Analysis: Is Royal Enfield now bigger than Harley-Davidson?

Royal Enfield sold 3,02,592 motorcycles in 2014. Given that Harley-Davidson sold 2,67,999 over the same period, Royal Enfield is now a larger motorcycle maker than Harley. Understandably, when you look at it like that, it looks like Royal Enfield's pulled off a coup. But I think that is not fair to either manufacturer. Royal Enfield have not come into some sort of inheritance that's made them rich/big overnight. Their sales are not a windfall, it's the result of years and years of hard work that have seen their sales and cachet grow steadily. And today, every step they take forward is usually a record for the company. Harley on the other hand, have not shrunk either, at least in the past five years. They were in quite a bit of trouble a while ago from which they have recovered. They sell about half their motorcycles in the US today and post a small but vital sales growth figure annually. Royal Enfield being larger than them doesn't mean they've lost the plot either. That's why we wrote this story, because the reports we have read lack perspective and stink of sensationalist writing aimed at attracting traffic rather than celebrating a milestone. A company has grown at epic speed and harbours amazing momentum. This is applause worthy. And that really, is the end of the story.

Facts

Royal Enfield is bigger than Harley-Davidson on annual motorcycle sales today. Fact. 2014 saw the Indian company sell roughly 34,600 more motorcycles than the American company. What really puts the Royal Enfield in the spotlight is the fact that Harley only grew by 2.7 per cent in 2014. Royal Enfield, in 2013, was over 1 lakh bikes behind the American brand. It grew 70 per cent last year to catch and pass the American brand. Also fact.

Perspective and scale

In 2013, the entire American market for two-wheelers was about 4,60,000 units. Hero routinely sell more than that every month. That's the scale of this comparison. If you look at just streetbikes, US customers bought about 3,25,000-odd motorcycles in 2013. Of this, roughly 1,69,000 were Harleys. That's roughly 49 per cent of all streetbikes sales in the US and about 37 per cent of total two-wheeler sales. These, for a mature, relatively stable, near-saturated market like the USA, are impressive numbers. This also means that Harley-Davidson have tackled the lack of domestic market (USA) growth with an aggressive expansion to other markets. They exported over 90,000 units that year, roughly a third of its motorcycles.

In this light, Royal Enfield aren't actually that impressive. Their buoyant, exploding sales still barely make a dent in the Indian numbers because again, our scale is dramatically larger. Royal Enfield sell over 97 per cent of their production in India. The Continental GT has received a lot of attention globally but Royal Enfield's exports are still a tiny part of the business - just two per cent last year at 6,221 units. The 3,02,000-odd bikes they sold last year? 98 per cent found homes right here in India.

What I'm trying to get at is not that Royal Enfield outgrowing Harley is a small feat. But you have to understand that anyone who succeeds in India (at practically anything, I might add) is likely to have a larger numerical impact than many, many global equivalents. It's pure scale. In that sense, Hero and Honda outsell Harley's annual figures too. Every freaking month and twice around Diwali. Bajaj's monthly sales equal Harley's annual sales (roughly) each month.

I imagine your eyes glazing over when Hero and Honda enter the picture. Because, well, they don't directly compete with Harley right? Well, does Royal Enfield compete with Harley? Their most expensive motorcycle is roughly half the price of the cheapest bike Harley make. Which happens to be the only motorcycle Harley actually make in India. It's the sole production overlap - geographically - between the two companies. The number of people who could afford both the Continental GT and the Street 750 and chose one over the other? You could probably take them all out to dinner tonight without needing reservations or a personal loan. The only other overlap I can think of is that both make retro-flavoured motorcycles. Yes, but the American flavour of retro and the British flavour retro are dramatically different. In format terms, the Thunderbird 350 and 500 are the two REs closest in nature to Harley's line of cruisers. Again, the overlap is thin.

Tomorrow, RE might have products that compete against Harley head to head. And who knows, they may even win. Royal Enfield's growth path and rate are startling - they will overtake many more brands in time for sure. They've put in money, sweat and thought into their brand, facilities and products and they are reaping the rewards of that. More power to them. Today, their sales numbers are bigger than Harley's. Let's not shortchange RE's achievement by giving it an irrelevant context. Harley's also on the path to stability and sales growth, let's not belittle the work they've put in either.