Royal Enfield is gearing up to go international more aggressively and is chasing its ambition to be the world's No. 1 midsize bikemaker Rudratej Singh, president, Royal Enfield, speaks to Sumantra B Barooah.
08 Jul 2015 | 3018 Views | By Sumantra B Barooah
After establishing a dominant position in its segment, Royal Enfield is gearing up to go international more aggressively and chasing its ambition of being the world's number one midsize (250-750cc) motorcycle manufacturer. Rudratej Singh, president, Royal Enfield, speaks to Sumantra B Barooah.
How you going about realising Royal Enfield’s ...
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After establishing a dominant position in its segment, Royal Enfield is gearing up to go international more aggressively and chasing its ambition of being the world's number one midsize (250-750cc) motorcycle manufacturer. Rudratej Singh, president, Royal Enfield, speaks to Sumantra B Barooah.
How you going about realising Royal Enfield’s ambition of being the world’s No. 1 midsize bike maker and what steps are you planning to take?
What we have seen in India is a brand and a promise that is serving a highly underserved segment – we call it the midsized segment which is the 250cc to 750cc segment. What we are seeing in India is the huge shift from 50,000 motorcycles a year (in 2010) to what we will exit at, which is going to be roughly at 450,000 motorcycles this year is because we are serving that need better.
This need is underserved everywhere else in the world as well. It is human insight on why we are doing so well and the role of the brand in fulfilling that need exists in every other part of the world as well. I am a fundamental believer that human insights and human needs are agnostic to geographical boundaries.
Our first objective is to first understand what’s working in India and make sure that we retain the values of the brand when we take it internationally. There is a certain brand promise that we want to be consistent with. Assuming that we have a brand promise and that is consistent, we have divided our market into three types, from a consumer lens than an economic lens. Obviously, finally it’s about business but it is also about serving people. The three types of markets are based on their understanding of the motorcycle.
This is our bastion market, but our root strength comes from the heritage markets, which is obviously the UK where our credentials, legacy and timelessness of our design come from. But those sets of markets are across Europe.
Royal Enfield is a respected brand and people know about it. We can do more in terms of encouraging people to ride more. Here (in India) it is all about getting people to ride, there it is about encouraging people to ride more. The barrier there could be the economic constraint of today. The alternatives that I have today are too extreme. The motorcycle industry has moved to too extreme a situation where I don’t have alternatives to enjoy the joy of riding. Therefore, we fill that opportunity.
The third type of markets, which is where a lot of business is likely to come from, are very similar to India but hugely underserved. These are what I call white spaces. Economically and demographically they are very similar like India. Let’s say all of Latin America, Colombia or Indonesia, which are very similar in terms of their economic life stage at which they are and the opportunity that exists. There’s again the opportunity to move this large base of commuter segment to something more evocative; this is meaningful to their current core purpose but can do more. This is where we believe we will hit the sweet spot. That’s why the job that is to be done might sound different but they come from the same core product, promise and proposition of the whole mix that we have in India.
To execute this strategy, you will need to also have a few assembly/manufacturing bases overseas. Have you identified any market/s yet?
Our current focus is to make sure we build our products in the location that we are in. As and where the need evolves, we will look at opportunities but at this point in time, we are happy with our setup. We are very confident that we can serve most of the markets from where we are. As the models require to be changed, based on scale, we will do that.
Royal Enfield operates only in the midsize segment and has a share of 95%. Could this also make it vulnerable to other market trends or new entrants in the segment?
Vulnerability comes in if we don’t understand our consumers. Our focus has been solely on consumers and will continue to be so. Our work is about expanding the market. The 95 percent share in the segment means nothing if we cannot expand it at 50 percent or whatever performance that we are happy with. Is there headroom for other players? I am sure there would be. They will have to do it from their angle.
However, our focus is on serving our customers and making our product and brand promise relevant today, and whether we can do it tomorrow? Can we do it for the next 50 years? That’s the obsessive culture within our organization and we’ve been doing that in the past as well.
Our success in the past few years has been just focusing on saying we have a product which has an unbelievable, beautiful characteristic. How do we continue to make it the most relevant offering for today? Going forward, my job is to continue making it as the most relevant promise for people.
Royal Enfield's CAGR of 50 percent in the last 5 years may not be sustainable as the base grows. From now on to CY2020, what kind of growth do you foresee as you have plans lined up to go more international as well?
I think there's headroom to grow. We have only scratched the surface. We don’t look at numbers in terms of what is our ambition. But we are not looking at any slowdowns. Our order books look as healthy as ever before, if not better. We continue to grow our sales but our order books actually continue to be ahead of this year’s sales.
In terms of building a portfolio or growing the brands further, you would require newer models. There is a lot of talk about the 400cc which I believe is in the pipeline. At what rate can we expect product intervention at Royal Enfield?
In a world of planned obsolescence, we are actually about planned longevity. We are not innovation junkies. We will do what is right for the customers to make the brand and the brand promise more relevant. We are working on a couple of platforms. You are right in assuming that. I want to stress on the fact that we are not innovation junkies. We want to just make sure that our product promise and our brand promise continues to be relevant for the times to come. For that we are working on a couple of platforms.
Accessories, apart from building brand equity or consumer connect, is also a significant business vertical for many major brands. How do you see it growing for Royal Enfield over the next 5-10 years?
If our core purpose is to get motorcyclists or those interested in motorcycling experience the joy of pure motorcycling and not just commuting, then you can’t do that by just offering a motorcycle. You have to give the whole experience. There is a gap, an under-represented market and nobody is filling that gap. At our dealerships, we are trying to make sure that a person who is keen to do more has the opportunity to feel it, believe in himself that he can and actually do it. It is in a way nudging the person to ride more.
It comes back to how to get more people enjoy the joy of motorcycling and riding versus a pure commute. In terms of business, we are currently focusing getting all of this working for consumers. Business will follow. Because you are selling motorcycles, you will sell gear. We should not and we don’t, thankfully, look at a sales target for this. Let’s just get the right products – that’s what our success has been of getting the right product and the right promise for our motorcycles. Let's first be obsessive of getting the right products and right promises on our gear and accessories. By the end of this year, you will see a refresh in the range. We will learn as we go as well.