Royal Enfield looking at assembling motorcycles in Thailand, Vietnam
Royal Enfield already has a strong presence in the country and that can be seen with its ever-growing sales numbers. And now the company is eyeing a bigger share of the global two-million middleweight motorcycle segment. The Chennai-based motorcycle manufacturer could be looking at establishing an assembly plant in South East Asia to bolster its presence in Thailand, Indonesia, and Vietnam.
"We are extremely bullish on Thailand and Indonesia. We have seen very good traction for Royal Enfield bikes in these market. We will have market companies with our own employees working there, where distribution will be done by us but dealers will be local. The idea is that it should be followed by local assembly but we are looking at different options." commented Siddhartha Lal, MD & CEO, Eicher Motors during the announcement of the fourth quarter results
He further added, "Preference is to do contract manufacturing rather than make the bikes ourselves. From the taxation point of view, it makes sense to do assembly (then export bully built units from India). If it works we could have something in Vietnam too"
Presently, exports contribute to 2.3 percent of Royal Enfield's annual sales. For a total sales of 8.2 lakh units, 20,000 units were exported. The company has reported 25 percent growth in exports compared to that of the last year. "In 24 months time exports should start pulling in some more weight by which time we will have an expanded product range and new capacities", added Lal.
Royal Enfield has announced plans of spending Rs 800 crore on capital expenditure in the 2018-2019 financial year. These funds will primarily be utilized to start construction of Phase-2 of the Vallam Vadagal plant in Tamil Nadu. Royal Enfield is also expecting its annual production capacity to go up to 950,000 units with the starting of operations at Phase-1 of the Vallam Vadagal plant and productivity optimization at its Oragadam plant.
Source: moneycontrol.com
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