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The Royal Success Story of Royal Enfield

A Royal Enfield motorcycle
A Royal Enfield motorcycle (Picture credit: jeffkazama from pixabay

Welcome to Youth Motivator. I would like to tell you how belligerence business strategies saved a bullet bike company from the brink of bankruptcy.
Now, Royal Enfield is one of the fastest growing and biggest Indian companies.

Introduction- The birth of Royal Enfield

Royal Enfield is a 64 year old company.
In the year 1892, Eadie Manufacturing Company Limited was started by Albert Eadie and Robert Walker Smith in England.
In the initial phases, this company used to manufacture the different parts of guns for Royal Small Arms Factory.
In the year 1896, a new subsidiary company of the Eadie Manufacturing Limited was formed, by the name The New Enfield Cycle Company Limited.
This company used to produce bicycles and its components.

In the year 1899, this company also manufactured a four-wheeled bicycle (Quadricycle).
After a period of two years, in 1901 The New Enfield Cycle Company produced its first motorcycle by fixing a motor produced by Minerva Company on to its bicycle.
And in the year 1903, this company also started producing cars.

Incurring heavy losses-

Unfortunately, after a few years, The New Enfield Cycle Company encountered huge loses, which made them to sell their car business to a company by name, Alldays and Onions limited.
Now, The New Enfield Cycle Company focused solely on manufacturing motorcycles.
This company later assumed the name Royal Enfield.

Serving in World Wars-

In the year 1914, Royal Enfield tasted its first huge success when it received a huge order from the British war department, which decided to use its motorcycles in First World War.  
After which, Imperial Russian Government also decided to place orders with Royal Enfield.
This popularised the Royal Enfield motorcycles.
And during the Second World War, the British Authorities signed a big contract with Royal Enfield for the military motorcycles.     
The Royal Enfield motorcycles were widely employed in the Second World War.

Entering India-

Eventually, Royal Enfield entered the Indian market in the year 1949.
These motorcycles gained immense popularity in India, when the Indian government decided to use these motorcycles for its army and police personnel.
For this purpose, 800-350 cc motorcycles of the Royal Enfield were employed.
In the year 1955, Royal Enfield partnered with the Madras Motors in India giving birth to Royal Enfield India.          
Madras Motors used to assemble the components of the 350 cc motorcycle, which they used to import from England.
And from the year 1962, all the motorcycle components were locally manufactured in India.

Becoming an Indian brand-

The Enfield England encountered huge losses, by which, in the year 1896 it was shut down.
Luckily, even then the Enfield India was not shut down and this plant in India was manufacturing motorcycles.
But, even this company in India was making losses, so it was merged with Eicher Motors.
So, over the course of time this British company became an Indian brand.
These motorcycles are being used by Indian Army for patrolling since 1955.
When Eicher Motors bought Royal Enfield, Royal Enfield was in a very bad position.
The Royal Enfield was making negligible profits at that time.
After incurring heavy losses for a period of five long years, Eicher Motors decided to stop the production of Royal Enfield motorcycles.

The man who saved Royal Enfield-

Siddhartha Lal, the son of Vikram Lal (former chief executive officer of Eicher motors) had a great passion towards motorcycles.
So, he decided to give a new life to the Royal Enfield brand.
Siddhartha Lal was very confident that he could make Royal Enfield a very successful and profitable brand.
So, he requested for a chance to save Royal Enfield with Eicher Motors, as Eicher Motors was planning to shut down Royal Enfield brand.
Luckily, all the board members agreed with the decision of Siddhartha Lal to save Royal Enfield.
Siddhartha Lal was of 26 years of age at this time.
In the year 2005, Siddhartha Lal was appointed as the managing director of Eicher Motors.

Taking tough decisions-

At that time, Eicher Motors was into 15 businesses, some of which include manufacturing automotive spare parts and components, trucks, buses, tractors, consultancy, garments, etc.
Siddhartha Lal took a very bold decision to sell out 13 businesses out of the 15 businesses.
So, Eicher Motors fully concentrated on its two remaining businesses, which include truck and bike businesses.
As Siddhartha Lal firmly believed that instead of doing several businesses with low profits, it is much better to focus only on a couple of businesses and become a market leader in them.
By this, we can understand that Siddhartha Lal is a much focused person.

This decision was very emotionally challenging for Siddhartha Lal, as the tractor business was initiated by his grandfather.
But in order to save Eicher Motors, he took this decision.
Many criticised Siddhartha Lal for his decision and opined that this company would soon become bankrupt.

Success through joint venture-

Even though, the Eicher Motors trucks were doing somewhat well, they were not in a position to compete with the big players in the industry.
So, in the year 2008, Eicher Motors formed a joint venture with Volvo for support in manufacturing buses and heavy trucks.
This proved to be a very good decision, as within a short span of time, their trucks stood at number three position in the Indian market.

