Despite new competition from Harley Davidson and Triumph, Royal Enfield promoter Siddhartha Lal – the MD of Eicher Motors is confident of holding on to 80% market share in the mid to long term in the fast gorwing mid-size motorcycle segment (250 to 750 cc).
Speaking to the media in the Q1 earnings call, Lal, said, “We are continuing to build an extremely strong company. We are many steps ahead of the competitors. We have been able to create a strong MOAT in our business. We believe that we will be able to hold 80% share in the medium to long term. That is our ambition. We are not going to cede any market share willingly, even if we are 80-85% of market share in the 1.5 to 2 million market, we are ok with that.”
The company today enjoys over 90% market share in the motorcycle market above 250 cc category and Lal claims that Royal Enfield has single handedly grown the segment 20X from 50000 units per annum to almost 1 million.
Very well aware the new competition can eat into RE’s share, Lal says, “We are ok with market share falling, at 90% there is only one way the market share could go, that is south with new competition coming in. But we are ok with that, but the good part is the overall market is however bound to grow.”
He believes that the new competition will potentially grow the segment from 1 million to 1.5 to 2 million units in the coming decade.
Lal reminds RE is ‘no stranger’ to competition, since it started succeeding a decade and half back, the brand has seen multiple waves of competition coming in. The segment has got a bit of action and excitement, as leaders RE will benefit tremendously from the growth of the segment too.
“We have seen different waves – the largest guys, the biggest brands, the global guys, the Indian guys, everyone has been coming in. There is no dearth of competition for Royal Enfield. (With Triumph and Harley) this is certainly a one new wave. There are a couple of brands that have come together, both as contractor manufacturers – may be not being able to compete directly so both are becoming contract manufacturers for other brands,” he elaborated.
Even with the two new competitors, the company will pay heed to them and spend a “lot of time, energy and effort in understanding them,’ assured Lal.
“More competition should help grow the mid-size motorcycle market. When there are new offerings in the market, there is new excitement. The outcome of all of this would be that the size of the midsize market will grow at an even higher space, than before,” believed Lal.