Royal Enfield 250cc motorcycle launch plans ditched by the company; it intends to focus now on bettering its profit margins and not chase sales numbers…
COVID-19 has affected the auto-industry badly and created a disconnect between the supply chain, manufacturers, and the customers at the other end.
Among all the companies, it looks like the Chennai-based manufacturer; Royal Enfield is the most affected. According to a report, it had plans of producing about 70,000 motorcycles in September, but could produce only 55,000 units due to supply-chain bottlenecks due to lockdowns. Even for October, the company intends to make about 75,000 units, but a top executive said that the it would end up producing about 60,000-65,000 units – a major deficit of 10,000-15,000 units.
Because of this, Royal Enfield has had to make some tough calls. It has to postpone launch of some very important models which were earlier set to arrive during the festive season.
What came as a piece of big news is that the company has dropped its plans of venturing into the 250cc segment. It was rumored that, in order to become accessible to a wider audience, RE was working on a 250cc motorcycle. With the insane cost increments mandated by various regulations in the last couple of years, motorcycles have become terribly costly. A 250cc would have provided an option for it to lower the entry barrier.
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According to sources, the company wants to focus on improving the cost-structure with a target of having 25% EBIDTA on 50,000 units sales volumes per month. This means that 350cc would continue to be the smallest engine the motorcycle maker would make (even the upcoming new platform is 350cc big). And all the upcoming motorcycles will either sport the new 350cc engine or bigger motors.
-Moin Ahmed
Source: ET Auto
