Eicher Motors drove in a strong first quarter with profits jumping 59 per cent on the back of stellar Royal Enfield sales.

Bloomberg TV India caught up with Siddhartha Lal, MD and CEO, Eicher Motors, to take a look at the company’s first-quarter journey. While the company was earlier focusing on just big cities, it is now spreading its wings in smaller towns as demand grows in the hinterland. Eicher is now adding more than two dealers every week in small towns, and that is where the expansion is happening, says Lal. Excerpts:

Eicher has accelerated its profit growth in Q1. What drove such a stellar performance? Is it the robust sales of Royal Enfield?

This is the result of all the work that we have been doing on the new plants. We had thought of this many years ago. And now it is here and it is producing lovely motorcycles. We had thought of The Himalayan plant many years ago. So it is all the work that we have done in the past that continues to benefit us.

Because we have got such a strong franchise of Royal Enfield, particularly Classic, we are being able to produce all across the board at this plant here (Chennai).

Because of a strong franchise and a strong brand equity, we are able to expand out of the big cities.

So earlier, in the last 10 years, we were focussed on just becoming relevant in big cities. And now that we are relevant — I believe in larger cities — they are demanding the products in smaller towns. We are adding more than two dealers every week in small towns. And that is where the expansion is happening.

The waiting period is still much more than one had thought. How are you working around to reduce that?

No, it is not at all a problem. There is a bit of push and pull from a peak of 11 months down to three months and even less for some models. And it is coming down because at the end it will never be a capacity constrain. It is a temporary phenomenon. It has been with us for six years; but may be a year or two more.

But it is not a forever-phenomenon because capacity will always be increased.

Our focus, whether it is in India or now in international markets, is always brand first. Build a brand and the rest will follow. So the worst thing is to have is that a plant with a lot of capacity but no one wanting the motorcycle. We do not want to be in that position. So we want to continue building the brand. We all work to build the brand, how to do beautiful new products and how to make amazing things with Royal Enfield.

Then, of course, we have a very strong engineering manufacturing team which builds the plants and do all of this. But that is not our obsession.Our obsession is like to do a Himalayan; it is just build beautiful motorcycles, tremendously improve all details, infrastructure, retail identity and our stores.

Our sales people tell us — and they are notoriously unforgiving for these things — that our new stores are getting more walk-ins, more enquiries and more conversions, just because people come in, look at the store and say: ‘Oh my god! This is all what Royal Enfield is all about? That’s beautiful.’

And that is the store infrastructure. We are working on improving the entire experience in the store. Today, when you go into a motorcycle store or a white goods stores, the sales person hands you the price list and you take whatever you want. But what we do is, we are getting into a zone where you can talk motorcycles. So they are handling people differently.

How has The Himalayan driven your Q1 results?

The Himalayan has played a tremendous role in Q1. It has taken a lot of our time and energy in marketing, and probably a bit of marketing spend. But it has not yet paid back. It’s still a young child.

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