Royal Enfield Plans Serious Inroads into the US Market

The Mid-Size Market Comes of Age

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India-based motorcycle manufacturer Royal Enfield has a plan, a plan that it thinks is paying off in the US. When viewing the current state of motorcycle sales, it sees a chink in the armor of the American bigger-is-always-better mindset. A growing set of young, urban riders appear to be interested in simple, retro-styled motorcycles that they can use for recreation and transportation. These riders are looking for more than technology and performance numbers; they desire an authentic riding experience – one that Royal Enfield feels it can provide.

Royal Enfield is a huge force in its home country’s market but has always been a minor player here in the United States. Flush with success in the domestic and European markets (about which one company official noted that Enfield is close to manufacturing more motorcycles annually than the combined total of the European manufacturers), the company has, in recent years, embarked on a modernization of its model line and its manufacturing facilities. With those improvements and increased profits in its back pocket, the company is beginning a push into the American market.

2014 Royal Enfield Continental GT Review

At a gathering in Los Angeles earlier this week, Royal Enfield took the opportunity to introduce the brand’s fans and the media to its new Continental GT500. In a motorcycle-friendly environment with much of the company’s line of motorcycles on display, Siddhartha Lal, CEO of Royal Enfield, took to the stage to talk about the GT, Royal Enfield and the US market. This also provided us with the unique chance for a one-on-one with him, later in the evening.

Siddhartha Lal

Royal Enfield CEO, Siddhartha Lal, addresses the crowd.

Lal comes across as an extremely focused but very relaxed proponent of his brand. He appears to be taking very measured steps toward gaining influence in the US market, noting that he thinks RE has found a way to secure a profitable niche within the bigger-is-better American market:

“We’ve done a lot of work in the US to understand what people want. Of course, the general market is for much larger motorcycles. We figure that there is a set of people who want a fun, urban, evocative, period-like cafe racer. So, our idea is not to dominate the market but to bring in something which is very different from what is available. So, we think that the GT, for example, is a motorcycle that is as different as it gets from anything else that’s available in the market. It’s a great handler. It’s not the fastest bike, but it’s got a lot of torque. It’s great fun in cities. When you’re riding it at 50–60 mph, it’s a great fun ride to have. That’s our entire idea: Enter the US with a different offering altogether. Hopefully over time, we’ll build a name for ourselves.”

Royal Enfield Continental GT

Introduced in 2009, the 535cc Single powering the Conti GT features EFI and unit construction.

Much in the way that Yamaha has positioned the SR400, Lal referred to market research that shows that young, urban riders are looking for the essential motorcycle, one that has a classic style and is easy to work on. Additionally, the ability to easily customize the bikes is important to them. Said Lal, “The way we designed our bikes is that it’s extremely customizable. Every part is…It’s not one complete, joined look. There are separate looks so that you can actually pull off some parts and put in other things – which is why we think it’s like a canvas, a starting point. A lot of people might want to buy it stock, ride it stock for some time, find what they want to change or improve.”

To further this approach, RE has a line of aftermarket parts in the works though many are not yet available. Lal said the manufacturer is working with US partners to develop performance parts for the Enfield line.

While Royal Enfield may be a small player here in the United States, the company is huge in India and is growing worldwide. The company recently built a facility capable of producing 800 motorcycles per day to meet demand. Lal also notes that “Now is the first time that I know of in Europe and the US that we’re actually a little backed up on orders. That’s a good thing.”

Royal Enfield Bullet

The Royal Enfield Bullet is a little slice of motorcycle history that is still in production.

Currently, Royal Enfield has around 100 dealers stateside. Although “organic growth is happening” to the tune of a new dealership or two every month, Lal says the primary focus of the factory is to manage the quality of its dealerships, to make sure that they have proper access to the service network and the financial strength to both grow and improve the brand’s image. However, with the new focus on the urban market, RE is actively looking to expand beyond the smaller to mid-size towns that form the core of its dealer network into the larger markets: “I imagine that, over time, our type of bikes will be a little more city-centric. We think of them as really fun urban commuters. We want to make sure that in the bigger cities we have a stronger presence. That’s our objective.”

Royal Enfield USA President, Kevin Mahoney, has a similar opinion on where the brand has come from to the leaping off point it appears to be on, now: “When I first started 16 years ago, I bought in the technology from the 30s, 40s, and 50s. You could really only sell those to a dedicated hobbyist/tinkerer. Our new bikes over the past several years are plug and play.” However, modernizing the model line through bikes like the Continental GT isn’t the only reason Mahoney thinks RE’s fortunes are on the upswing. Through a price restructuring, RE dropped prices across the board (with the lowest being $4,999) and brought in the GT at $5,999. Notes Mahoney, ”We increased dealer profitability at the same time. So, it’s a sweet deal for everyone.”

Classic Battle Green motorcycle

The Classic Battle Green is one of Royal Enfield’s best sellers in India.

However, it isn’t just the pricing, the mid-size market is changing, too. (We need only look at the Honda 500s and the aforementioned SR400 to see that other manufactures are also seeing a value-priced trend.) Mahoney sums it up: “When I first started with this, the people I sold to were older, vintage motorcycle people. Over the last several years, that’s changed completely. I’m selling to an awful lot of young people, now, and a lot of first-time riders. For me, it’s almost staggering.”

The Royal Enfields on display at the gathering were quite stylish, with the Continental GT delivering a clever merging of classic cafe style with modern components. The Bullet models are non-intimidating bikes with value-oriented pricing that may attract newer riders looking for an economical ride.

Royal Enfield Continental GT

The Continental GT has been available for order since the beginning of the year.

Looking ahead, Lal sums up his feelings for Royal Enfield’s US potential, “It’s early days in the sense that it is not yet the most sought after bike in the US, but I think it could be one of the best selling mid-sized bikes in a couple of years.”

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  • allworld

    There used to be a dealer in my area (Boston), but no longer, which is unfortunate, since their target market exist in droves. It is the same with Moto Guzzi, a lot of hipsters love the V7, but there is such a lack of dealers most just buy the tried and true Bonneville.
    I wonder if when Hero sets up shop, if they will help usher in the less known big players.
    .

    • Evans Brasfield

      They are really looking to grow their presence in major metropolitan areas, like Boston. Time will tell if it works out for them.

  • Old MOron

    If they have quality backing up those cool looking bikes, they’re going to make it.
    I’ve been eyeing the SR400, but that Conti GT is looking real cool.

  • AJIT MENON

    The classic battle green is actually not available to the civilians in India as that is the color that the military uses.

    • Evans Brasfield

      Really? OK, then I must have misunderstood the Royal Enfield representative who pointed out that model. I’ll look in to it more.

      Thanks!

  • Matt Maddalena

    Great. I think they’ll do well. When Suzuki brought out the TU250, I thought, “If they make this in a 650 or bigger, it’ll sell like mad!” Well, I guess we’ll have to prove our interest before RE & other manufacturers make it a little bigger. Not a heavyweight 1000, but an upper-middleweight between 600 & 800. They looks fantastic, and I could see riding one as a commuter. WIth that being said, in America, we still like to ride backroads & canyons… just for FUN.