Royal Enfield: Revival of a Cult Brand

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EXCERPTS

In the year 1893, Enfield Manufacturing Company Ltd (Enfield Manufacturing) was set up in England to manufacture bicycles. The company manufactured its products under the Royal Enfield brand. Not content with limiting its product line to bicycles, Enfield Manufacturing soon decided to focus on building other types of vehicles.In the year 1899, it started manufacturing a quadricycle called the Royal Enfield Quadricycle. The Royal Enfield Quadricycle was powered by a rear-mounted engine. Despite being an innovative concept at that time, the Quadricycle had limited market potential. In the year 1901, Enfield Manufacturing launched its first motorcycle. This was fitted with a 239 cc engine.

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As part of its global expansion strategy, Enfield started selling its motorcycles in the Indian market in the year 1949. In 1955, the Indian government placed an order for eight hundred 350 cc Royal Enfield motorcycles for use by its police and armed forces. The Royal Enfield motorcycles were considered an ideal choice for the Indian army for patrolling the country’s border...

Despite operating in a niche segment, Royal Enfield remained one of the most admired two wheeler brands in India. The bikes were preferred by both motorcycle enthusiasts and customers in the rural areas...

Immediately after taking over as CEO, Siddhartha analyzed the strengths and weaknesses of Royal Enfield to come up with a strategy to put the brand on its path to revival. He came to the conclusion that the sales of Royal Enfield motorcycles needed to be improved quickly to save the brand....

With the quality issues addressed, the management focused on improving the customers’ experience of buying and owning the brand. To improve the sales experience, Royal Enfield improved the look of the dealer outlets...

Even though the prices of Royal Enfield were higher than that of the low powered Japanese motorcycle brands sold in India, they were cheaper than the major global brands. And in order to keep the motorcycles affordable in the price conscious Indian market, the company did not revise its prices even after the prospects of the brand started to improve...

The strong pricing power of the Royal Enfield brand and the improved operating margins rapidly increased the valuation of the company. By the year 2015, Eicher Motors had become one of the most expensive automobile stocks in India...

Exhibit- I : Summary Financials of Eicher Motors

Exhibit- II : Royal Enfield Models Sold in India

Exhibit- III : Sales of Royal Enfield from 2010 to 2014

Exhibit- IV : Image of Royal Enfield Continental GT

Exhibit- V : Images from Trip and Leave Home Campaigns

Exhibit- VI : Market Share of Different Categories - Indian Two Wheeler Industry for the Fiscal Year 2013

Exhibit- VII : Old and New Logos of Royal Enfield