Royal Enfield sales down 22% in July-September

Inside an RE showroom

Royal Enfield, the country’s most popular premium motorcycle brand, reported a 22% decline in its September quarter motorcycle sales, even as revenue for parent Eicher Motors fell 9%.

Royal Enfield sold 1.63 lakh motorcycles during the three months, down from 2.10 lakh motorcycles sold over the same period in 2018, even as it invests heavily into expanding its manufacturing and retailing base.

The company has been aggressively expanding its retail footprint to head off an attack from Mahindra & Mahindra’s Jawa motorcycles, which started shipping during the quarter.

RE doubled the number of ‘Studio’ retail outlets since August, when it had launched 250 such stores, mostly in tier 2 and tier 3 towns.

In all, said Vinod Dasari — head of Royal Enfield, the company now has over 500 such retail outlets. The total retail outlets has touched 1,400.

“We’ve persistently worked to strengthen our distribution network and product capabilities…The response to the Studio Stores has been great, and we are already working to widen our presence over the forthcoming quarter,” he said.

On the international front, Royal Enfield also added three stores each in France and Thailand and one store each in Italy, Brazil and Argentina. The Interceptor 650, priced at around Rs 3 lakhs in India, became the second highest selling motorcycle in the mid-size segment in the UK.

During the quarter, the company introduced 6 new color variants of the Royal Enfield Bullet 350 and Bullet 350ES during the three months. It also introduced new colors for Classic 350.

“Both motorcycles have received a tremendous response from customers,” Dasari claimed.

In the Commercial Vehicles segment, VE Commercial Vehicles (VECV) – Eicher’s joint-venture with AB Volvo – continued to be affected by the demand slowdown.

For the quarter ended September 2019, VECV’s revenue from operations was Rs 2,004 crores, down 32% from Rs. 2,966 crores in the same period last year.

VECV sold 11,370 trucks and buses in the quarter, registering a decline of 39.2% over the same period last year.

Vinod Aggarwal, CEO VECV said the commercial vehicle industry continues to grapple with an ‘extreme slowdown’ in demand.

“In the first half of this year, industry volumes have declined by 36% with an even higher drop of about 50% in the second quarter. Even though our volumes have reduced, our decline has been a bit lower than the industry with a drop of 30% in the first half and 39% in the second quarter respectively,” he said.

He said customer sentiments have “marginally improved” during the festival season.

“That has reflected in better performance in the two wheelers and passenger car markets. However, it still has not translated into business recovery for the commercial vehicle industry largely due to idle capacity of trucks with the transporters.

“Going forward, we are optimistic that industry is likely to perform better in the balance part of the year due to thrust on infrastructure investments and pre-buying of BS IV vehicles and likely pick up in business activity with improved sentiments,” he said, referring to India’s new emission norms that will kick in on April 1.