Royal Enfield Plans Serious Inroads into the US Market
The Mid-Size Market Comes of Age
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.
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.
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.”
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.”
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.”
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.
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.”