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Royal Enfield expects its share in semi-urban and rural markets to grow steadily backed by steady demand and the company’s network expansion over past two-to-three years. Semi-urban and rural markets currently account for nearly 40 per cent of its total sales, up from around 28-30 per cent nearly two years ago.
According to Jayapradeep V, Business Head–India and SAARC, Royal Enfield, its share of semi-urban and rural markets is likely to increase by 3-4 percentage points, taking it close to 43-44 per cent in the next couple of years as it is yet to realise the full benefit of the network expansion undertaken in the last two years.
“We opened over 1,000 studio outlets in the semi-urban and rural markets in the last 2-2.5 years and that has helped improve access in these markets. We are yet to get the full benefit of these outlets since the pandemic spread after the opening. The volume in tier 2 and 3 towns is steadily growing backed by our network expansion,” Jayapradeep told newspersons on the sidelines of a press conference to announce the launch of the Royal Enfield Hunter 350 in the city on Monday.
In terms of growth rate, semi-urban and rural markets accounted for nearly 60 per cent of the company’s total sales in the first quarter of the current fiscal while the remaining 40 per cent came from urban markets.
The company, which registered a nine per cent degrowth in FY22 as compared with FY21, is bullish about sales picking up in the current year backed by improvement in sentiments, new product launches and network expansion. It expects sales to pick up during the ensuing festive season.
“We hope to be back to pre-pandemic level of sales at the earliest,” he said.
Royal Enfield is, however, not looking to add more outlets this year and would rather focus on consolidating presence in existing markets to grow sales.
The company, which has an installed capacity of manufacturing one million bikes per annum, is currently operating at 65 per cent capacity utilisation. This was close to 80 per cent during the pre-Covid period. It hopes to be able to spring back to those levels soon with demand picking up during the festive season.
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