Exactly a month ago I had written a report on Royal Enfield's Recent Sales Performance. In that I had specifically mentioned about my expectations for coming months. I am happy to say that Royal Enfield has not managed to perform beyond my expectations, atleast in
January'17. The Total Sales number for Royal Enfield motorcycles during January'17 was 59,676 units, which is 25.1% higher than the 47,710 units number reported for January'16. This is the slowest Y-o-Y growth reported by Royal Enfield in the last many years and are clear signs of the fact that the High-Base effect is finally catching up with this manufacturer of the famous 'Bullet' motorcycles.
Eicher Motors had reported a strong surge in sales of Royal Enfield motorcycles during the 3 months of January to March'16, compared to previous few months, which is now creating a High-Comparison-Base for the company during the corresponding period this year. Hence, despite selling the highest number of motorcycles in a single month in the company's history during January'17, it's Y-o-Y Growth has dropped sharply to 25% from the 42% growth reported in the previous month of December'16. For the next 2 months, I am expecting Royal Enfield to continue despatching increased number of motorcycles, most probably in the range of 60,000 to 62,000 units each month. But the Y-o-Y Growth number will continue to dip further lower to something around 22%. Another interesting factor is that the Low-Base effect for Export Growth comparison ended in January'17 as Royal Enfield had reported sharp increase in Export despatches from February'16 onwards. Hence it will be interesting to see the kind of growth numbers Royal Enfield is able to report for Export sales too going forward.
With monthly sales number of around 60,000 units, Royal Enfield is now competing with the likes of Yamaha India and Suzuki India's 2-wheeler unit in Volume stakes, but it's turnover is way ahead as the Average Selling Price of each unit of Royal Enfield motorcycles is nearly 2 times that of the two Japanese manufacturers. Thanks to the cult-bike image that it's products carry, Royal Enfield is able to price them at a premium and hence the company is able to enjoy way superior EBITDA and Net Profit margins compared to any other 2-wheeler manufacturer in India. It will be interesting to see if this situation remains unchanged even a couple of years down the line or not.
Eicher Motors had reported a strong surge in sales of Royal Enfield motorcycles during the 3 months of January to March'16, compared to previous few months, which is now creating a High-Comparison-Base for the company during the corresponding period this year. Hence, despite selling the highest number of motorcycles in a single month in the company's history during January'17, it's Y-o-Y Growth has dropped sharply to 25% from the 42% growth reported in the previous month of December'16. For the next 2 months, I am expecting Royal Enfield to continue despatching increased number of motorcycles, most probably in the range of 60,000 to 62,000 units each month. But the Y-o-Y Growth number will continue to dip further lower to something around 22%. Another interesting factor is that the Low-Base effect for Export Growth comparison ended in January'17 as Royal Enfield had reported sharp increase in Export despatches from February'16 onwards. Hence it will be interesting to see the kind of growth numbers Royal Enfield is able to report for Export sales too going forward.
With monthly sales number of around 60,000 units, Royal Enfield is now competing with the likes of Yamaha India and Suzuki India's 2-wheeler unit in Volume stakes, but it's turnover is way ahead as the Average Selling Price of each unit of Royal Enfield motorcycles is nearly 2 times that of the two Japanese manufacturers. Thanks to the cult-bike image that it's products carry, Royal Enfield is able to price them at a premium and hence the company is able to enjoy way superior EBITDA and Net Profit margins compared to any other 2-wheeler manufacturer in India. It will be interesting to see if this situation remains unchanged even a couple of years down the line or not.
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