In our Little Champions portfolio (which is now shut to fresh inflows as it has reached capacity) we have highlighted that several small Indian companies now have world leading market shares in niche industries (see As you would expect, this trend is going to spread as the Indian economy’s expansion allows more companies to have the financial reserves to make an attempt to sell their products around the world. Most of the familiar names in this regard are Indian IT Services and Pharma companies. In manufacturing, the 2-wheeler is at the vanguard of this trend with Bajaj Auto having already built a strong export franchise in mass market bikes. However, what makes Royal Enfield (and its owner, Eicher Motors) more interesting in this regard is that they are targeting the opposite end of the market. This article highlights just how different Royal Enfield’s franchise in India is from Harley Davidson’s franchise in the US and why that difference could give Eicher Motors a crucial edge as it tries to build Royal Enfield’s brand in the Americas:
“The Devote’s differ from typical motorcycle enthusiasts in more than their watering hole and fashion preferences. For one thing, they’re young. Almost everyone in the club qualifies as a millennial, whereas the median age of a U.S. rider is 50. The second is that they exclusively ride Royal Enfield bikes. All but unknown in the U.S. and Europe, Enfields—retro rides that would look familiar to 1960s-era Steve McQueen—have become in recent years a coveted lifestyle statement among young, upwardly mobile Indians. As a result, Chennai-based Royal Enfield, which began as the subcontinental unit of a British manufacturer by the same name and kept chugging along when the parent went bankrupt, sold more than 650,000 motorcycles in India last year—a volume equivalent to the entire U.S. market.
Royal Enfield’s success in bringing bike culture to India’s millennial and Gen Z demographics—collectively, more than half a billion young people—has started to turn heads outside the country. Sales are rising sharply in markets including Brazil and Indonesia, places where bikes have traditionally been viewed as utilitarian transport tools, not expressions of personal style. The company is now making a high-stakes bet on the U.S. and Europe, where producers such as Harley-Davidson Inc. and Indian Motorcycle have been struggling for more than a decade to expand sales as younger consumers choose other hobbies. Siddhartha Lal, the heir to the automotive conglomerate that controls Enfield, says he can win over Western enthusiasts with stylish bikes that cost far less than those made by rivals—and perhaps attract younger riders to revitalize a customer base now dominated by aging boomers.”
The Bloomberg article then delves into Royal Enfield recovery from the hole it found itself in the late 1990s. The key inflection point in the recovery came in 2006 and at its heart say Indian companies’ growing prowess in creating affordable designs: “Juicing sales would require new models. Lal decided to start with an overhaul of the fabled Bullet. Its basic design was little changed from the two-wheelers that had carried Indian border guards through the Himalayas in the 1950s, including a clunky cast-iron engine. Updating the motor and electronics while retaining the look and feel of the original would be a challenge, not least where sound was concerned. Modern aluminum engines, Lal was disappointed to learn, couldn’t replicate the roar he’d fallen in love with as a young man.
It took two years of design work, including a lot of noise testing, for the company’s engineers to find a compromise. By making the motor’s piston longer and thinner, they could get a deeper engine sound during acceleration, at the cost of some speed. And with a heavier flywheel, the bike would still make the throaty thunk thunk thunk that let everyone know you were on an Enfield at a red light. But the new model would also be affordable, retailing for less than $2,000 in India… In its last financial year before the pandemic struck, the company sold about 824,000 bikes globally. Harley, by contrast, shipped about 218,000.”
If Royal Enfield is to hack it in the Western world, it is on the back of this design prowess: “Both Royal Enfield models have been well received in overseas markets, making best-of lists in the motorcycle press and winning a positive review from none other than Jay Leno, the retired late-night host who now spends much of his time reviewing bikes on YouTube. “You know, I think I like this bike. … [The] engine is very balanced, very smooth,” he said as he rode a Continental around Los Angeles in one video. The two models helped Royal Enfield increase export sales 96% in the 12 months to March, to almost 39,000 bikes.”
(Disclosure: Eicher Motors sits inside several of Marcellus’ advisory portfolios.)

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