Eicher Motors expects increase in demand for two wheelers amid Covid-19

Royal Enfield continues to make concrete inroads to expand its retail network, while further strengthening its supply chain and vendor ecosystem
Going forward, Eicher Motors expects increased demand for two wheelers as people would be wary of using public transport amid the coronavirus pandemic, according to the company's annual report.

The company has presence in the two wheeler segment through Royal Enfield, which sells niche bikes across domestic and international markets.

Eicher Motors Managing Director Siddhartha Lal said Royal Enfield was witnessing a strong initial customer interest with the gradual easing of the coronavirus-led lockdown.

"Going forward, we do estimate an increased demand for personal transportation and two wheelers as people would be wary of using public transport. This we believe will augur well for us and for the industry as a whole," Lal said in the 2019-20 annual report.

He also said that Royal Enfield continues to make concrete inroads to expand its retail network, while further strengthening its supply chain and vendor ecosystem.

"With an aim to further build accessibility through a host of seamless digital solutions and a variety of financial solutions, we are confident of capitalising on this demand as the situation stabilises," he said.

Commenting on Royal Enfield's international operations, Lal said it was well poised to expand and lead the middle weight motorcycling segment globally.

"Our international markets are beginning to show significant and sustainable growth trends on the back of motorcycles we have recently introduced -- the Himalayan and the 650 Twin motorcycles -- and we believe we have strong potential for further growing these markets for Royal Enfield," he noted.

The company has recorded an overall volume growth of 96 per cent across international markets, Lal said.

"Both developing markets and matured markets have performed exceedingly well, with Europe registering a 100 per cent growth over last year," he added.

The company's overall volumes last fiscal declined 15 per cent to 6,97,582 units as compared with 8,22,724 motorcycles in 2018-19.

Total revenue from operations dropped 7 per cent to Rs 9,154 crore in the last fiscal compared to the year-ago period. Revenue from domestic business reduced 12 per cent to Rs 8,323 crore in the last financial year from Rs 9,418 crore in 2018-19.

However, revenue from international business more than doubled to Rs 831 crore 2019-20 from Rs 379 crore in 2018-19 on the back of a strong response to the 650 Twins resulting in almost doubling the export volume.

About the VECV business, Lal said, "while we expect the current year to continue to be challenging, we remain focussed on our long-term initiatives and are optimistic that the industry will be back on track soon, largely led by investments in infrastructure".

VE Commercial Vehicles, a Volvo Group and Eicher Motors joint venture, is alsobringing sharp focus on cost management and improving productivity, he added.

"We will continue to focus on driving modernisation in the commercial vehicle industry and we hope to better the market as the economy improves and the industry comes back on track," Lal noted.

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