On the open road towards growth

On the open road towards growth

Royal Enfield is set on increasing its business by ramping up production in Thailand, introducing new models for local consumers, and focusing on EVs in line with global trends and government policy, writes Lamonphet Apisitniran

Mr Sumbly sees business opportunities for mid-sized motorcycle sales in Asean.
Mr Sumbly sees business opportunities for mid-sized motorcycle sales in Asean.

The motorcycle industry in Thailand underperformed in fiscal 2020, yet the mid-sized market gained momentum, which has encouraged Indian manufacturer Royal Enfield to shift gears.

The 120-year-old company is planning to further expand in Thailand amid changes in the automotive industry, which saw sluggish sales during the pandemic last year. Some of the slowdown was attributed to digital technology and the rise of electric vehicles (EVs), both of which are expected to redefine the whole industry.

Established in 1901, Royal Enfield is the world's oldest motorcycle brand. It is listed under Eicher Motors Limited.

The company is headquartered in India and operates in more than 60 countries, with facilities located in Leicestershire in the UK and Chennai, India.

Its production base in Chennai played a major role in its rapid growth and offers a range of motorcycles from modern to classic bikes.

"We have a rich history and legacy that has withstood the test of time. We've seen World Wars and other iconic products become popular worldwide," said Vimal Sumbly, Royal Enfield's head of business in Asia-Pacific.

EXPANDING THE EMPIRE

Royal Enfield is eager to expand its mid-sized motorcycle sales in Asia-Pacific, with Asean seen as a high potential market because of its large population and high purchasing power.

The company announced Thailand will become a production hub in Asia-Pacific to assemble and sell motorcycles in the domestic market, as well as serve as an export base.

Mr Sumbly said this project is on schedule and is expected to be completed in the second half of this year.

"Our assembly plant is making good progress and we are relentlessly working to make the facility fully functional," he said.

The assembly factory for middleweight bikes is located in Chachoengsao and designed to have a total capacity of 3,500 units per year.

Royal Enfield chose Thailand because the country has been recognised for decades as an automotive manufacturing hub in the region.

Thailand has the infrastructure to facilitate automakers as well as the potential to grow the mid-sized motorcycle segment, said Mr Sumbly.

TARGETING MORE SALES

The growth of the mid-sized market in Thailand makes the company optimistic about its prospects.

Mid-sized motorcycles were the only segment that grew, gaining 2.4% in fiscal 2020, while total sales for the two-wheeler industry volume dropped by 11.7%, according to Royal Enfield.

"We are making headway for strategic growth in Thailand. This was substantiated by our overall retail footprint in Asia-Pacific growing by 28% in priority markets in fiscal 2021 [April 2020 to March 2021]," he said.

Royal Enfield's share in the Thai mid-sized motorcycle market is about 5%. Its sales in Thailand make up one-third of its total sales in Asia-Pacific.

In terms of sales volume in the mid-sized segment, Royal Enfield is recognised among the top five brands in Thailand, Australia, New Zealand, Vietnam and South Korea, said Mr Sumbly.

The company has 33 outlets in 25 provinces in Thailand. Royal Enfield plans to grow its business here, he said.

"We are bringing varied and suitable motorcycles to Thailand," Mr Sumbly said, including a model named Meteor 350.

The model is an easy cruiser suitable for experts and novices alike, he said.

RIDING TOWARDS EV ERA

Like other automakers, Royal Enfield sees business opportunities in the EV market, which is growing after the launch of a global campaign against climate change.

"We are working on exciting new platforms for our motorcycles at two state-of-the-art technology centres located in the UK and India," Mr Sumbly said.

EV technology is being driven by a carbon neutrality campaign to achieve a net-zero goal that requires every country to strike a balance between emissions and absorption of carbon dioxide from the atmosphere.

Thai authorities initially set a target to have EVs make up 30% of total car manufacturing or around 750,000 of 2.5 million units by 2030.

However, the authorities decided to increase the target to 50% on March 24, following the rapid growth of EVs in many countries, especially in Europe.

The government also introduced EV promotional privileges to car and auto parts makers in 2017, covering three types of EVs: hybrid, plug-in hybrid and battery.

The privileges include tax holidays of 5-8 years and import duty exemptions for cars and machinery.

In the motorcycle segment, the Board of Investment (BoI) plans to encourage motorcycle taxis to use electric motorcycles under the "Clean Win" scheme. The BoI is granting promotional packages to participants, aiming to increase the number of electric motorcycle taxis to 53,000 between 2020 and 2022.

"Win" is used locally to refer to an area where motorcycle taxis park their bikes. Riders who arrive first and park their motorcycles in an area "win" the right to serve passengers.

Royal Enfield has a dedicated team working on the EV project, he said. The company is in the investigation phase and is looking at ideas for development.

Mr Sumbly said the company plans to make an announcement at an appropriate time.

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