Repeated attempts by rivals in the past to breach the Enfield fortress have failed. Here is what is different this time round.
The first two weeks of July packed quite a buzz for Indian biking enthusiasts. The buzz is owed to the entrance of two American motorcycle heavyweights, Harley Davidson and Triumph, in the Indian 350-500 cc motorcycle market.
On July 3, Harley Davidson, in collaboration with Hero Motocorp, released the cruiser X440. After packing up its Indian operations in 2020, the company now bids to enter Indian biking’s middleweight market (350-500cc bikes) with its first single cylinder bike in five decades.
A couple of days after X440’s launch, Triumph and Bajaj Auto, brought forth Speed 400 and Scrambler 400X. Triumph, which has been active in the country since 2013, had entered a strategic partnership with Bajaj Auto back in 2020. As a part of this partnership, Bajaj Auto took over Triumph India's sales and marketing.
The entrance of two major auto forces in the market simultaneously isn’t coincidental but owed to its growth in recent times.
On average, 65,500 350cc+ bikes are being sold in India every month this year. An industry report found out that sales in the 350cc-500cc category grew by 17.74% to 29,135 units. The segment, however, is still not greater than 5% of the total bike market in India. Two-wheeler sales in India in FY23 stood at 15.86 million units.
Commenting on the industry growth, Abhinav Chaturvedi, Partner, Deloitte India, shares, “Premium bike sales in India are expected to continue growing mainly due to the rise of high-income young buyers and an increase in available models and choices in the market. Existing and emerging players in this segment will do well by focusing on personalisation, better shopping experience and premiumisation.”
Niranjan Gupta, CEO, Hero MotoCorp has also said the segment is one of the most profitable in two wheelers.
The trail for the new entrants in the segment won’t be easy though. They will be entering into a market segment in which Eicher’s Royal Enfield (RE) commands a monopoly. RE currently commands over 90 percent of this market.
This isn’t the first time Royal Enfield’s monopoly has been challenged. In 2015, Mahindra tried to enter the segment with Mojo. The 300cc bike failed to make a lasting mark. Its total sales shrank to 274 units in 2021.
Rejigging their approach, the company brought back legacy bike brands of the category, Jawa and Yezdi, back on the roads in 2018 and 2022 respectively, under subsidiary 'Classic Motors'.
However, the resurgence failed to put a dent in Royal Enfield's appeal for consumers in the segment. Classic Motors combined sales declined by 8.15 percent, from 3,436 in February 22 to 3,156 in Feb 2023.
When Bajaj launched Dominar 400 in 2018, it took direct shots at RE with its ad campaign, ‘Haathi Mat Palo’. Dominar sales were down to 743 units in February 2023, from 2,795 units sold in December 2021.
Things continue to go well for Royal Enfield. The company posted sales of 77,461 motorcycles in May 2023. The number stood at 63,643 for May 2022.
Understanding "Bullet's" dominance of the category
Royal Enfield or more affectionately known as "Bullet" has been present on Indian roads since colonial times. In the Indian market, it had rivals like Yezdi and Jawa till the 90s.
These two pulled out of India, while other bike manufacturers like Bajaj, Hero, Honda, etc., focused more on the commuter (100-125 cc) segment. This left RE alone to strengthen its roots in the segment.
Talking about RE's dominance, Subhash Kamath, former CEO, BBH, brand consultant, and an avid motorcyclist, opines, "Enfield has been able to preserve the charisma and machismo of their heritage over the years. There is a certain feeling a biker gets when he's on a Bullet. There's the sound, the look, the ruggedness, that a rider can associate with the bike. "
Kamath believes there are three parts to Bullet's success. First is the consistent imagery driven around the bike. Any bike that aims to make a place in the premium category needs to be clear about its story and brand image, he opines.
“New entrants wanting to take on Bullet's monopoly in the segment need to build an image for the bike which can trigger a desire to own the vehicle in the target audience. The task at hand is to place the product in popular culture,” he opines.
Secondly, the pricing of the bike plays in its favour. Bullet’s variants can cost you anywhere between Rs. 1.5 lakh - Rs 3.8 lakh. Both Bajaj-Triumph and Hero-Harley have been aggressive with the pricing of their bikes. Hero-Harley's X440 starts from Rs 2.29 lakh and goes up to 2.69 lakh. Bajaj-Triumph Speed 400 price starts at Rs 2.33 lakhs.
The other significant factor behind the success of RE is the assurance that the bike can be taken care of without hassle, given the easy availability of servicing.
"With the pricing, positioning, and the rugged image, Royal Enfield has built a very unique position in the space," he adds.
Fostering a biking community: Bajaj-Triumph’s attempt
Agreeing with Kamath, Anil S Nair, CEO, ASN Growth consulting, and former CEO and managing partner, L&K Saatchi & Saatchi, believes that both new entrants, Hero-Harley and Bajaj-Triumph, pose a strong threat to Bullet’s monopoly over the segment.
He says the biggest strength of Royal Enfield’s marketing machinery has been the biking 'communities' within its consumer base. These communities and rider clubs revolving around Bullets came up organically and the company utilised it for further promotion thoroughly later.
"There are people who are fiercely loyal, holding the flag high for RE. The Bullet clubs eventually led the company to build a platform called 'Rider Mania'. The strength of Rider Mania is that it actually gives riders a platform to come together," he says.
An avid motorcyclist himself, Nair believes that the premium segment is not one where advertising can necessarily lead to more sales.
"New players won't get a lot of time to let these communities come about organically. RE had a free rein of two decades to build this community because it came about on its own. Triumph and Harley will have to inorganically accelerate building communities and activation around their bikes," he adds.
He believes that Bajaj-Triumph has the edge in community building. He observes the company has made an effort to make the bikes available to influencers prior to its release. In turn, they have been able to generate content around them, thereby generating a buzz around the bikes.
The impact of this has been an increase in consumer interest. Bajaj-Triumph has completed over 10,000 pre-bookings for its Speed 400 and Scrambler X400 ten days prior to its launch.
Distribution and servicing in favour of Hero-Harley
"In Harley's case, they have only done this press meet where just a few bikes available. Thus, influencers have not been able to release their content around Harley. Triumph, on the other hand, has distributed their bikes left, right and centre,” he says.
Distribution channel, supply chains and after sales service centres is where, he believes, Hero-Harley has an advantage. This is because they have developed a presence in every nook and corner in every small town in India over the years. Currently, Hero has 1,672 service centres and 1,715 showrooms present in India. In comparison, Bajaj has a lesser number, 660 bike dealerships in India.
The consumer base for the segment is also diverse and segmented. Ambika Sharma, founder and managing director, Pulp Strategy, sales in the non-metro areas are a big geographies for RE.
“Breaking RE's hold on this segment is not on the cards for other players at the moment. New entrant's should target the passion segment, where biking means a combination of travel passion and motorcycles, for youngsters,” she says.
The bike’s quality and the service quality will be critical. Further, the cost of maintenance and cost of ownership will also play a factor, she opines. Customer advocacy, on social media handles of the companies, can also help in image building.
“Making sure that you have a very robust consumer experience channel, which flows into social media, will be critical. Websites like bikedekho, zigwheels, should have the necessary data to support a consumer’s research on these bikes. Auto journalists also drive a lot of perception because people believe what they say. Companies should also look into having prominent journalists review and speak about their bikes,” she says.