Royal Enfield Identifies 4 Core Markets To Expand International Presence

Expanding its footprint overseas, Royal Enfield CEO Siddhartha Lal said that the company has identified four core markets that will help expand its international presence. The markets include Thailand, Brazil, Columbia and Indonesia, which show a lot of potential for the bike maker and are outside the traditionally developed markets like Europe, North America and Australia. Lal made the statement during the investors call earlier this month.

Answering queries at the investors call, Siddhartha Lal said, "The four identified markets for us where we are going to invest over the next many years is Thailand, Indonesia, Columbia, Brazil. Right now, we are just learning and expanding in these four core markets for us. Any of these or all of these could become very large markets for us over the next decade. So really it is these four core markets that we are expanding on."

Royal Enfield plans to open 25 more Exclusive Stores globally this year

Royal Enfield has been on an expansion spree in the past couple of years and has been opening exclusive outlets in different markets in order to establish its network. Royal Enfield recently established its second direct distribution subsidiary outside India, in Brazil. RE's first direct distribution subsidiary is in the US, called Royal Enfield North America. In markets like Columbia, RE has 5-6 stores and one each in other markets. As these regions show more potential, the company plans to set up more showrooms to address the growing demand.

"We are adding single stores in couple of other markets also, which hopefully by a year or two they will mature so that we can then take action in that country and expand," said Lal.

Despite the global push, India still makes for RE's biggest market

Royal Enfield currently has a set up of 50 dealers each located in the important markets like the UK, Germany, France, Italy and Spain. However, most of these showrooms are multi-brand outlets while some are exclusive stores. Given the fact that these markets are more inclined towards performance offerings, RE's current motorcycle range is seen as niche, mid-size modern classics. Instead of focussing on these markets, developing markets give the company the potential to become a mainstream player in that region.

Talking about opening exclusive stores internationally, Lal said that the company has opened up to 25 showrooms at present and plans to double the number to around 45-50 by the end of the year. "That pace of adding exclusive stores should continue next year as well," he added further.

Royal Enfield recently announced that it plans to invest Rs. 800 crore towards the new manufacturing facility in Chennai, product development, R&D centres in the UK and India; as well as towards market expansion.

RE is eyeing the global market ambitiously and has witnessed a healthy increase in its export numbers. Compared to the 9363 units shipped in FY2016, the bike maker recorded a 64 per cent hike in volumes with 15,383 units exported in FY2017. The company retails most of its current range including the Bullet and Classic 500, Thunderbird series and Continental GT in several Asian and developed markets. The Himalayan, meanwhile, is on sale in Nepal and is slated to be launched in Indonesia later this year.

The 750cc parallel Twin is Royal Enfield's next major launch

However, RE's major chunk of volumes continue to come from the domestic market. The company has been aggressive with its operations here and even saw its best ever monthly sales in April 2017 with volumes peaking over 60,000 units.

With its global plans getting aggressive, the company seems to be on the right track building a strong base for its upcoming 750 cc twin-cylinder flagship motorcycle. A more advanced and powerful product compared to anything in RE's current line-up, the upcoming bike will not only be a middleweight contender, but also act as a brand builder for the manufacturer.