Royal Enfield, was the company which was going to be bankrupt in 1994, and now Royal Enfield is the largest profitable automobile company in the Indian two-wheeler market. None of you thinks that a 26-year-old boy would take the drowning company to the largest profitable automobile company, where the most interesting thing is Royal Enfield has hardly done any T.V ads but everyone knows the Royal Enfield and every bike lover’s dream to buy Royal Enfield.
History of Royal Enfield
Many people think that Royal Enfield is an Indian brand but it is not, Very few people know that Royal Enfield’s parent company Eicher Motors has given 40% of its profit to the investor for 5 years in the stock market. Royal Enfield is a British company, this story begins in 1891. Albert Eddie and Robert Smith started a needle manufacturing company together in England. Whose name is Eddie Manufacturing, After some time this company gets an order to make bicycles from the Royal Arms factory when the cycles are ready, they are named Royal Enfield.
Royal Enfield made its first Motorbike in 1901, their bike was so powerful that it was also used in World War by the army finally in 1932 Royal Enfield launched its Bike named Bullet. The bikes sold tremendously but as soon as the world war ended, their bike demand started decreasing.
And ultimately in 1949, when there was no option left, K.R.Sundaram of Madras Motors decided to buy this company. After many years the CEO of Eicher Motors, Vikram Lal buys back this company but this decision proves to be the most dangerous decision of Vikram Lal’s life. Because at that time Royal Enfield was at a heavy loss and the condition of the company had become so bad that no one was even ready to buy it. 6 Years After Buying the Company finally The Board Decides It’s time to get rid of Royal Enfield. when everything was about to end when Vikram Lal’s son Siddharth Lal asks his father for a chance. Everything was about to change from here, no one could have imagined that the company which was going to be bankrupted in 6 months would dominate in the mid-range market segment.
How Siddharth Lal makes Royal Enfield the largest profitable automobile company
In the year 2000, when 26 years old Siddharth Lal edited the company, the company was away from being bankrupt for only 6 months making Royal Enfield the market leader among two-wheeler companies.
Siddhartha Lal used these 3 strategies that changed their game completely. When Siddhartha started handling the company the first thing he did was “Started Living the Buyer’s life” In these simple words, start looking at the product like a consumer, not like a CEO. When he started taking the Enfield on mountain trips, he noticed a lot of shortcomings.
The shortcomings to which the company had not paid attention to date. When he became a Bullet rider, he experienced how many problems bikers have due to gear shifts on the right side, not only this but there used to be a kick start at that time and how many bosses used to back that, a rider’s leg can also be broken. Moreover, when he used to go out by bike, people used to ask only one question, are you a tourist? Seeing all this he identified two very critical problems of Royal Enfield.
1. More reliable product & service
Till now everyone in the company used to think that people do not buy Enfield’s bike because it is too expensive.
But it was not so, people did not buy Royal Enfield because its maintenance cost was very high. And it had only one reason and that was Faulty Manufacturing. Sometimes the bike engine used to leak, sometimes the bike’s pipes started leaking and So the maintenance cost used to increase so much that no one wanted to buy it. Seeing this, he made technical changes in his product, like gear shift’s side and re-engineered kickstart. Created the go-to look for the market and the second thing Siddharth realized changed the whole game.
2. Behavioural Design
Whenever we perform any task in life, then an action done in our life is a product of our behavioural design of us. For example, if you want to go somewhere in a taxi, then first of all you will take out your mobile and will book a taxi from Uber or Ola and then leave. But have any of you ever wondered why you picked up the phone in the first place? This is known as BEHAVIOURAL DESIGN.
Picked up your phone because a company like Ola Uber has given its service and altered your behavioural design in this way. That you can never even think of booking a taxi by going to the taxi stand. Similarly, Siddharth notes that people have a set perception in their mind about Royal Enfield and that was, Royal Enfield, is an iconic tourist bike that one can’t use for daily use this is the reason why Royal Enfield bikes were not selling. Siddharth solved this problem and make Royal Enfield such a big brand without advertisement that today every person wants to buy a Royal Enfield.
” border=”0″ data-original-height=”298″ data-original-width=”478″>3. Emotions are always sold expensive the products
It is most important for all of us to understand that Royal Enfield is not a bike but an emotion. How did Royal Enfield create the emotion? Siddharth Lal first made himself the brand ambassador of Royal Enfield and conveyed the same message everywhere BE THE CHANGE. Because most of the army used to use Royal Enfield bikes, in people’s minds Enfield was a heavy-duty bike. But this message by Royal Enfield reached to people that, be the change then people started connecting with their self-esteem gradually, this perception in minds of the people started becoming that the people who run Royal Enfield are different from the normal people. To push this idea in the market, Enfield organized many adventurous trips also, along with this, mountain rides were also sponsored, and clubs like Rider Mania in places like Goa were made. All these things have created a loyal fanbase for Royal Enfield.
Due to all of this, the Royal Enfield created a Community and the person who belongs to this community thinks that it is a Symbol of Pride. And people not having Enfield, even to them this message reached that Enfield is Symbol of Pride You won’t find people driving two Pulsars connected, but bullet drivers feel connected automatically. Its reason is that Enfield’s community is very powerful because it is a symbol of pride. The company which had a production capacity of 6000 bikes, sold only 2000 bikes Today there is a waiting period of 2 to 4 months to buy that company’s bike In 2003, the price of a bullet was only ₹55000 and the share rate of Eicher Motors was ₹18. The interesting thing is that if you had taken Rs.55000 shares of Eicher Motors at that time, then you would have 6.5 crore rupees now.
Siddharth Lal first used Enfield and after using it, many drawbacks were seen by him. If he had not used Enfield at all, he would not have been able to make Enfield a better product or a better brand. In the year 2000, Eicher Motors was operating in more than 15 businesses and the result was that it was ahead in none. Siddharth Lal first shut down 13 of those 15 businesses and focused on the truck division of Eicher Motors and Royal Enfield. The result of this is that today Eicher has become one of the top most profitable automobile manufacturers in India.
A good lesson
A good lesson
Interesting piece, if a little flawed on the history. RE were selling well, after WW2, due to their early adoption of swinging arm rear suspension (other marques went from rigid frames to the less effective plunger suspension… or the ‘sprung hub’ in Triumph’s case… before later developing their own swinging arm set ups).
The post war Bullet’s successes in trials and off road events helped its sales. In the early fifties, the Indian army chose the Bullet as its patrol and DR bike and placed a large order.
After initially sending complete bikes to India, RE (UK) set up a local assembly plant with their Indian importer, Madras Motors, in ’55, at first importing the bikes as components, for assembly in Madras/Chennai, and eventually sending the tooling when the UK bikes got a new frame design, to produce the entire bikes in the jointly owned business ‘Royal Enfield India’.
Both UK and Indian factories continued production ’til at the end of the sixties, the UK factories (Redditch and Bradford on Avon) closed and in 1970 the receivers were called in. Fortunately for the future of the marque, because under Indian law the jointly owned Chennai operation was majority (51%) Indian owned, the receivers couldn’t touch its assets, so it continued production for the Indian market, where bikes were still selling.
The ‘Royal Enfield’ brand name was sold with other assets in the UK, so bikes exported to the UK and other places had to be badged ‘Enfield’ or ‘Enfield India’, but after Eicher bought the company, they persuaded the UK courts to allow them to use the name again as the ‘new’ owner hadn’t used it and Eicher wanted to use it on motorcycles, and in particular, on motorcycles still recognisable as Royal Enfields. Judges recognised it as fitting and proper use of the unused brand name to effectively returned it to the remains of the original company under its new ownership.