Royal Enfield Sales In June Drop The Most In Five Years

Sales of Royal Enfield, the flagship motorcycle brand of Eicher Motors Ltd., fell the most in five years in June.

Royal Enfield sales slumped 22 percent year-on-year to 58,339 units in June, the maker of bestselling Classic 350 motorcycles said in an exchange filing. That's the biggest drop since April 2014 and is the eighth straight month of contraction in sales. Three analysts BloombergQuint spoke with had expected the monthly sales to come at 63,500 units.

In absolute terms, Royal Enfield has only once in the last 24 months sold less than 60,000 motorcycles after worker unrest at its Oragadam factory in Chennai impacted sales in December. Sales of its 350cc motorcycles fell 25 percent year-on-year, or by 17,000 units, to 51,678 in June, the filing said. This segment accounts for nearly 90 percent of the company's overall sales.

“Royal Enfield motorcycles have been selling for many years and are loved by the masses. However, a dip in the product cycle, coupled with lack of easy availability of financing due to the crises among non-bank lenders and tough competition from domestic two-wheeler makers such as Bajaj Auto/KTM and the entry of foreign companies like Jawa, Benelli and Triumph, has hurt the sales for the company,” Ashwin Patil, senior auto analyst at LKP Securities, told BloombergQuint.

On the other hand, sales of Royal Enfield motorcycles with engine capacity more than 350cc rose 17 percent year-on-year to 6,661 units last month.

Royal Enfield sells the 411cc Himalayan, Classic 500 series and the 650cc Interceptor and Continental GT in India and abroad.

“These are premium motorycles with an average ticket size of Rs 2.5-3 lakh. The customers in this bracket are generally from the more affluent economic background or enthusiasts. As a result, financing is not an issue for them,” Kunal Vikram Singh, a Royal Enfield dealer based in Mumbai, told BloombergQuint. International sales too offered some comfort as they rose 72 percent year-on-year to 3,257 units.

Shares of Eicher Motors have tumbled nearly 16 percent so far this year compared with a 14 percent drop in the NSE Nifty Auto Index, Bloomberg data showed.