A fierce race has started in India’s premium motorcycle segment but Royal Enfield is ready to defend its turf

Capping months of negotiations, when iconic US motorcycle-maker Harley Davidson last week announced an alliance with Hero MotoCorp, India’s largest two-wheeler maker, it underscored a trend that has been gathering speed in the Indian motorcycle market — growing consumer demand in the mid-size segment, or vehicles with engine displacement between 200 and 500cc. The premium motorcycle market in India (classified by the industry as 200ccplus) sees annual sales of 800,000 and its undisputed king has for long been Royal Enfield. Now, a slew of new players and partnerships are revving to grab market share, even as changing customer preferences indicate that this segment is poised for massive expansion. Of all the motorcycles sold in India, the mid-size segment accounts for 5-8% marketshare. “The premiumisation of two-wheelers in India is as fundamental as the demographic age of the country and despite the temporary disruption on wages, the direction is unmistakable,” says KN Radhakrishnan, CEO of TVS Motor. 78972754 78972760 78972765 78972767Premium bikes now account for 30% of the company’s total sales. While the Hero-Harley combine will also cater to the global mid-size motorcycle market out of India, a number of marquee global badges, Indian brands as well as partnerships between them are introducing new products in the segment. Apart from Hero-Harley, Bajaj has joined hands with Triumph and has an existing partnership with KTM, TVS has joined hands with Norton as well as BMW, while Japanese majors Honda, Suzuki and Yamaha are also introducing models in the segment. The player to beat, Royal Enfield, is not idling, either. It is also introducing a pipeline of new models and preparing for the coming battle. India’s 9 million units commuter segment which accounts for 50% of overall market has got saturated with little differentiation between models and continues to grow at a steady state, fulfilling the mobility needs of users. 78972771The excitement kicks in beyond 200 cc — that’s where differentiation is rife and enthusiasts can choose from categories such as street bikes, sports bikes, racing bikes, tourers, cruisers, rally bikes and adventure bikes, among others. But within the premium segment, the 350cc mark is where the action appears to be most intense. Royal Enfield’s upcoming Meteor (350cc), Honda’s recently-launched Highness (350cc), BMW Motorrad’s G310 R (313cc) and G310 S (313cc), TVS Apache RR310 (312cc), Bajaj KTM 390 Duke (373cc) and the Svartpilen/Vitpilen (250-400cc) model from the Bajaj-KTM-Husqvarna partnership will be jostling for marketshare around that sweet spot. Enfield has for years sold motorcycles with that engine capacity. Enfield’s Lalit Malik, chief commercial officer at Royal Enfield, says the youth is gravitating towards the middle-weight motorcycle segment and that has triggered increased action from rivals in the space. This surge is primarily driven by increasing affordability and urbanisation of towns and villages but there’s also a growing desire for self-expression among the youth, which is accelerating leisure motorcycle riding in India, he adds. 78972777“The younger generation wants motorcycles to be a reflection of their personality, and a means for furthering their passion for riding, travel and exploration,” Malik says. “The definition of the mass market will change with rising disposable income. It is a matter of time, the bikes above 125 cc will account for a significant chunk of the market,” says Devashish Handa, VP sales, marketing & after sales at Suzuki Motorcycle India. The centre of global motorcycle consumption started shifting to emerging markets in the last decade, with India leading the charge. A rising disposable income, improving road infrastructure and a young demographic combined to trigger the need for upgrade options for millions of bike owners. Unlike evolved markets such as the US, UK or Europe, where a motorcycle for leisure and commute are different, in the emerging markets of India, South East Asia and Latin America, the mid-size motorcycles served both the daily commuting need as well as the leisurely weekend ride. 78972783Apart from lower per capita incomes, the physical build or body frames in emerging markets are relatively smaller when compared to the population in Europe and US, and hence the 200–500cc motorcycles have become just the right size to meet their varying mobility needs. In an era when only two out of 10 products launched succeed, bike makers have been compelled to unite in the back end, even as they fight fiercely in the market place. Bajaj-KTM unite was the pioneer in the space almost a decade back. The Pune-based global motorcycle maker not only offered Stefan Pierer-owned KTM a new beachhead to serve the large Indian market but the partnership also catered to the international market with bikes made in India — which has delivered an optimal costquality mix. Earlier in 2020, Bajaj Auto