Royal Enfield intends to mirror their India success story in other markets as well, plans to open 30-50 stores in the long term.
Royal Enfield officials are confident that the company will replicate the India success story even in the global markets thereby becoming the market leader. The Eicher-owned company recently added Argentina to its global markets portfolio and plans to get into third-party contract manufacturing once its presence in the big volume markets like Indonesia and Thailand reach critical mass.
Now, what is third-party contract manufacturing and why is Royal Enfield looking at it? Third-party contract manufacturing/assembly is outsourcing some of the manufacturing processes to a third party primarily to save on expenses like materials, labour and also to avail tax benefits. In FY2017-18, the Bullet-maker sold over 8,20,000 units in the domestic market and plans to produce 9,50,000 units this fiscal. Royal Enfield will add capacity from the phase 2 of the Vallam Vadagal plant near Chennai and for this purpose, it is investing Rs. 800 crores of which some will also go into the Chennai technology centre and some for product development as well.
Production in phase 2 of the new plant is expected to start in the second or third quarter of the next fiscal and this plant will also assist in shifting to the BS-6 emission norms. As far as exports go, Royal Enfield sold 19,000 units in FY2017-18, up by 26%. The automaker is also looking at increasing its retail footprint from 1-2 stores to 30-50 stores where it already has proper footing.
For markets like Thailand and Indonesia, the establishment, as a first move is looking at getting marketing companies for effective marketing and distribution of their products. Back in India, Royal Enfield is also getting into pre-owned motorcycle stores and plans to have ten of them this year with a nationwide distribution format in place in the coming few years.
Royal Enfield India Success
– Royal Enfield aims at increasing its global footprint
– Exports 19,000 motorcycles in FY2017-18
– Plans to get into third-party contract manufacturing
Source – ETAuto.com