Comprehensive Pack

2-Wheelers

1
• Industry Overview :3

• Motor cycles :8

• Scooters and Mopeds : 14

• Exports : 16

•Realizations : 21

•Costs and Margins : 25

•Future Growth Outlook : 31

•Company Analysis (Eicher Motors) : 50

2
 Between 2010-11 to 2016-17, motorcycle sales increased at a modest 6%
compound annual growth rate (CAGR), scooter sales accelerated at a
strong 20% CAGR.
Scooters
INDUSTRY GROWTH TRENDS

Motor-Cycles

Mopeds

• Size of 2-wheeler market in 2016-17

•By Value: Rs. 848 bn
•By Volume: 17.59 mn units
3
 FACTORS INFLUENCING GROWTH
Motor cycles
•Rural demand constitute 46-48% of the
motorcycles sales.
•Two consecutive years of El-Nino for FY
15 and FY 16, resulting into back-to-back
drought situation in rural areas which
affected Motorcycles growth
• Growth picked up in 2016-17 due to:
•Good Rainfall
•Improvement in MSP of both Kharif
and Rabi
•Increase demand in urban areas due
to pay commission pay-outs
4
Why Scooters are growing fast?
• Improved road network in Tier 2 and
Tier 3 cities and lack of public
transport
•Reducing mileage gap between
motorcycles and scooters
•Gender-neutral positioning
•Launch of new models
•Steady expansion in players'
dealership network
•Capacity expansion by leading
players
 FACTORS INFLUENCING GROWTH

MOPEDS
• Demand for mopeds mainly comes from small businessmen, shopkeepers and
farmers in rural and semi-urban areas.
• Geographically, AP and TN contribute the highest sales.
• Over the last few years, Kinetic Engineering, Majestic Auto etc have shut their
moped businesses and as a result, TVS Motors is the only player in the segment
• There was a decline in moped sales in the last 2-3 years as erratic rainfall led to
poor farm income.
• But in 2016-17, TVS launched its new four stroke XL 100.This model has been
very well received in the market. The newly launched model is also being well
received in the northern states
• In 2016-17, Moped sales accelerated 23% over a low base in 2015-16 as a result of
improved rural demand and a well-received new model launch.
 The share of motor- cycles sales has dropped from 76.6% in 2010-11 to
63% in 2016-17. In contrast, the share of scooters has increased from
17.5% to 31.65% in the same period

SEGMENTAL MIX CHANGE

Source: Crisil Research

6
OVERALL MARKET SHARE

Player Market Share

2010-11 2016-17
Hero 44.8% 36%

HMSI 13.2% 29%

Bajaj Auto 20.5% 10%

TVS 13% 14%

Royal Enfield 1% 4%
Others 7% 7%

7
 Motor-Cycle review

8
 HMSI has been gaining market share at the expense of Honda and
Bajaj.

MOTORCYCLES : DOMESTIC MARKET SHARE

Source: SIAM, Crisil Research

9
MOTORCYCLE SUBSEGMENTS
•Motorcycles are classified as

economy, executive and

premium, depending on their

launch price and engine

capacity.

• Executive sub-segment

dominate the motorcycles

with 54% share.

Source: SIAM, CMIE
10
 Though Hero leads with 55 % share, Bajaj increased the share from 29%
to 32.5% post the CT-100 launch in 2015.

MOTORCYCLES SUB-SEGMENTS •Hero continues to dominate the

ECONOMY economy sub-segment with its CD
Dawn range of models.
•Bajaj Auto, which had gradually lost
its market share to Hero, now
accounts for 32.5% of the economy
sub-segment, post the launch of CT-
100 in February 2015.
•In the absence of new models, TVS
Motors too, lost its market share in
the segment from 25% in 2011-12 to

Source: SIAM, Crisil Research 12.5% in 2016-17.

