If given a choice between becoming the owner of fifteen mediocre businesses or two market-leading businesses. Which one would you choose? If your answer is the second option, your choice would align with what Siddharth Lal (current Managing Director of Eicher Motors) had chosen seventeen years ago for his company and this choice has made all the difference.
When the brand was facing huge losses way back in 2004, Siddharth Lal decided to return to the brand’s roots and look for solutions that could help Royal Enfield regain its lost glory.
Royal Enfield is Eicher Motors’ flagship brand. It is the only automobile Indian company that didn’t have a Japanese collaboration. Earlier, dabbling around with 15 businesses at once, all incurring huge losses, had become a hassle for Eicher Motors. Siddharth’s cutthroat decision of slashing down most of them and redirecting the focus on Royal Enfield made the company and the brand what it is today – a stellar gemstone in India’s automobile crown. This is the unlikely story of India’s grandest motorcycle brand - Royal Enfield.
The Origin Story
The British Saga
Initially a British company, the origins of Royal Enfield can be traced back to 1891 when entrepreneurs Bob Walker Smith and Albert Eadie bought George Townsend & Co. of Hunt End, Redditch. Townsend’s was a 50-year-old needle manufacturer which had recently begun manufacturing bicycles.
In the initial phases, the company manufactured different parts of guns for the Royal Small Arms Factory.
In 1893, the company won a contract to supply precision parts to the Royal Small Arms Factory of Enfield, Middlesex. To celebrate this prestigious order, they went on to rename their undertaking as the Enfield Manufacturing Company Ltd. Their bicycles were then renamed as Royal Enfields and the trademark ‘Made Like A Gun’ was introduced.
After about two years, in 1901, The New Enfield Cycle Company produced its first motorcycle. Over the years the company came out with many hybrids, quadra bikes, and motorcycles.
It was in 1955 when the Redditch Company finally entered the Indian market by partnering with Madras Motors to form 'Enfield India'. Shortly after, construction of a purpose-built factory at Tiruvottiyur, near Madras began.
A New Home
In 1955, the Indian government placed an order for eight hundred 350cc Royal Enfield motorcycles to be used by its armed and police forces. They were an ideal choice for patrolling the country's borders by the Indian army.
In 1956, the Tiruvottiyur factory in Madras finally opened for business and started manufacturing Bullets under licence. Initially, these were shipped from England in kits and then assembled in the Madras plant. But, by the end of the year, a total of 163 Enfield India Bullets were built and manufactured.
In 1977, Enfield India started exporting its 350cc Bullets to the UK and Europe. Sales started soaring quickly and the bike became a cult favourite amongst the biker community.
In 1994, the company took another leap when commercial vehicle and tractor manufacturer, The Eicher Group, acquired Enfield India, consequently renaming it to Royal Enfield Motors Limited.
In 1997, 40 Royal Enfield riders went to the world’s highest motorable pass, Khardung La, on their Enfields bikes, setting a precedent for other riders and laying the groundwork for the yearly Himalayan Odyssey ride.
But things started going south for Royal Enfield not long after that. In 2000, the company’s sales hit an all-time low of 2000 units per month owing to poor quality, redundant design, and changes in customer taste and preferences which was followed by the entry of Japanese two-wheeler manufacturers in the market of India.
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In 2004, when Siddharth Lal, the heir of Eicher Motors joined the company as the head of sales, marketing, and product development, he decided to take up control of Royal Enfield and crafted a two-year plan to save it from dying. In a momentous decision to pull back the brand from the edge of bankruptcy, he divested 13 Eicher motor businesses and diverted all his focus towards Royal Enfield and trucks - two businesses that he felt had unbound potential.
After taking up operations, he ordered the shutdown of Enfield’s new Jaipur manufacturing plant as a cost-cutting initiative and decided to focus on existing plants.
Next, he stopped the dealer discounts which were costing the company around 80 lakh every month.
A series of these decisions helped Royal Enfield come back on track and revive its sales for good. Soon after, Royal Enfield became the star of Eicher Motors. Thus Royal Enfield entered its golden era under the leadership and wisdom of Siddharth Lal.
He consulted engineering consultants in the UK, Austria, Germany, and Italy when the company was developing the engine for the motorcycle. In his study, he found the engineering support in the Midlands second to none.
In the Midlands, the team developed the signature Royal Enfield Twin inceptor, which is what gave the bikes an additional boost of power, making them ideal for highway rides. This was a humongous deal for the brand. They had tapped into a huge consumer need that was not very well vocalised.
The brand thus reinvented itself and became synonymous with a rugged, ‘live life on your rules’ personality. It fits into the vibe of travelling and getting out in the world. This made Royal Enfield quite popular with bike enthusiasts, making it the go-to bike for people who love to travel.
The Enfield Rider’s Community
An exclusive community for all the Royal Enfield riders across the country, The Enfield Rider’s Community is India's only adventure touring club, which focuses on touring on Royal Enfield and exploring the unexplored.
Started in 2016 with a vision to promote adventure touring in India and globally, on Royal Enfield, this club gives Enfield riders a platform to come together and share their passion for riding and unleash the true potential of their machines. The biker online community regularly organises bike trips to explore the remotest corners of India.
In addition to this, the community website offers to find or add mechanics for you as part of their Roadside Help feature. Millions of Royal Enfield owners gather together and celebrate their zeal for riding, spread across various cities in the country.
In 2011, Royal Enfield riders around the world took on a ride on the inaugural ‘One Ride’ event hosted by the company. It is an annual ride that takes place on each first Sunday in April.
The Royal Enfield community is bound together by the same enthusiasm and passion for riding. And even when the company was incurring losses, the community stuck together strong and loyal to the brand as ever – now that’s the true mark of an amazing brand.
The Sales Figures
In 2005, the company was selling only about 25000 bikes annually, on an average. But after Siddharth’s takeover, sales increased and by 2010, the company was selling 50,000 bikes per year. But they still weren’t enough to help the company break even.
In 2010, the tech economy in India began to boom which turned the tides for the brand. Royal Enfield today brings in about 80% of the Eicher Motor profits.
In February 2021, Eicher Motors recorded a 10% growth in Royal Enfield sales of 69,659 units per month! In terms of exports, the brand saw a 94% increase of 3,522 units sold in October 2021.
Looking to the Future
As compared to the low-powered Japanese motorcycle brands sold in India, the prices of Royal Enfield were higher but were relatively cheaper than other major global brands. And in order to keep the motorcycles in the affordable range, owing to the price-sensitive Indian market, the company did not revise its prices even after sales went up considerably.
Thus, the strong pricing power of the Royal Enfield brand helped elevate the valuation of the company quickly.
The magnificent story of Eicher Motors’ comeback is a prime example of an efficient leadership at play. If Royal Enfield is the star of Eicher Motors, Siddharth Lal was surely the man behind the show, transforming Royal Enfield into what it is today.
Eicher Motors’ saga and Siddharth Lal’s fortitude certainly ensured that the answer to their setback came with a solid comeback.