Royal Enfield Sales Slump On Dwindling Demand For 350-CC Motorcycles
A surge in exports and sales of 450 cc and 650 cc motorcycles weren’t enough to arrest the slide in Royal Enfield’s sales in May.
Royal Enfield’s sales slumped nearly 10% last month as its bread-and-butter 350 cc motorcycles found fewer takers.
The Chennai-based motorcycling unit of Eicher Motors Ltd. sold 71,010 units in India in May, as against 77,461 units a year ago—a decline of 8% year-on-year, according to an exchange filing on Saturday.
Sales of 350 cc motorcycles—which include best-selling models of Classic and Hunter—fell 13% year-on-year to 59,852 units, as against 69,038 units in May 2023.
Sales of 450 cc and 650 cc motorcycles surged 32% year-on-year to 11,158 units, on the back of an outsized demand for the new Himalayan 450.
In the international markets, Royal Enfield sold 7,479 units—12% higher than the 6,666 units offloaded in the corresponding period a year ago.
Still, those gains weren’t enough to arrest the slide in volume.
The underperformance is symptomatic of the competitive intensity in the middleweight category of motorcycles, where Royal Enfield is the outright leader. Every two-wheeler maker worth their salt—be it Bajaj Auto Ltd. (Triumph and KTM) or Hero MotoCorp Ltd. (Harley-Davidson)—have launched products that offer a higher value proposition than the staid Royal Enfield 350, at a slightly higher or even lower price point.
“We reduce our FY25E/FY26E EPS estimates by 4%/7% as we expect Royal Enfield margins to be under pressure, led by rising competitive intensity,” Motilal Oswal had said, after Eicher Motors’ fourth-quarter earnings.
“We have factored in a 10% volume CAGR for Royal Enfield over FY24-26E. We now expect margins to see a 70 bps decline by FY26E, as any benefit from improving mix (higher spares and apparel sales) is likely to be offset by the rising competitive intensity.”
To be sure, Royal Enfield has a pipeline squarely aimed at the competition.
In the coming months, the Chennai-based company is likely to launch the roadster version of the Himalayan 450, at a price point that will pitch it against the Triumph Speed 400 as well as the Harley-Davidson X440.
That is expected to be followed by the 650 cc variant of the Classic—a moniker that a decade-and-a-half ago breathed life into the world’s oldest motorcycle maker in continuous production.