11
 Hero is the undisputed market leader in the Executive sub-segment

MOTORCYCLES SUB-SEGMENTS
EXECUTIVE • Hero is the undisputed market

leader with 2 top-selling models –

Splendour and Passion.

• HMSI increased the share through

primarily due to Honda Shine.

•Bajaj lost considerable market share

despite launching several models of

the Discover series

Source: SIAM, Crisil Research

12
 Though Bajaj is the market leader in the premium segment, it’s market
share has dropped to 33% while Royal Enfield’s share has increased to
26%

MOTORCYCLES SUB-SEGMENTS • Bajaj is the market leader

PREMIUM with top-selling models like

Pulsar and Avenger variants
• Enfiled is the second largest
player
• Yamaha captured 3rd
position through different
26%
variants of FZ series.
8.1
• TVS increased it’s share
through Apache
Royal Enfield
• Hero did not have any
successful model after Karizma
Source: SIAM, Crisil Research
13 ZMR and CBZ Extreme
 Scooters and Mopeds

14
 HMSI has 57% share in the scooters segment.

Scooters Market Share • HMSI is the market leader

with Activa with a huge lead
over others. They have
expanded capacities to
Haryana, Rajasthan,
Karnataka and Gujarat.
•TVS gained market share
after 2013-14 with the launch
of Jupiter, Scooty and Zest
•Hero is the third player with
models like Maestro, Pleasure
and Duet
•Yamaha has become the 4th
player with models like Ray,
Source: SIAM, CRISIL Research
Alpha and Fascino
15
 EXPORTS

16
 After a period of slow or negative growth, exports picked up in 2017-
18.

EXPORTS - PAST GROWTH

Source: SIAM
17
 Share of Latin America and Europe in India’s exports have gone up
between 20164 to 2017.

EXPORTS DESTINATION
2014 2017

Source: UN Comtrade, Crisil Research

18
 Exports have been shifting from Africa to Latin America due to their
better economy and currency appreciation.

EXPORTS SHIFT
 Exports to Latin America will continue their growth momentum due to better
economic growth and appreciation of Latin American currencies (the Mexican peso
appreciated 6% and the Argentine peso climbed 3%, while the Colombian peso rose
1% in January-May 2017).

 Recent expansion in the Latin American market by Hero and TVS will support
growth in demand for exports.

 Exports to African countries have been suffering post the slump in oil prices.

 Although oil prices have stabilised, shortage of foreign exchange is expected to

keep exports muted.

Moreover, the Nigerian naira which depreciated 53% in 2016, is still under pressure
and19depreciated a further 6% in January-May 2017.
 Bajaj’s market share in exports has dropped due to over exposure to
African markets and dependence on motorcycles.

EXPORTS : PRODUCT MIX AND MARKET SHARE

Exports: Product Mix Exports: Market share

Source: SIAM
20
 REALIZATIONS

21
 Realizations increased due to the combination of price hikes and
increased share of premium segment.

MOTORCYCLES: NET REALIZATION TRENDS

SEGMENTAL SHIFT NET REALIZATIONS IN RS. 000s

Source: crisil research

22
 Bajaj has the highest realization in Motorcycles due to it’s dominant
position in the premium segment.

MOTORCYCLES: PLAYER-WISE REALIZATION TRENDS

• Bajaj Auto Ltd's realisation is

higher than other players, due

to a larger presence in the

premium segment as well as

higher exposure to exports.

• Growth in realisation was

supported by rupee

depreciation.
Source: crisil research
23
 Despite having lower market share, Bajaj is the highest profit
making 2-wheeler company due to it’s premium bikes and exports.

