Growth in sales of Royal Enfield, figures of VECV decline in India

author image CarTrade Editorial Team
Wednesday 29 May 2013, 10:38 AM

The new plant for Royal Enfield motorcycles at Oragadam is about to start its second phase of production. With its full capacity, it is expected that both plants of the company will together produce 500,000 units a year, as against 1,75,000 at present. Apart from this, the other significant achievement is the rise in sales of motorcycles during the first quarter of 2013 as compared to the previous year. 34,736 units of Royal Field motorcycles were sold this year, as compared to the first quarter of 2012, when the sales figure stood at 23,899 vehicles. This indicates an impressive increase of 45.3 per cent over the previous year. Apart from this, the operating margin for the auto maker was at 15.9 per cent for the first quarter of 2013.

Royal Enfield launched the new Bullet 500 in the market during 2013 and in addition, the Continental GT is scheduled for a year-end launch. In terms of specifications, the new Bullet 500 is fitted with a 500 cc twin-spark carburetted 4-stroke UCE engine that churns out 26.04 Nm of highest power and 40.9 Nm of peak torque. The vehicle gets a 5-speed manual transmission on the left to put it into motion. In terms of styling, the Bullet 500 gets a brand new Frost Green colour and the headlamps are now known as 'Tiger Lamps', being slightly different than the round headlamps traditionally seen in Bullet motorcycles.

Speaking about the brand Royal Enfield and its future, Siddhartha Lal, Managing Director and Chief Executive Officer (CEO) of Eicher Motors Limited was quoted as saying, “Royal Enfield continues to power ahead even in Q1 2013. With its second plant at Oragadam commencing commercial production, Royal Enfield is now prepared for its next level of global growth. The new facility has been conceived on a much larger tract of land and created with a master-plan that can take the eventual production to over 500,000 per year. With the speedy execution of the first phase of the plan, we will now have a capacity of 175,000 motorcycles in 2013, from both plants. We have already begun working on the second phase of expansion at Oragadam, which will further increase the production capacity to 250,000 motorcycles in 2014. With this new facility, we now have the ability to scale our production quantity quickly in response to market demand.”

He also talked about the launch of the Bullet 500 in February 2013 and about the positive responses received from Indian buyers with respect to the same. It must be noted that Royal Enfield is a part of VE Commercial Vehicles (VECV), which is a joint venture between Eicher Motors Limited and Volvo Group of Sweden. Eicher Motors Limited reported an increase of revenue in quarterly operations during 2013. The company came up with a rise of 3.4 per cent to Rs. 1724.3 crore as against Rs. 1668.2 crore witnessed in the first quarter of 2012. However, Siddhartha Lal spoke about troubled times being faced by the Commercial Vehicle industry and how VE Commercial Vehicles had managed to retain a positive outlook by outpacing growth in the Indian market.

According to the CEO, the company focussed on increasing profits by strictly managing costs and working capital. Sales for VE Commercial Vehicle stood at 12529 units during Q1 2013, under the review of 14,289 units sold in Q1 2012, which implies a sales decline of 12.3 per cent. However, 98.1 per cent growth in Earnings before Interest and Tax (EBIT) was recorded, since the figure stood at Rs. 53.1 crore as against Rs. 26.8 crore during the same period.

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