Harley-Davidson’s New Royal Motorcycle Pain : Royal Enfield

Royal Enfield

It’s bad enough Harley-Davidson (NYSE:HOG) is in the midst of a two-year slide in U.S.

motorcycle sales, but it may have a new headache to contend with. India-based motorcycle

maker Royal Enfield is introducing a new big motorcycle to the Indian market, a move that

could lead to Harley-Davidson losing its dominance overseas. It could also create headaches

here at home.

 

A royal lineage

It’s possible you’ve never heard of Royal Enfield, or only associated it with the famed rifle of the

British army, but it is today the world’s largest motorcycle manufacturer located in the world’s

biggest motorcycle market. It has a largely negligible presence in the U.S., and its bikes typically

have small engines compared to the big bore bikes Harley produces, but it was founded in 1901,

giving it a lineage older than Harley-Davidson (and as old as Indian Motorcycle), and now it looks

like it wants to take on Harley-Davidson wherever it does business.

 

Earlier this month, Royal Enfield introduced in India its first big twin-engine motorcycle — two of

them, actually — the Interceptor INT 650 and the Continental GT 650, bikes that will compete

head-to-head with Harley’s Street 750.

 

Royal Enfield

 

Right now, India only accounts for around 2% of Harley-Davidson’s total sales, but it owns 60% of

the big bike market there and a local player with a vastly larger distribution network could create

problems.

 

A vastly larger rival

Royal Enfield is owned by Indian car manufacturer Eicher Motors and completely owns the mid-size

250 cc to 750 cc bike market with a 95% share. In fiscal 2017, which ended last March, it sold some

666,000 motorcycles, but wants to produce some 950,000 next year.

To put that in context, Harley-Davidson sold 260,000 bikes last year and is expected to sell at most 250,000

units worldwide this year. In fact, Royal Enfield’s sales are equivalent to the global sales of Harley-Davidson,

KTM, BMW, Triumph, and Ducati — combined.

According to reports, the new Enfield motorcycles will be priced at around 300,000 rupees (about $4,600)

versus the 500,000 rupees a Street 750 goes for. While that alone would make it a competitive alternative,

Enfield has about 700 dealerships in India whereas Harley has just 30, meaning it would take very few

Enfield sales at each of the dealerships to outstrip Harley sales.

 

 

Read More: https://www.fool.com/investing/2017/11/21/harley-davidson-has-a-new-royal-pain-to-worry-abou.aspx

2 thoughts on “Harley-Davidson’s New Royal Motorcycle Pain : Royal Enfield”

Leave a Reply