HERO HONDA VS BAJAJ AUTO : FINANCIAL COMPARISON

March 2017 Bajaj Hero Eicher

Market Share 10% 36% 4%

Net Sales (Rs. 213,735 285,850 70,334
mn)
Profit after Tax 40,795 35,463 16,671
(Rs. mn)
Net Profit 19.1% 12.4% 23.7%
Margin
Exports to Sales 45.1% 2.7%
77,180
M.Cap (Rs. cr) as 79,544 70,807
on 29th March
2018
24 Source: Company reports
 COSTS AND MARGINS

25
 Raw material costs constitute 80 to 85% of the total costs.

COST BREAK-UP

Type of Costs Percentage of Total Costs

Raw Material Costs 80 to 85%
Selling and Distribution 7 to 9%
Costs
Employee Costs 5. 8%
R & D Costs 2 to 3%

Source: Company Reports

26
 Steel , Aluminium and Rubber constitute the bulk of the Raw
material for motorcycle manufacturers.

RAW MATERIAL COMPOSITION ( MOTOR CYCLES)

Source: Crisil research

27
 Sales and Distribution costs have almost doubled in the last 5-6
years.

NON RAW MATERIAL COSTS

• S & D costs almost doubled in the

last 5 – 6 years due:

 Expansion of distributive

network

 Building brand of new

models

Source: Company Reports

28
 Margins and Profitability have increased in 2015-16 due to drop in
Raw material prices.

MARGINS AND PROFITABILITY

•Margins are estimated to have expanded 200 bps to about 16% levels in 2015-

16, aided by 12% drop in basic raw material costs.

• Companies' return on capital employed (RoCE) has increased to 40% in

2015-16, driven by expansion in margins due to decline in raw material costs.

29
 Capacity Utilization typically has improved after bottoming out in
2015-16.

CAPACITY UTILIZATION TRENDS

Source: SIAM
30
 Future Growth Outlook

31
Growth Trends

Source: crisil research

32
Growth to remain robust till 2019-20
• Demand to grow at a robust compound annual growth rate (CAGR) of 8-10% till
2019-20, to about 23 million units.
• Rural demand will be backed by rising farm incomes and improving rural
infrastructure, especially as the government continues to invest in developing rural
roadways.
• Each kilometre of road constructed adds significant two wheeler ownership.
• In addition to higher GDP growth, rising population of working women and student
enrollments will support urban demand.

33
Growth to remain robust till 2019-20
• From 2016-17 to 2019-20, motorcycle sales to expand at 6-8% CAGR on the back of
rural demand and premium launches.
• Scooter sales is likely to grow at 14-16% CAGR, led by positive structural factors
such as convenience, perceived higher utility in intra-city transport, and growth in
demand from urban and semi-urban areas.

34
Emission norms to affect two-wheelers most; prices to surge in 2020-21
• Two-wheeler prices to rise from 2017-18 onward, owing to regulatory requirements.
• The main price hike is expected in 2020-21, owing to compliance with Bharat Stage-
VI (BS-VI) norms.
• On average, prices are likely to rise ~Rs 1,000 in 2017-18. A hike of Rs 500 for
economy, Rs 1,000 for executive, and Rs 9,000 for the premium segment, will impact
motorcycle demand in 2019-20. Combined braking system, which will be mandatory
for vehicles < 125 cc, will add Rs 500-1000 to vehicle prices, while anti-lock braking
system will add Rs 9000.

35
Emission norms to affect two-wheelers most; prices to surge in 2020-21
• A sharp across-the-board price increase of Rs 10,000 will take place in 2020-21, on
account of BS-VI compliance, affecting sales that year. Sales will drop 7-9%, with
economy segment and mopeds taking most heat.
• Industry expect some improvement in the demand scenario in 2021-22, from the low
base of the previous fiscal. On the whole, the industry to expand at a 5-7% CAGR
between 2016-17 and 2021-22, with 3-5% growth in motorcycles and 0-2% in
• mopeds. Scooters are expected to continue to outperform the industry at 9-11%
CAGR.

36
Competitive intensity rises with increase in player's offerings
• Competition is intensifying in the Indian two-wheeler market, with global players
increasing their offerings, even as domestic players are launching newer products.
• Motorcycle segment to see more competition, given the launches planned by players.
Competition is expected to be more intense in the premium segment.
• Launches are anticipated in the scooter segment from global and domestic players.
Players with a sharper focus on scooters have benefited owing to the continued
growth momentum in sales, whereas companies such as Bajaj and Hero have felt the
pinch.