Saving his favourite company-

Even though their truck business picked up pace, their Royal Enfield business was still in a sorry state of affairs. 
So, Siddhartha Lal decided to better their bikes by improving their performance without compromising on their vintage looks.
He hired many passionate employees into Royal Enfield management team.

Siddhartha Lal rode the Royal Enfield bikes for thousands of kilometres to understand the issues pertaining to the bikes and made numerous technical changes accordingly, like shifting the gear plate to the left side from right side.
And also the engine was improved significantly.
His post-graduation in mechanical engineering from Cranfield University helped him immensely in developing Royal Enfield motorcycles.
In addition to maintaining quality, Siddhartha Lal also strived to improve the customer experience by updating the company’s brand outlets.

Understanding from a customer’s perspective-

 As he was a passionate rider himself, he grasped the various weaknesses of the bikes and started on improving them.

Before launching Continental GT motorcycle, Siddhartha Lal conducted the trial of this bike by riding it form Goa to Mangalore.

Creating a new bike segment-

At that time, many motorcycle companies in India were doing successful business by selling affordable bikes.

But Siddhartha Lal chose to step in the expensive and powerful bikes market.
Also, many motorcycle models like Continental GT, Thunderbird, Bullet Electra, etc. were launched.

Marketing made the company what it is today-

He vividly used various marketing techniques for popularising the Royal Enfield brand.
Royal Enfield was marketed as a powerful and adventurous bike.
So, Royal Enfield began to sponsor many off-road rallies, adventurous rides and many events, like Himalayan Odyssey, Rider Mania in Goa, etc.
Also, there are many rider clubs for Royal Enfield riders.
Also, Royal Enfield set up classic retail outlets at many parts of the country to enhance their customers biking experience.

Finally tasting the success-

These caused a spike in the popularity and sales of Royal Enfield bikes.
The Royal Enfield is aiming to become a world leader in the mid-size bike segment (250cc-750cc).
Now, in India Royal Enfield has over 90 per cent share in mid-size bike segment.
In the year 2014, Royal Enfield accounted for over 80 per cent profits of the Eicher motors.
Now, Royal Enfield sells over 70,000 bikes per month.
The net worth of Eicher motors is over 50 million USD.

Surpassing Harley Davidson-

In the year 2015, the sales of Royal Enfield motorcycles surpassed that of Harley Davidson globally.
Eventually, Royal Enfield became a market leader in over 250 cc bikes in India.
In 18 September 2017, Royal Enfield launched its classic 350 and Classic 500 bikes.
In the year 2018, Vikram Lal, the father of Siddhartha Lal became the 14th richest person in India.
Siddhartha Lal transformed a struggling business into a successful business with his hard work and passion.        
After its huge success in India, Royal Enfield is eying on global expansion.
Royal Enfield also established its R and D centre in London.

Awards-       

In the year 2015, Royal Enfield was awarded for the best marketing and sales award.
Siddhartha Lal, the CEO and managing director of Royal Enfield was awarded EY Entrepreneur of the year for 2018.

Fans across the world-

Royal Enfield has garnered fans not only in India but all over the world.
Currently, the bikes of Royal Enfield are sold in over 50 countries, some of which include USA, South Africa, France, Russia, Japan, Australia, etc.
Royal Enfield has also set up a wide network of its brand stores and authorised dealers across India.
The waiting period of bikes is around four to six months.
All the Royal Enfield bikes are manufactured in India.
Royal Enfield is one of the oldest motorcycle brands in the world which is still manufacturing motorcycles.

Financial Freedom-

If you had a sum  of 1 lakh rupees in the year 2001, what would you buy a Royal Enfield bike or shares in the Eicher Motors limited (the company which manufactures Royal Enfield bikes).
In the year 1994, Eicher Motors bought Royal Enfield.
If you chose to purchase the bike, I would say it would not be a wise decision.
Because the bike is a liability and, as this bike is a high capacity bike, it requires high maintenance and fuel costs.
Moreover, if this bike is purchased in 2001,it will now be out-dated and would not perform well.
If you chose to purchase shares in Eicher Motor limited, then you would be the luckiest person.
Because shares are assets.
The value of liability (bike) decreases with time but the value of assets (shares) multiplies with time.
In the year 2001, each share of Eicher Motors costed just 18 rupees.
But now, each share of Eicher Motors costs over 19,717 rupees.
That means the value of each share has increased more than a thousand times.

You could have become a millionaire-

So, if in the year 2001, instead of purchasing a Royal Enfield bike, if with the same money, if you had bought the shares of Eicher Motors, now you would be able to afford hundreds of Royal Enfield bikes or even super cars.

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