What are the reasons behind success of Royal Enfield

What are the reasons behind success of Royal Enfield

What are the reasons behind success of Royal Enfield

Siddartha Lal, the current CEO of Royal Enfield and his extreme focus on Royal Enfield brand and bikes have made it a culture.

What are the reasons behind success of Royal Enfield
What are the reasons behind success of Royal Enfield
  • In 2000 Royal Enfield was in a very bad state. Their factory which had a capacity of 6000 was producing only 2000 bikes due to low demand. This was because of various engine problems which was very old. The board of Eicher Motors which is the owner of Royal Enfield was thinking of what to do, when Siddartha Lal asked for one more opportunity to revive the brand
  • In those days Eicher Motors had around 15 businesses like components, shoes, clothes etc but it was a market leader in none. Siddartha sold all businesses except bikes and trucks. In those times family conglomerates normally did not sell any business as that meant incapability by the family to run it. He even sold the tractor business in which they were strong. Everyone doubted his decision but Lal made his calculations and took the risk. As he was himself an automobile engineer and a passionate biker, he started to focus on to build better Royal Enfield bikes.
  • Though they wanted to make several design changes yet they were scared thinking what if the original customers do not like it(decreasing the level of the iconic Royal Enfield sound, moving the gears to rider’s left foot etc) . Yet they maintained the original look and made the bike for efficient. The risk paid off well and their user base started growing
  • They focused on the leisure market which was their strong point instead of the consumer market which had many competitors. They started sponsoring various events and rallies to built a loyal customer base.
  • Though sales started increasing, in 2010 Lal again took a big risk. In that time they sold around 50,000 bikes on various engine platforms. They decided to focus on a single engine platform and their sales grew to a whooping 3,00,000 bikes per year in 2014.
  • In 2014, 80% of Eicher Motors’ profit came from Royal Enfield. They became huge by becoming small. He believed in his decisions, worked hard and learnt from his mistakes to build Royal Enfield into such a huge brand.

    Just to give you an example of how big Royal Enfield has become now:

    In 2001, if you had bought shares of Eicher Motors worth Rs 55000 (Rs 17.5/share), your Rs 55000 would be now worth more than Rs 7.5 crore (more than Rs 25000/share).

 

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