37
Smooth ride for industry up to 2020, BS-VI norms to slow down
pace in 2020-21
• The under-penetrated rural market will be the key growth segment for the two-wheeler
industry. Rising incomes and growth in addressable households will be further aided by
better rural connectivity and rising participation of women in both urban and rural
• areas. Scooter sales are likely to grow at a higher rate than motorcycles over the next five
years, due to changing consumer preferences.
• The implementation of BS-VI norms in 2020-21 will destabilise the growth trajectory, but
the industry is expected to rebound within the next year.

38
 Rural markets to steer long term growth, but emission norms to
pose a speed breaker in 2020-21
• Domestic two-wheeler sales to record a robust compounded annual growth rate (CAGR) of
8-10% up to 2019-20.
• Payouts following the Seventh Pay Commission's recommendations are expected to boost
two-wheeler sales up to thenext fiscal.
• Scooters, the fastest growing segment, will make rapid strides. Here, manufacturers' focus
on urban markets, expansion in the distribution network in semi-urban and rural areas,
model launches, and better product positioning will drive up volumes.
• Motorcycle sales are likely to grow on the back of robust rural sales.
• Mopeds, which account for 4-5% of domestic twowheeler sales, are also expected to
continue growing at a moderate pace.
39
Rural markets to steer long term growth, but emission norms to
pose a speed breaker in 2020-21
• However, prices are estimated to rise sharply in compliance with the BS-VI norms in 2020-
21, leading to an adverse impact on sales.
• Sales volumes to drop 7-9% that year.
• The impact is expected to be lower on premium motorcycles and scooters, and higher on
price-sensitive mopeds, and economy and executive category motorcycles.
• Thereon, we expect industry growth to rebound from the low base of 2020-21 and grow 8-
10% in 2021-22. The five-year CAGR up to 2021-22 is thus estimated at 5-7%.

40
Estimated long term volumes and growth rates by two wheeler segment

Source: crisil research

41
Scooters' share to cross one-third

• Scooters' growth has been continuously outpacing that of motorcycles. Led by the
structural factors, scooters are estimated to grow at a faster pace in the next five years.
• The share of scooters in the two-wheeler industry is estimated to reach ~36% in 2021-22
from a mere 19% in 2011-12.

42
Scooters eating into motorcycles' share

Source: Industry , CMIE

43
Rural connectivity and rising women's participation to accelerate
addressable households growth
• Rising affordability and growing number of addressable households are major drivers of
long term growth. Improving economic scenario as well as structural factors are predicted
to give the required push to growth in addressable households in the next five years.
• Multiple two wheeler ownership saw a large rise in the last decade or so, in both urban
and rural regions.
• It is estimated that 22-25% and 32-35% of households, respectively, own more than one
two wheeler.

44
Considerable scope for expansion in rural markets

Source: Crisil research

45
Urban households provide limited growth potential

Source: Crisil research

46
Rural segment offers better growth opportunities
• The graph below represents the penetration levels in domestic households, which have
been divided into 10 equal deciles.
• The higher deciles represent higher household incomes. The penetration of two-
wheelers is much lower in rural areas versus urban areas, clearly showing where the
potential for the two-wheeler industry lies. In fact, for the lower deciles, the penetration
isinsignificant in rural areas.
• This potential will be the prime mover for two-wheeler demand in the future, as rising
income levels make two-wheelers more and more affordable for a larger number of
rural households.
• Additionally, rural penetration is continuously rising, with even higher deciles
preferring two-wheelers, whereas urban consumers tend to shift their preference
47
Decile-wise penetration: Rural versus urban

Source: Industry
48
Decile-wise penetration: Rural versus urban
• On the rural front, besides rising penetration and improving incomes, better road
infrastructure is also expected to support income demand.
• Rural roads also have a very favourable impact on two-wheeler demand.
• This impact is: Direct, by generating income multiplier in the rural economy during the
construction of roads Indirect, by enabling mobility and access through connectivity.
• Every kilometre of road constructed results in an addition of 20-25 two-wheeler
ownership.

