Royal Enfield targets higher production, strong international growth

Motorcycle maker Royal Enfield Motors plans to increase production this fiscal amid cautious domestic demand outlook, while charting a more aggressive international business expansion.

In 2018-19, the company had produced about 8.42 lakh units and sold 8.26 lakh units. After maintaining a strong double-digit growth for many years, the company reported flat domestic sales volumes in FY19. While two- wheeler makers in the country are bracing for lower capacity utilisation this fiscal due to the modest growth outlook in view of BS-VI norms, Royal Enfield Motors is targeting higher production of 9.5 lakh units with the proposed commissioning of Phase-2 unit at Vallam Vadagal near Chennai during the second half of this fiscal.

The company aimed to produce of 9.5 lakh units in FY19 on the back of strong growth momentum it maintained. But the two-wheeler market slowed in the second half due to constraints in financing and higher insurance costs. It ended up with 8.42 lakh units.

The company is aiming for stronger growth in international sales after the launch of new products including the twin bikes — Interceptor 650 and Continental GT 650.

“Capacity planning is done with a slightly longer term perspective in mind. We are focussing on international markets too where we have seen growth, of course on a low base,” Siddhartha Lal, Managing Director of Eicher Motors, told on Friday.

The company has launched and commenced deliveries in markets such as the US, the UK, Europe, Thailand, Indonesia, Columbia, Argentina and Australia. “We have been getting excellent response in these markets,” said Lal.

The company has planned a capex of ₹700 crore for the current fiscal and it will be spent on its upcoming plant near Chennai, construction of the technology centre, development of new products and to expand its portfolio for global markets.

The company plans to ramp up its dealer network to 1,000 by the end of this fiscal from about 900 now.