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40 Years Ago...and now: Royal Enfield rode straight into a need gap

In 1975, the Royal Enfield Bullet motorcycle, with its familiar sidecar, made its most famous Bollywood cameo appearance. Actors Amitabh Bachchan and Dharmendra rode it joyously down a dusty, bumpy country road to the strains of Yeh Dosti… in the all-time hit film Sholay.

That bucolic scene marked the apogee of the legendary Royal Enfield (RE) brand in India. Its original British parent, which made the brand famous in the second World War, had long sold the company, and production in the UK had ceased by 1971. But the 350-cc Bullet with its rugged looks continued to be assembled in India (even exported to Europe! ) by a company called Enfield India, in which Madras Motor Company owned the majority shares.

But 25 years later, Royal Enfield, as the company was renamed after it merged with Delhi-based Eicher Motors in 1994, was facing extinction. A board meeting in 2000 almost came to the conclusion that RE should either be closed or sold. Cut to 2014, RE is feted as a star performer in the Eicher stable. From having just Bullet (and a much smaller, now-extinct 50-cc Explorer), RE has three more brands - the Thunderbird, Continental GT and Classic. In the 250-350-cc category (181,683 units), its Classic, Thunderbird and Bullet compete with Kawasaki's Ninja but have 99.5 per cent share. In the 350-500-cc (24,914 units), these have 84 per cent share (against KTM) and in 500-800-cc (1,283 units), its Continental GT has 73.5 per cent share (vs Ninja) as per data with Society of Indian Automobile Manufacturers (SIAM).

RE was able to make a stellar comeback from a near-death experience because it found the right positioning in an increasingly crowded market. RE was a casualty of liberalisation, made worse by years of neglect. In the 70s and 80s, the Bullet was in a class of its own, with a 350-cc engine. Motorcycles then, as now, were seen as a utility vehicle for urban transport but one that lagged scooters because of a significant price differential. But across the few motorcycle segments, the Bullet had just a handful of other brands to compete with, such as Yezdi's Jawa and Rajdoot, both of which sold more than the Bullet, according to legacy data shared by SIAM.

But RE had strong inherent brand values, which is why the second-hand Bullet (manufactured since the 1930s) was a coveted possession even then. But the company did little to focus on quality, mileage and other issues that motorcycle buyers began to consider by the late-80s. By then Rajiv Gandhi's partial liberalisation was changing the dynamics of the motorcycle market, with hybrid brands like Hero Honda and Kawasaki Bajaj introducing fuel efficiency as a key differentiator.

By the 90s, the brand was living on the fumes of history. The joke in those days was the RE brand originated in Britain and travelled from the showroom straight to the mechanic's. RE's market share had come down to 5 per cent from the highs of 22-30 per cent till the early-80s of the total motorcycle market. That was when Siddhartha Lal, of the third generation of the family that owned Eicher, decided to resuscitate the brand.

Lal's strategy was simple but original. Instead of competing directly with the 11 brands present by then, he focused on a niche that played on the RE's brand values: Mid-size leisure motorcycles and that too, only in India. The RE bikes were mostly touring bikes that were a cross between a cruiser (all-out highway riding) and a commuter bike. Lal wanted to be the first-mover in a market where middle-class income was set to rise.

The individuality of RE bikes had to be preserved too - as most bikes in their price range or engine capacity either bore the DNA of superbikes or cruiser bikes. R L Ravichandran, former CEO, says, "We needed to attract new customers but by doing so, risked losing existing ones." Hence, RE launched the Thunderbird in 2002 and the Classic in 2008, reminiscent of the Bullet's look. Among the Bullet variants, market analysts say the Electra (350-cc) is doing the best, while the Classic 350-cc is estimated to be the highest-selling overall. The newer avatars are what the touring bike-maker is pushing in its sales pitch now.

But RE also fixed the nitty-gritties such as engine seizures, snapping of the accelerator or clutch cable, electrical failure and oil leakage. "We made tremendous changes to the manufacturing and the supply chain," says Lal. The 50s-British technology was jettisoned, a new engine introduced (with 30 per cent fewer parts and more power), yielding vastly-improved fuel efficiency. By 2008, dealers reported lower workloads and warranty claims fell sharply.

RE mostly eschews conventional advertising, instead banking on activities with afficionados. Much like Harley-Davidson (cruiser bikes in a much higher price bracket), RE boasts of fan-clubs, rides and events across the world (recently, there was a ride in Germany with the Continental GT 535-cc). RE's site, too, is weaved around "stories, problems and solutions related to one passion, the Royal Enfield bike" says Lal.

Lal is eyeing pole position in the mid-size segment (by global standards, 250-500-cc) that would act as an upgrade for those riding commuter bikes. Its lowest-priced Bullet costs Rs 1.02 lakh, with its 350-cc variants costing Rs 1.13-1.31 lakh.

It will also export to US, Europe, Latin America, with the cafe racer, Continental GT, as the flagship model. For a brand that was almost headed for the scrap-heap 14 years ago, this can certainly be called change at the speed of a bullet.