49
 Company Analysis - Eicher

50
 Eicher Motor’s market capitalization grew 114 times between
2008 to 2018.

COMPANY’S MARKET CAPITALIZATION

• Eicher Motors
Rs. 77,180
crs
90000 • This has been
80000
70000 achieved with around
60000
50000 4% market share in 2-
40000
30000
wheelers and 7%
Rs. 676
20000
crs market share in
10000
0 2008 2018 1
2008 2017
commercial vehicles.
Note: Market Capitalization as on March 29, 2018
51
ROYAL ENFIELD VS BAJAJ AUTO VS HERO MOTO CORP

• In May 2008, Royal Engield’s market

capitalization was just 12% of Bajaj
Auto and 6% of Hero Motocorp.
• On July 31, 2017, Eicher Motors
overtook both Bajaj Auto and Hero
Motocorp in market capitalisation
stood at Rs 81,776.67 crore against Rs
81,243.52 crore of Bajaj Auto and Rs
72,971.22 crore of Hero MotoCorp.
• Share price Eicher Motors have
surged 7,716 per cent on July 31, 2017
from May 26, 2008, whereas Bajaj
Auto and Hero MotoCorp climbed1
828 per cent and 363 per cent,
respectively, during the same period.
52
SIDDHARTHA LAL : CEO •Siddhartha Lal was all of 26 when he took over
as CEO of Royal Enfield in 2000.
• If you had spent Rs 55,000 to buy a Royal
Enfield motorcycle in 2001, you would now
have an old, rugged bike.
•But if you had invested the same Rs 55,000 in
shares (at Rs 17.50 per share) of Eicher Motors,
the company that makes Enfield bikes, your
investment will be worth Rs 5 crore now.

1
• If you had bought one share of Eicher at Rs.
224 in 2006, it would have been worth Rs. 28,450
on March 29, 2018.
53
MAJOR STRATEGIC DECISIONS
•Till 2004, Eicher group had a diverse spread of about 15 businesses including
tractors, trucks, motorcycles, components, footwear and garments, but none was
a market leader.
• Lal undertook an intense portfolio analysis and took a hard call.
•He decided to divest 13 businesses and put all money and focus behind Royal
Enfield and trucks, two businesses where he believed the group had a genuine
shot at leadership.
• Back then, conglomerates viewed businesses as family jewels. It was a cardinal
sin to sell anything. But Lal sold almost everything.

54
How Mr. Lal justified his strategy?

"In my mind the basic question was this: do we want to be a mediocre player in

15 small businesses or just be good in one or two businesses,”

"That's why we sold 13 out of the 15 businesses, the big one being tractors to

TAFE. We removed the clutter and focussed on two promising businesses."

"Many did think Eicher was going out of business,“

"Motorcycles was the joker in the pack,"

"I did the mathematics, projections

1 and all we needed was to get the motorcycle

business to the next level (in terms of sales).“

55
 ROYAL ENFIELD TURNAROUND

•In 2000,Royal Enfield was in a very bad shape. Their monthly production was
2000 units against a capacity of 6000 units.
• Directors of Eicher Motors decided to either sell-off or shut down the motor-
cycle division.
• Siddarth Lal convinced the board that the Bullet need to be given another chance.
• Lal, then 26, was an unabashed Bullet fan: he even rode a red-coloured Bullet
while leading the baraat (procession) to his wedding venue, instead of the
traditional horse.
• Though the Bullet had its reputation, following, an instantly recognisable build,
and aspirational value, it faced 1many challenges.

