In this buzz, We talk about how Royal Enfield turned from loss making business to the most profitable business for Eicher Motors.
Royal Enfield entered the Indian market in 1949, and gained popularity when the Indian Government decided to use these motorcycles for the military. Hence, to cater this it partnered with Madras Motors and that is when Royal Enfield India came into existence.
The parent company then merged with Eicher Motors as its plants outside India were already shutting down because of decline in sales and losses in the market. But when the fortunes of the company did not change, even after making losses for five consecutive years, Eicher Motors decided to stop the production of Royal Enfield bikes.
Siddharth Lal, son of Vikram Lal, was appointed as the Managing director of Eicher Motors in 2005. He had a great passion towards motorcycles. He requested all the board members to give him a chance to save Royal Enfield India and he himself took the responsibility of it. He took a bold decision to shut 13 out of the 15 business segments Eicher motors worked in. He decided to keep only the truck and bike business running. He had to face many criticism for this decision of his and many even claimed that the company would be bankrupt in the near future.
He himself took the bike segment under his control, but in the initial years, the sales of the Royal Enfield did not turn up, it continued its downtrend. So in 2012, he decided to improve the bike without changing its vintage look. He hired many passionate employees to the management team who would serve for the betterment of Royal Enfield.
He himself rode the bike for thousands of kilometers to understand the problems with the old bike and made numerous changes in terms of engine, gears like shifting it from right to left and many more. He turned the older Royal Enfield bike into newer one but keeping its vintage look intact. He also decided to step into the expensive and powerful bikes market segment. He planned to launch new segments of motorcycle models like Continental GT, Thunderbird, etc.
Effective marketing strategies were used for popularizing the brand. Royal Enfield India was marketed as a powerful and adventurous bike manufacturing company. The company began to sponsor various off-road rallies, adventurous rides and events to popularize its bikes as they were tagged with the same. The famous off-road rally in Leh-Ladakh which got famous for bike journey was because of this bike. This ride also brought importance to Leh-Ladakh and help it gain recognization.
Royal Enfield also made various rider clubs for the owners of Royal Enfield bike owners and carried out various events all across the country. This made riders of Royal Enfield different from other bike riders and gained them popularity and helped Royal Enfield stand out from all other bikes and create its own space.
Interesting Facts –
Royal Enfield bikes are called Bullets because it was a Rifle manufacturer for British Army.
The original Royal Enfield logo had cannon and tagline “Made like a gun, goes like a bullet”.
Royal Enfield Today –
Effective marketing strategies, modernization of bikes, dedication, faith and belief of the owner made Royal Enfield a huge turnaround from loss making company to major profit contributor for the company. Today Royal Enfield contributes to around 80% of total profit of parent company Eicher Motors. It also contributes to around 90% of market share in its segment with its peer competitors being Harley Davidson, Java motorcycles.
From Struggle for sale in India to large market across 50 countries over the globe, Royal Enfield has come a long way.