Thanks for your reply. I shared your concern about Eicher growth being sustainable or not.
I have presented both sides views and given my opinion. About Himalayan, it was shared on thread previously only that they are withdrawing. So classic is success, continental is medium-low success and Himalayan, let us assume failure. However, upside from success from Bullet and Classic is signficantly higher even after providing for failure of Himalayan and Multex in my opinion.
So far it has constantly gained market share, and may replace TVS in motorcycle segment, as 4th largest player, if continue to grow at 20-25% for next 12 months. That, I would not consider small achievement by any standard.
Having said that, the major chellange for Eicher, in my view, would be to add new capacity and also add one more successful model like Classic to maintain sales momentum.
A single sku product line carries very high risk. That risk must be factored in the pricing. Having said that, RE has surprised everyone with their growth. They can get away in the short term, but eventually I feel they need to refresh their product line in the near future. The upcoming emission norms and their struggle with refined engines may warrant some risk premium.
Disc: I hold a major position in Eicher and my views may be biased.
To my mind, the real competition for RE has now arrived.
I am a huge admirer of Rajiv Bajaj. He understands the game as good as anyone. But so far he didnāt had good weaponās to fight the RE surge, but now he has. So the game is on.
Part 1
Part 2
Disclosure: I have reduced position significantly since 20k price range. Still hold about 7-10% allocation.
This is actually good for RE. Mr. Bajaj says Triumph is a better brand than RE. But will it translate in to sales and earnings is a different story. This entry will create more awareness for 250+ CC segment. That is in fact good for RE. It will take 3 years to start rolling out these bikes and by then, we may have a different market environment.
RE is successful with only a single sku. It may not be easy to understand the pulse of the market. It might be a dusty and rough road for Triumph.
I have no view on what this tie up will do for Bajajās earnings. Donāt follow it that closely to comment on it. I am more concerned about the overall market for 250 cc+ segment, (which in my mind is roughly 10-15% of total market size) in which RE now has about 75% market share. How the entry of this new players changes the dynamics in this segment is the topic am concerned about.
A 2 lac priced 350 cc Enfield vs 5 lac priced Triumph was no competition. But i donāt think the equation will remain same in a 2 lac priced Enfield vs 2.5 lac priced Triump (if that happens). If it happens, I think Triumph will have a much better chance to compete.
Will the overall market share for this 250+cc bikes grow from 10-15% range to 15-25% of market. Well, I donāt know. Too futuristic a call.
elite i20 was consistently selling around 11k units per month. When baleno came, i thought it was going to see a big fall. But it still sells around the same and baleno also sells over 10k. We saw the same in alto when eon and kwid entered.
This may not be an apple to apple comparison.But stillā¦
All these makes investing so interesting. Understanding consumer behaviour is not easy and Bajaj needs to work hard to extract money from our wallets. RE has proven itself and is executing pretty well. They need to manage risk and must add more successful products to portfolio. Who does what in next 3 years will change market cap for these 2.
The market is good to reward two players and both may succeed too if they do the right things.
Disclosure: Donāt hold Bajaj today. Heavily invested in Eicher.
This certainly will have competition to RE(Not a threat). Details of alliance is not clear yet, but looks like Bajaj will produce,distrubute,sale. There can be royalty or profit sharing to Triumph.(Page-Jockey,Jubilant-Dominoz model ??) Producution in india will lower the cost for Triumph which then can be priced competitively. Triumph can bring in design and customer experience which Bajaj doesnāt have at all.May be both companies(Eicher,Bajaj) can benefit.
Disc: Invested in both.
Even today REās product lack the reliability & refinement (you could go through the threads at Team-BHP) but still they sell. REās range starts from Rs 1.5 lac and I donāt think Triumph even after made in India will compete at this price. REs market share has increased though we have motorcyles from Harley, Kawasaki, Benelli, etc. though the segment is different. It increases the aspiration value and awareness.
In fact, Bajaj has been trying hard to match REs. Please see this blog where Bajaj has made not-so-subtle ad aimed at RE. They first tried with a motorcycle at the price price point and engine capacity of RE but failed (?) to achieve what theyād intended. Now they are bringing in Husqvarna and Triumph Motorcycles.
Disc: Eicher Motors is one of my highest holdings with over 25% of PF.
REās reliability has improved by leaps and bounds over the years, I am a happy customer and investor so my views can be biased. I see this development as positive for the industry as it will expand the market for 250 cc+ and Bajaj and RE both will benefit from it. RE is still an aspirational brand for both young and old generation and will remain so for at-least next one decade, having said that itās too early to predict. We will have to wait for a couple of years to see how Bajaj price Triump bikes. There is a good possibility that Triumph may create a new segement for itself between 350cc to 700 cc where some of the existing customers of RE may consider to upgrade.
It has and still they are improving. Here is another article today in The Hindu: But the issues loom. The brakes are the main cause for concern, and the underpowered engine does dull the fun somewhat in high altitude scenarios. The fuel tank, though perfectly sculpted for footpeg riding, holds only around 15 litres. Build quality is another area to look at. The bike is more than capable of surviving the constant rattles and punishment of rough terrain, but the inevitable drops are likely to shake things loose. Part of the centre stand on our machine folded away like melted wax, and as we neared Chandigarh to finish the ride, the gear shifter came off the frame and hung limply, as the Himalayan finally gave up the ghost.
In spite of all these they are still selling well so there must be something going good for them. They now have invested in technical centers in UK and Chennai so we should be seeing newer products and hopefully better engineered motorcycles.
Mr Bajaj clearly said he is a marketing guy. However Mr Lal is an enthusiast and more of an engineer wearing business hat. I believe the later will Triumph (pun intended) due to sheer passion for motorcycles. RE is not selling just due to price, comfort, or efficiency. It actually fairs pretty average on these metrics. There is more to the success of RE which nobody (including RE) has figured out.
To me, the āmoreā to success of Royal Enfield is the brand - the cult of riding an Enfield. It is the perception of the brand in the minds of the consumer. Enfield is associated with confidence, power and status ā¦ To me that is what is driving the sales. Like you said, performance wise, there are many bikes which are much better (I personally would rate a Bajaj Pulsar or Honda Unicorn much higher on these parameters)ā¦ Till the cult is alive and spreading, RE will continue to dominateā¦ Plus, their success today is due to very selected product/s. If they can bring even 1 more product which is widely accepted by consumers, then they will continue to grow for many years. I am reminded of Bajaj Pulsar which was launched in 2003/2004ā¦ A superhit product which Bajaj is milking even today
