikes.
“Paradoxically, the more we
make the more we appear to be falling behind. Only when the new plant kicks in fully next year will we be able to fully
address the waiting periods,” Venki Padmanabhan, chief executive officer of Royal Enfield Motors, told Reuters.
A new
engine has replaced Royal Enfield’s antiquated cast iron engine, boosting acceleration, performance, mileage and
reliability, and reducing emissions.
The company is best known for the powerful Bullet model, but it is the newer
Classic series that is driving growth in a crowded and fast-expanding Indian market where 10 million motorbikes were sold
last year.
“They’ve finally got the markings, the logo and the colour schemes perfect,” said 35-year-old George
Koshy, who works in an advertising firm and owns four Royal Enfield bikes, including a Classic 500.
Royal Enfield’s
motorcycles start at 108,000 rupees in Mumbai and rise to 175,000 rupees, against 72,000 rupees for a 220 cc Bajaj Avenger, a
similarly powerful bike also marketed towards enthusiasts.
Harley Davidson (HOG.N), whose bikes start at 560,000 rupees, is part
of a slew of overseas manufacturers such as Britain’s Triumph and Japan’s Kawasaki that is ramping up activity in India to
capture a growing premium motorbike market.
“If you want to ride for the heart, you ride the Bullet; if you want to
ride for performance you ride the Harley,” said Koshy, who plans to add a Harley Davidson to his
collection.
TRANSFORMATION
Purists still come to the company looking to buy a bike with the old engine, but
they have to go to the second-hand market as production ceased in 2010.
Royal Enfield originally built motorcycles to
be parachuted into enemy territory by British forces during the Second World War, and the classic styling and trademark
thumping of its engine at full throttle drew a legion of gearheads to the brand, including television host and motor
enthusiast Jay Leno.
It rolled out its first motorised bike in 1901 and entered the Indian market in 1949, where the
Bullet, now in its 80th year of manufacture, became a staple on the country’s roads.
Royal Enfield, which stopped
building bikes in Britain in 1970 and was bought by India’s Eicher Motors (EICH.NS) in 1994,
expects to open a new
50-acre plant in the southern Indian state of Tamil Nadu next year, taking capacity to 150,000 vehicles.
It is a niche
manufacturer in a country where mass-market players led by Hero MotoCorp (HROM.NS) and Bajaj Auto (BAJA.NS) sell cheap bikes as basic transportation
and family vehicles.
The company sold just 3,200 bikes overseas last year and is looking to expand its export markets
on the strength of its upgraded engines. It recently signed up dealerships in Malaysia and the Philippines, and is working to
resurrect its distribution network in Germany and France.
An auto-industry veteran, the 49-year-old Padmanabhan started
his career with General Motors (GM.N) in Michigan
and took the top job at Royal Enfield in January 2011 after two years as chief operating officer.
“For many motorcycle
companies, when they change engines it’s like life and death – if you don’t do it right you’re finished,” he
said.
“For us we think we’ve been successful with the UCE engine, which just happened a little over a year ago, and
there’s still a lot more to be done with this engine,” he said.
(Writing by Henry Foy; Editing by Tony Munroe and Sanjeev Miglani)
