Royal Enfield

After four consecutive months of declining wholesale volumes, Royal Enfield recorded growth in September and October, with festive demand propelling October dispatches to the 1-lakh unit milestone. While strong festive demand usually tapers off after the season, the automaker is witnessing a positive trend and expects a positive trajectory.

"Certainly, there will be a change in demand from the festive to the post-festive period. But if we compare pre-festive to post-festive demand, it has gone up…In the last 10 days of November, traction, inquiries, and walk-ins have been very good. That is a very positive sign which we are seeing," B Govindarajan, Royal Enfield's chief executive officer told investors in a post-earnings call.
 
The mid-size motorcycle maker saw its monthly wholesale volumes fall between May and August. In the second quarter of the current financial year, Royal Enfield's sales declined 1.8 percent year-on-year to 2.25 lakh units. However, the company ramped up despatches in September and October in anticipation of strong demand during the peak festive season. 
 
Royal Enfield’s retail volumes grew by nearly 26 percent during the festival season, much higher than the market growth, thanks to the company's new launches, focus on Bullet and Classic models, and marketing initiatives. "The marketing and product interventions have really worked, and the demand is sustaining," Govindarajan said.

"During this time, the middle-weight segment saw a lot of activity, action, and noise. Last time, I mentioned that any amount of marketing effort we would have done would have been an over-emphasis at that point, and would have gone into a saturated phase. So, we held back on market activations and all those things. We wanted to enter market activations around September onwards."

Royal Enfield has also increased floor funding and ramped up marketing initiatives through video and print advertisements, which, the management said helped rekindle interest in the brand. "The desire is back. There is an interest that we are seeing once again with a lot of positivism. That is why the brand is actually vibrant once again," he said.

Meanwhile, Royal Enfield generates around one-third of its domestic volume from the rural area. In October, rural India continued to demonstrate its market strength, posting robust growth in key vehicle categories, despite the festive season traditionally driving stronger urban sales.

The recent data from the Federation of Automobile Dealers Associations (FADA) also revealed interesting shifts in the urban-rural dynamics of India's auto retail market. In October, auto sales in urban areas were down 2.7 percent month-on-month and 1.5 percent year-on-year. In contrast, rural sales were up 2.5 percent on the month and 1.4 percent on the year in October 2024.

"Rural demands are going up. In urban areas, the overall growth rate is lower. We are seeing it even for our motorcycles. There are some products like Guerrilla 450, which are urban-centric. Now we are going to pick up those areas where it has a higher traction and we are going to work on it during the two quarters. That is where our focus is going to be on the market activations," Govindarajan added.

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