rolled out the Swedish Husqvarna brand (part of KTM) in India and in another two years, a range of Triumph Motorcycles, too will hit the roads. The 250-800cc segment has seen an exponential growth over the last 5–8 years, growing almost 7 times to about 7 lakh units. Bike makers say the 250-350cc segment is the gateway to the world of premium motorcycling, allowing consumers from the commuter segment to upgrade to this next affordable category. “It’s the stepping stone and gives entry into premium ownership for the young urban consumer,” says Kaushik Madhavan, VP, Frost & Sullivan. Cognizant of the changing competitive landscape, Royal Enfield on its part is in the midst of revamping its product portfolio based on its J platform. Within a year, all its core models will have been refreshed. Thunderbird is being reborn as Meteor, the much loved Classic is getting a replacement and the company is also introducing a lighter Bullet model. Even as bigger motorcycles based on K and Q platform are underworks for the global market. For Royal Enfield, the pressure is coming from both ends of the market. 78972790The main stream two wheeler makers — Hero, Honda, Bajaj and TVS — are moving up the price points through their premium range and the global big bike makers — KTM, Triumph, Harley and BMW — are shifting downwards thanks to their Indian allies. Jawa from Classic Legends, which hit the roads two years back, has gradually started chipping away at RE’s marketshare. Classic Legends today sells about 5,000 units a month of Jawa and within the next 12-18 months, it is likely to add a 650cc model as well as a couple of models under the Yezdi badge. Honda Motorcycle & Scooter, which has joined the race with the 350cc Highness, will introduce two or three more offerings on the same platform. Royal Enfield will face the stiffest competition from Bajaj Auto, which is adopting a comprehensive approach to corner the upgrader space. Rakesh Sharma, ED, Bajaj Auto, says the company will be straddling the entire space of premium motorcycles in India. The company will do this through a combination of its own brands as well as through alliances with KTM and Triumph. “We will be seeding multiple positions in the market across different dimensions. Be it for young or matured customers, sporty, racing or tourer bikes, modern or a classic bike, racing or tourer bikes and bikes for the racetrack , the Tarmac and the dirt track! These positions will be built through multiple brands — Bajaj-KTM-Husqvarna or a Triumph,” adds Sharma. Rivals will rely on domestic plus export strategy to stay competitive. The price elasticity that RE enjoys today may no longer exist. Beyond new products, the tactical move from competition like price rationalisation also has an impact. BMW India recently launched the 310 R and 310 GS at reduced prices of Rs 54,000 to Rs 64,000 to Rs 2.45 lakh and Rs 2.85 lakh respectively, which can wean away buyers. The demand for these bikes has been more than expected. Informed sources say the BMW motorcycles 310R/GS 310 have clocked more than 1,400 bookings in 20 days, that is more than half of what BMW sold in the whole of last year. “The next 2-3 months are crucial as we expect pent-up demand and the festive season to buoy sales. With the riding season peaking in winters, could also add to the sales numbers,” says Shivapada Ray, head of BMW Motorrad India. Royal Enfield is a strong brand in its category, both in terms of persuasion and awareness. This, combined with a near absence of competition, has contributed to its high market share. But the company’s unrivalled run in the premium segment is now coming to an end and it might have to rapidly adapt to a market with competition from pedigreed makers such as Harley, BMW and Triumph, whose local partnerships give them reach and agility in the market. Due to the lack of choice, a lot of Royal Enfield owners accepted niggles over quality or service experience. With more options emerging, the tolerance level may wane. The company fares poorly in third party surveys on parameters such as quality and service experience. It has largely followed a conservative approach to marketing. Royal Enfield has traditionally relied on below-the-line activities and rides to build brand salience. The company’s biggest risk might be that it’s still largely a single-product company. Its Classic range accounts for over 80% of its total volumes. As the premium market sees the entry of differentiated categories such as cruisers, tourers and sports bikes, RE will need a more diversified product mix. To be fair, its Interceptor 650 has got off to a very good start. RE is betting that it will eventually turn into another Classic for the company. While the entry of Bajaj-Triumph, TVSNorton and Hero-Harley over the next 2–3 years will challenge Royal Enfield, analysts believe its strong franchise network will hold it in good stead. As for the Indian consumer, a bonanza of premium bikes at mouthwatering prices is on the anvil.

from Economic Times https://ift.tt/35Vo6Eh