Royal Enfield Turnaround story

How Royal Enfield Pulled Itself Up After Fighting Failure

Last week, my colleague, an owner of Royal Enfield, was planning to go for a new one. After many discussions and speculations, he decided to go for Royal Enfield, once more! It not like he does not like change, it’s just that he is passionate about this bullet! Royal Enfield is synonymous to bikes, but the picture was not this rosy two decades back. The owners once planned to shut down its production due to utter failure.

The decline in sales, unable to face competition, not attracting the user base and the weak business strategies posed as road bumps for this iconic brand. But, the scenario changed when Siddhartha Lal took over the brand and revamped it. Siddhartha, a third generation of the Lal family became the MD of Royal Enfield in 2005 when the situation could not get any worse. He was himself an Enfield lover and wanted a grace period of two years before finally putting an end to it. According to him, “The board agreed to give me a chance. It was not because of its confidence in me, but because the business was doing so badly it could hardly get any worse.”

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Siddhartha Lal – MD & CEO – Eicher Motors Ltd Source: Forbes India

Before the dawning of this century, the Enfield started losing its customer base, people were satisfied with the traditional bullet bikes, and were not ready to embrace the innovation that was brought by Enfield. In the year 2000, the board of directors of Eicher Motors decided to either shut down or sell off Royal Enfield division. The situation was grim, and the leaders had no idea about what went wrong.

The consumers even complained about the malfunctioning of the Enfield, like engine seizures, oil leakage, breaking of accelerators, tearing of clutch cables, electric failures etc. Then the problem child, Royal Enfield was adopted by Siddhartha Lal, but he was not alone in the game. He appointed Ravichandran as CEO of Enfield in 2005, who acquired expertise from giants like Bajaj and TVS Motors. Both these experts chalked out plans and strategies to revamp the Enfield, gain market share and new user base.

Royal Enfield earned a Midas touch, and the sun began to shine on this rugged classic bike. The DNA of the bike or the signature of Royal Enfield was this rugged look, headlamps, trunks etc. They consulted with international experts and carried out sound mapping or several hours to track the maximum number of rhythmic vibrations.

According to Ravichandran, “We declared 2006 as the year of getting back to the basics. We also formed a field quality rapid action force to bridge the gap between customer expectations and reality.” In October 2008, Royal Enfield launched 500CC classic model and it was a huge hit. In November 2009, 350CC bike was launched in India, priced at Rs 1.20 Lakh, and it was loved by all.

Previously, Eicher Motors had several business ventures that of manufacturing trucks, motors, bikes, garments etc. But Lal decided that instead of having several small businesses, it is better to have two large businesses. The other ventures were dissolved and the money was invested for the development of the Royal Enfield. Lal concentrated purely on the bike and truck business, and as of 2014, the company earned a total revenue of Rs 8,738 crores, net profit was Rs 702 crores. In the year 2001, if you invested Rs 55,000 you would have got one rugged Enfield bike, but if you had invested the same amount in the Eicher Motor shares, then now the value would have been Rs 3.53 crores.

Lal is passionate about Enfield and his actions prove it. He has incorporated the bike riding culture in the workplace, he himself rides hundreds of kilometres for understanding the engineering and quality of the bikes. Lal helped in improving the quality of the bikes, in the year 2010, the company sold 50,000 bikes on three platforms. Later Lal decided to function from a single platform, and the sales increased from 50,000 in 2010 to 589,293 units in 2014. Lal is well acquainted with the economies of sales, engineering.

He has built Enfield from scratches owing to his will and perseverance. He is highly inspired by the Mini Cooper and Porsche, who averted brand dilution and are legends in the automobile sector. Within a span of one year, Royal Enfield exports have witnessed a growth of 97.6%, hinting towards their popularity in the global market. Lal is working hard now to dominate the global market with his iconic Royal Enfield.

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Source: CNBC TV 18

Royal Enfield has emerged from its ashes like Phoenix, and the credit goes to Lal and Ravichandran. There are several lessons that can be learnt from this journey.

  • Self-confidence is a must-have: Siddhartha Lal was confident about dissolving the small business and concentrate on the two major ventures, that of trucks and bikes. The step was a daring one, but he did not fumble. His foresightedness and self-confidence have contributed to the success of Royal Enfield.
  • One man army is not good for business: With time, the scenario changes and the decisions have to be made as per the situation. The decision of Rahul Bajaj and Rajiv Bajaj was not the same, but the new MD proved to be successful for Bajaj Auto. Similarly, Eicher Motors appointed the new MD and he did wonders. But he did not do it all alone. Ravichandran played an integral part in reviving Royal Enfield. Undisputed leadership and the one-man army can often jeopardize business growth, as seen in Spicejet.
  • Brand dilution is harmful: Retaining the signature is important. The signature of Royal Enfield is the rugged look, headlamps, trunks. Changing these features may lead to brand dilution. People find these features synonymous to the Royal Enfield. Lal did not tamper with these features, the brand and the bike ultimately stood out.

Lal took the decisions wisely and resurrected the brand. In business, failures and obstacles will be there, but who does not want to avoid it! Vedak is such a platform where you can get all your queries answered. How? Talk to our niche skilled experts now to know the diverse competitive market in greater detail! We at Vedak have an exclusive pool of experienced industry professionals and veterans who have in-depth knowledge about the business nitty-gritty. Contact us to know more. 

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