56
 CHALLENGES

• Competition:
 Liberalization of 1990s had led to the introduction of deluge of light, easy to commute, cost
Competitive bikes in the Indian market.

• Old Vs New Customers:

 Existing customers wanted their Bullets just the way they had always been. By modernising,
Royal Enfield risked losing traditional fans without possibly gaining any new customers.

• Quality
 There was a joke that the Royal Enfield Bullet travelled directly from Showroom to
Mechanic.
 Though the bikes had diehard followers, there were also frequent complaints about them
- of engine seizures, snapping of the accelerator or clutch cables, electrical failures and oil
leakages.

57
 CHALLENGES

• Design:
 The company had to deal with many basic design questions –
 Should the gears be shifted close to the rider's left foot - as in most bikes - or
retained on the right side? Long-term users were dead opposed to this change.
 Many prospective buyers found the Bullet too heavy, difficult to maintain, with the
gear lever inconveniently positioned and a daunting kick-start.
 Engine was made of Cast iron that made it prone to oil leaks and frequent
seizures. Its ability to meet increasingly strict emission norms was also suspect.
 A modern aluminium engine would eliminate these problems, but it would lack
the old engine's pronounced vibrations and beat - which Royal Enfield customers
loved.

58
 ROYAL ENFIELD: KEY DECISIONS

• The company decided to retain the bikes' rugged looks, including the build, the
design of the head lamp and the petrol tank, many of the old engine's
characteristics - the long stroke, the single cylinder, the high capacity with push rod
mechanism.
• But the company decided to make some bold changes:
• The gear lever was shifted to the left despite the opposition from long-term users
• The new aluminium engine, unlike the old, had hydraulic tappets, a new engine
arrangement, and fewer moving parts. But it did not produce the vibrations and the
beat of the old, but international experts were consulted and sound mapping carried
out for over 1,000 hours to ensure it produced the maximum rhythmic vibrations
possible and a beat, which was 70 per cent of the amplitude of the original.
• The new engine had 30 per cent fewer parts and produced 30 per cent more power
than the old, with better fuel efficiency. By 2010, all Royal Enfield models had begun
to use the new engine.
 ROYAL ENFIELD: KEY DECISIONS

• Two other problems needed to be addressed: the quality of some of the

components Royal Enfield bikes were using, and the sales experience.
• To tackle the first, shop floor processes were fine tuned, while suppliers were
exhorted to improve quality levels. Royal Enfield also embarked on a large scale
internal exercise to tone up performance.
• Slowly, the tide turned. Engine related problems and oil leakages in Royal Enfield
products almost disappeared. By 2008 dealers were reporting lower workloads.
• Malfunctioning of the sprag clutch, on which the electric starter depends, declined,
for instance, from five per cent in 2005/06 to 0.2 per cent in 2010/11.
• Royal Enfield also began conducting marquee rides to promote leisure biking.
•To improve sales experience new company-owned showrooms were launched and
dealerships expanded.
 LONG CLIMB UP

 In October 2008, Royal Enfield launched in Germany its newly designed 500cc
Classic model - inspired by J2, a 1950 model Bullet - with the new engine. It was a
success, admired for its performance and fuel economy.

 Emboldened, Lal launched it in India in November 2009 initially as a 350 cc bike,

priced at Rs 1.20 lakh.
•In 2005, the company was selling only about 25,000 bikes every year.
• By 2010, the company was selling 50,000 bikes, but on three platforms. That was
when Lal decided to build all Enfield bikes on a single platform to maximise
economies of scale.
•The Enfield Classic, launched from
1 this single platform, caught the fancy of
customers. Sales shot up six times in half a decade from 50,000 units in FY10 to
300,000 in FY14. and 8,00,000 units in FY18
61
 •Royal Enfield sold around
ROYAL ENGIELD’S MONTHLY VOLUMES
70,000 vehicles per month in

FY 2018

•Royal Enfield’s Monthly Sales

grew 750% between June 2012

to June 2018.

