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Royal Enfield New 650cc Bike to Launch Today, Could Test Harley's Dominance

Royal Enfield's new bike - to be unveiled in Milan today - is expected to retail at around Rs 300,000 compared to Harley's Street 750 at more than Rs 500,000.


Updated:November 7, 2017, 12:07 PM IST
Royal Enfield New 650cc Bike to Launch Today, Could Test Harley's Dominance
The 650cc Royal Enfield could be based on the Continental GT platform. Image used for representational purpose only. (Photo Courtesy: Royal Enfield/edited by News18.com)
Harley-Davidson Inc's pole position in India's fast-growing big-bike category is set to face a sweeping test when Indian-owned Royal Enfield launches its first heavyweight bike today.

The world's biggest bike and scooter market with 18 million in the year to last March, India accounts for less than 2 percent of Harley's global sales but is now a production location for its popular Street 750 bike and a promising generator of growth as U.S. demand slows.

Harley was the first major player in the country's big bike market - defined as those with engines above 601cc - and controls 60 percent of a segment that has almost tripled in size since 2014 and is expected to double again in the next 4-5 years.

With the arrival of Royal Enfield, however, it faces a locally-owned distribution network that dwarfs Harley's roughly 30 outlets by a multiple of 24.

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Were Enfield to ship even 10 of its new big bikes to each of its about 700 locations, it could double Harley's 3,700 in annual sales.

A day before the new bike's launch, Royal Enfield on Monday unveiled a 650cc twin engine, putting it on track to compete squarely with the Street 750.

India-based industry analysts and commentators say that Harley's distribution network in India must be expanded if it is to deal with the new competition and rising demand from the country's 1 billion-plus consumers.

"Having outlet numbers in the mid-twenties is clearly a thin distribution spread," SBICAP Securities analyst Mahantesh Sabarad said.

"India has over 30 10-million-plus cities and each such city needs 2-3 dealerships to cater to a budding market of bike enthusiasts."

Asked about the new bike last month, Harley Chief Executive Matthew Levatich told Reuters that he would not dismiss a competitor's strengths but that he had faith in Harley's brand and would not be changing strategy.

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Popular enthusiasm for commuting bikes in India's densely populated city streets provides a far larger rider base than in western markets where Harley sells most of its bikes.

Harley plans to increase its network but is cautious about undermining its premium brand and has had problems with complaints about bike servicing in India in the past.

"The specific plans and the rate at which we (expand) is a function of finding a big enough market area and a really competent dealer that can make the investments to have the brand experience that we want to have for riders," Levatich said.

"So that's part of the formula, which will naturally make it probably slower and less dense than most of our competitors will do. But that's our strategy and we are sticking to it."

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Royal Enfield's new bike - to be unveiled in Milan on Tuesday - is expected to retail at around rupees 300,000 ($4,640) compared to Harley's Street 750 at more than 500,000 rupees.

Other Harley executives say they feel confident that it will remain a brand Indians will look up to.

"When it comes to wooing those riders from Royal Enfield to Harley Davidson, we have a track record of that now since we have been in India," said Marc McAllister, Harley's managing director for international markets.

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| Edited by: Ayushmann Chawla
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