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Royal Enfield profits up by 33% compared to Harley-Davidson in 2015

Royal Enfield profits up by 33% compared to Harley-Davidson in 2015

Author | Ronald Menezes | Monday, Mar 07,2016 8:48 AM

Royal Enfield profits up by 33% compared to Harley-Davidson in 2015

On the racing track Royal Enfield might not be a worthy competitor for Harley Davidson’s power; however, the story is different when you compare the sales figures of these two leading bike manufacturers.

It must be mentioned that in 1990, Royal Enfield collaborated with Eicher Group and merged in 1994. In 2000, Royal Enfield considered shutting shop but the Eicher board agreed to give the Royal Enfield more time and continue productions.

And 16 years later the scenario has changed. Royal Enfield, part of the Eicher group has overtaken Harley-Davidson in terms of market share. It had previously exceeded the sales volumes of Harley-Davidson last year.

We make a comparison between the two on a few parameters and see how they fare:

Marketing Approach :

Royal Enfield – In 2009, the average age of a Royal Enfield buyer was around 45 years, which has now come down to about 26 years. Royal Enfield does not boast of huge advertising budgets, rather they have systematically promoted their brand organically through in-store and customer experience and by organising unique events around the brand.

Harley Davidson - According to a recent Harley-Davidson study, in 1987 half of all Harley riders were under age 35. Now, only 15% of Harley buyers are under 35. Harley-Davidson attracts a loyal brand community, with licensing of the Harley-Davidson logo accounting for almost 5% of the company's net revenue. In India over 150 experiential events were held in 2013 alone to promote the Harley-Davidson lifestyle. The second India H.O.G. Rally and India Bike Week 2014 witnessed 1,200 proud Harley owners riding together from across the country to Goa.

Making their presence felt in numbers:

Royal Enfield – Their official website claims they sell few bikes in California and exports contribute about 4,000 units a year. They export to some of the developed markets like United Kingdom, Germany, France and Australia. In total Royal Enfield is present in around 50 countries around the world. In August 2015, Royal Enfield Motors announced it is establishing its North American headquarters and a dealership in Milwaukee, Wisconsin, with the intention to offer three bikes, the Bullet 500, Classic 500 and Continental GT 535 Cafe Racer as they feel this engine size represents an underserved market

Harley Davidson - Harley-Davidson manufactures its motorcycles at factories in York, Pennsylvania; Milwaukee, Wisconsin; Kansas City, Missouri; Manaus, Brazil; and Bawal, India and markets its products worldwide. At present, the Company has 13 authorized dealerships in India.

Revenue and sales:

Royal Enfield - Royal Enfield Revenues shot up 44.6 percent to Rs 3,316.6 crore in quarter ended December 2015 compared to Rs 2,294 crore in corresponding quarter of last fiscal on robust sales growth in two-wheeler as well as commercial vehicle business.

Royal Enfield had posted higher volumes when compared to Harley-Davidson, a near 33 percent hike in profits.

Profit was expected at Rs 264.3 crore on revenue of Rs 3,287 crore. Operating profit was seen at Rs 510.8 crore and margin at 15.5 percent for the quarter, according to analysts polled by CNBC-TV18.

Harley Davidson – Harley’s bike volumes were growing in single digits as compared to the double digit growth for Royal Enfield by the end of 2015.

The dealers felt the pinch as they saw a drop in sales.

Dealers worldwide sold 88,931 new Harley-Davidson motorcycles in the second quarter of 2015 compared to 90,218 motorcycles in 2014.

In the U.S, dealers sold 57,790 new Harley-Davidson motorcycles in the quarter compared to sales of 58,225 motorcycles in the previous year.

Harley-Davidson has currently sold over 12,000 motorcycles in India since 2010 and has grown in double digits. It currently operates 21 dealers in India and clocks 6,000 members as part of the Harley Owners Group.

In international markets, dealers sold 31,141 new Harley-Davidson motorcycles during the second quarter compared to 31,993 motorcycles in the previous year.

Through six months, Harley-Davidson’s 2015 net income was $569.7 million on consolidated revenue of $3.50 billion.

Royal Enfield surely has long waiting periods for their bikes but the enthusiasts don’t seem to mind. The ride for the customers as well as the manufacturer seems to be a smooth one  as of now.

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