• During the same period,

Motorcycle grew by around

25%
Source: Company, Nirmal Bang Institutional Equities Research
62
ROYAL ENGIELD’S PROFITABILITY

•Most profitable companies with its two-wheeler EBITDA margin of 31%.

(Average EBITDA margins for the industry is 16 to 16.5%)
•The company has been consistently improving margins YoY.
•In the last seven years, the company posted 2,100bps margin expansion from
10.0% to 32%.
•Margin is set to expand further on the back of better economies of scale with.
• Industry Analysts expect another 120bps margin expansion over
FY18E/FY19E.

63
 350 CC bikes contribute to more than 90% of the company’s sales

ROYAL ENGIELD PRODUCT MIX

64
 Bajaj Domineer could not dent the dominance of Classic 350 cc

Royal Enfield Classic 350 Vs Domineer 400

Month | Year Classic 350 Dominar 400
January 2017 39,391 Units 3000 Units
February 2017 40,768 Units 3000 Units
March 2017 39,973 Units 3216 Units
April 2017 43,978 Units* 2000 Units
May 2017 39,721 Units 1500 Units
June 2017 42,149 Units 927 Units
July 2017 42,967 Units 1341 Units
August 2017 45,555 Units 1892 Units*
September 2017 47,674 Units 2250 Units
October 2017 48,469 Units 1652 Units
November 2017 49,534 Units 1004 Units
December 2017 47,558 Units 925 Units

65
Total Sales (2017) 5,27,737 Units 22,707 Units
VIRTUALLY NO COMPETITION IN 350 CC SEGMENT

66
 The company significantly expanded the dealer network in the last 5-6
years.

STRENGTHENED THE DEALER NETWORK

•Royal Enfield has focused on

cities as the price points for its

750 models are nearly 2x that of

traditional motorcycles, but

the company is now focusing

on increasing its dealer

network in small towns and

FY18

cities.
67
 Royal Enfield’s advertising spend is only 0.6% of sales whereas the
industry average is around 2.2 to 2.5%.

ADVERTISING SPEND AS % OF SALES • Lowest advertisement spending in the

domestic industry as it witnessed
strong demand and long waiting
period without any significant
advertisement spending.
•It rather focused on organising various
events like Rider Mania etc to get Royal
Enfield customers together.
•Apart from this, the company also
conducts various rides throughout
India for Royal Enfield customers.

68
 FOCUS ON EXPORTS

•In 2015, Lal shifted focus to international markets. The company exporte a mere
6,000 bikes annually in 2015, but Lal believed Royal Enfield can be a sizeable player
in international markets a decade from now.
•He made some strategic hiring with this goal in mind.
• Rod Copes, a former Harley Davidson manager has been hired as president
of North America (based in US);
•Pierre Terblanche, head of the industrial design team was snagged from
Ducati;
•James Young, head — engines has worked in Triumph, and was hired in UK.
•Simon Warburton, head — product planning and strategy (new projects) also
comes from Triumph.
•Mark Wells, head — programme (new projects) and Ian Wride, worked on
Enfield's Classic and Continental GT models while they were with the design
firm 'Xenophya.‘
•Rudratej Singh from Unilever1
for marketing .
• In 2017, exports increased to around 18,000 units (300% over 2015 volumes) and
export to more than 50 countries including developed markets like US, Germany,
UK etc
69
 FROM BIKES TO TRUCKS

•Lal turned his attention to trucks in 2006 after turning around Royal Enfield.

•The group pushed hard for a breakthrough in the truck business.

•He struck an alliance with Volvo, which also brought in equity.

•Eicher and Volvo hold 54.4% and 45.6% respectively in the joint venture VE

Commercial Vehicles (VECV). This alliance too has led to shareholder value

creation.

•Though VECV is the number 4 player in terms of market share, it has managed to

1 and Heavy Vehicles segment which give higher

be a strong player in the Medium

margins.
70