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Royal Enfield aims to be $5 Billion Company: Strategy Explained

Royal Enfield is targeting a 10 percent market share in mid-size bikes in the export market. Royal Enfield is aiming to become a $5 billion global company as per a report by brokerage Motilal Oswal.

It plans to have a new launch every quarter. The company has a clear focus and pipeline for the next 5-7 years for both the domestic and export market. The latest launches have been the cruiser-style motorcycle Meteor, in November 2020 and the new Himalayan— for adventure touring— in February 2021.

All the recent products: Himalayan, 650cc twins, and Meteor, have been a success. The launch of the new Classic, on a brand new platform, will narrow the gap in product quality for the 650cc twins' platform while also expanding the portfolio for India and globally too.

The Meteor launch has added another platform to the existing UCE platform (unit construction engine): the Himalayan and the twins are on this platform. The Thunderbird too was on the UCE platform.

The company has acquired land near its Vallam Plant, close to Chennai for moving some operations like machining, which will ramp up capacity utilization. It will also de-bottleneck the production operations.

On digitization, Dasari said, the online enquiries are contributing over 50 percent of total enquiries: earlier 10 percent in pre-Covid times. For Meteor, over 90percent of bookings were through its "make-it-yours" (MIY) platform. On the accessories, Mr.Dasari said that the company is catering to about 30% of the potential and has a large scope to grow. The launch of the Meteor on the MIY platform has helped in boosting accessories sales. And with all the other upcoming launches too on the MIY platform, boosting accessories sales significantly is a clear possibility. There would be great opportunities in the international mid-size bike markets too.

The export markets have received the 650 twins very well and are a good statement for the company’s export strategy. The launch of the Meteor and further launches will only complete its portfolio globally and grow its presence further. The company is targeting a 10 percent market share in the mid-size bikes in the export markets: while already crossed the same in Korea and Australia.

The export margin is much above the domestic one. And in keeping it that way, its first offshore CKD plant was started in Sept 2020 in Argentina. There are also plans to set up 3 new plants in Thailand, Brazil, and Colombia.

The demand is back to pre-Covid levels, and would only grow with the new launches and also the expansion plans in the international markets. And after a difficult past 18 months, Royal Enfield could see a healthy revival and good volumes driven by new and improved platforms


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