India remains the primary market for Royal Enfield and all the upcoming products from the brand will be developed with our market in mind. The company is also planning to expand its reach in the rural market with new studio outlets, reports LiveMint.
Lalit Malik, chief financial officer, Eicher Motors, said that the new studio outlets, which would be inaugurated in the rural area, would have 225 sqft of retail space and 275 sqft of workshop area. He also stated that the company would add 80 regular-format stores in 2019. Currently, Royal Enfield has 825 stores in India while the global outlet number stands at 42.
These (studio outlets) will be one-sixth the size of a typical Royal Enfield showroom in a metro. We don’t expect these small stores to sell more than 12-20 bikes per month. This is our first rural foray in India. Under our big distribution thrust, we aim to touch 1,100 towns via 1,350 stores this year.
The new outlets are expected to give an extra push to the domestic sales of the Chennai-based two-wheeler brand. The local sales have witnessed a drop since the return of Jawa motorcycles in November last year. The numbers plummeted for the sixth consecutive month in April. The company reported 17% negative year-on-year sales performance in April this year.
The exports, on the other hand, have seen improvement. The 650 Twins have been one of the significant reasons behind the increase in exports. In April 2019, for example, the exports registered a 139.87% increase in the year-on-year numbers. Lal had stated in the past that the 650 twins could achieve global sales of up to 1 million units per annum in the next 5 to 10 years. The Royal Enfield Interceptor INT 650 and the Continental GT are currently available in markets like Australia, New Zealand, Thailand, Vietnam, Indonesia, USA and the UK.
LiveMint also quoted Axis Capital’s report, which stated:
We attended Eicher Motors’ investor meet in the UK. Notwithstanding the current sluggishness in Royal Enfield (RE) volume, the company is well placed to leverage all its efforts over the last decade for an even stronger next decade. A big driver for this is plugging of geographical gaps (rural/exports), leveraging the resounding success of the recent 650cc Twins for its future product offerings, and growing non-motorcycle revenue. The seed of all this remains the cult RE brand, the legacy of which no competitor can replicate.
Meanwhile, the company is working on its BS-VI compliant models. The test mules of the next-generation motorcycles we spotted on more than one occasion in the past.