VE Commercial Vehicles commences production at its new truck plant at Bhopal VE Commercial Vehicles (VECV) a joint venture between the Volvo Group and Eicher Motors.commenced the commercial operations at its new truck manufacturing unit at Bagroda, Bhopal. This is the eighth manufacturing facility of VECV in Madhya Pradesh and has been set up with Industry 4.0 standards. With the setting up of this plant at Bagroda Industrial Area, Bhopal, VECV becomes the pioneer company in development of a new Industrial Estate at Bagroda. With this plant, a number of ancillary units are expected to come to Bagroda and this holds a very bright future for the development of this area as well as for creation of employment opportunities for the local people.
A question to seniors in VP like @deevee , @arjunbadola who are tracking EM for long: Why is the co struggling to grow in the 350cc+ segment?
Just to give a background on this,the YTD growth is -34% vs -15% for <350cc segment. The highest monthly sales numbers recorded this FY in this segment is around 6400 which pales in comparison to the 7500-8000 levels the co had achieved in the August-October period of 2019
Unfortunately, I donāt have answer to that.
If you read their recent concalls company is boasting about how successful their Twins model were. They consider Twins as the standard of high quality until Meteor came.
Even though numbers are telling a different story, I would give few more quarters to the company to perform. As due to COVID I would expect that the behavior of customers might have changed and recovery is taking time.
Disclosure: Invested
(Note: My cost is low with huge margin of safety, so I can afford to be wrong.)
RE used to have 500 cc models of classic and thunderbird, both are discontinued. So that numbers will reduce the >350cc count. I am hoping Himalayan is going to make up the numbers in future. I donāt expect twins to sell like classic or meteor .That is a different segment where market in india is pretty immature. Job of twins is to create an aspirational value among people and exports of course.
Hi @Vinay_T_M
RE has had its 400cc Himalayan plus the 500cc variant plus the twins. The twins I think launched around December 2018.
I have data for all bikes sold class wise and also RE data of 350cc+ sales.
If we were to plot market share of REās 350cc+ bikes to the total domestic sales of 350cc+ we can see the trend below. Please note the denominator will include heavy weights such as triumph 800-1000cc bikes etc. But that is ok. I can give a cut of REās 350cc+ bikes divided by total 350cc to 500cc bikes sold domestically in India also.
Jan 2021 vs Jan 2020 same market share
Both Dec 2020 & Nov 2020 has better market share
Nov 2020, Dec 2020 and Jan 2021 all have better market shares than a year before
I do not have the market data for Feb 2021 yet. When I get that I will update the new bars.
So my back of the envelope calculation is that RE is not losing market share in this segment infact I would say its gaining. Though the market itself has been flat actually from Jan 2020 to Jan 2021 (slightly positive in this segment).
Rgds
Deepak
disc: continue to be invested and have txns in last 30 days.
Do you have similar data for exports, Deepak? Is that something you can share, if so? I could be wrong, but I think the go-forward RE story will be driven by their success in other markets, in the short-medium term (<3 years). My hypothesis based on what I have been reading is they are doing well so far on exports, though not massively so. It will be great to know more details on how their exports are faring, particularly in those countries with a larger addressable market.
Many thanks for the reply, @deevee, @arjunbadola and @laxman_sreekumar.
@deevee , do you have any data regarding the overseas market sales figures for the 350cc+ segment since higher ppp in the developed markets like UK should ideally derive higher sales in this segment? Eicher only provides the total export numbers without the segmentation
Hi @asarun and @Vinay_T_M
There is some challenge in doing this analysis related to exports. If someone can help here it will be great. Following are the constraints:
- Eicher reports export sales in terms of units but the export data under ministry of commerce and industry we get only export value in INR or USD (if someone can help here)
- There is no bifurcation in terms of cubic capacity in the export figures but I know that even 350cc, 430cc and 650cc all get exported.
Anyways here is the chart of export units sold as a percentage of total units sold since late 2017
I dont have any data for Aug 2018 so please ignore that
Coming to exports we have to look under 2 HS codes which are for bikes under
a) HS Code: 87113020 Bikes from250cc to 500cc
b) HS Code: 87114010 Bikes from 500cc to 800cc
Like I said I dont have units data. We can use our very own screener for this 
Now coming to strategy of overseas I think RE was the most selling bike (650 twins) in the UK in the middleweight segment for few months last year. I read this somewhere but cant recall. Also if you youtube you can see many reviews in foreign channels of the Himalayan (not so great) and the twins (quite positive feedback). For me I enjoy knowing about bikes and I sense a good feedback overseas for them. Maybe I am biased.
Apologies I donāt have any further granularity on these data points. Happy if someone else can share. Thanks.
Rgds
Deepak
Thanks Deepak! Interesting data to look at. Itās a pity Eicher doesnāt break out export sales by model, would love to know how the Twins are doing in different countries. I am really hoping they can get to 15% export volume soon as they appear to be opening shop in more countries (Japan, recently). Also, they have a plant in Argentina now. Thatās still very new, so quantities are likely still marginal. I presume they report that under exports too.
What is the difference between export rate and export value, btw? I couldnāt understand the difference. The numbers look like units, but you said itās only value.
Hi @asarun
On the GOI website I couldnāt get units exported for any of these. Also will have to write a script to extract data from there. But the easy way out was to look at screener.
Also @RachitaSuri had written to Eicher a few months ago for granular data on sales and exports. But we didnāt get any response from them unfortunately.
Rgda
With basic membership you get the below data
At the end of fiscal year 2019, Eicher Motors Limited had exported approximately 21,000 Royal Enfield 650cc twin engine motorcycles from India. This was forecast to reach approximately 66,000 units by the end of fiscal year 2022. As of date, Royal Enfield motorcycles, owned by Eicher Motors Limited, operated in over 50 countries across the globe.
Whether this has to be disclosed to exchanges considering material order passed by top court? I donāt see any disclosures made by company neither to bse nor bse.
Whatās likeable?
- Proven Management
- Excellent Balance Sheet
- Product Variety with consistent Velocity ā Journey planned to provide multiple models based on multi-platform in the category of 350CC to 650 CC. Launched the Twins (in FY2019) and Meteor (in FY2021) and plans to launch a new bike every quarter for the next SEVEN YEARS (28 new bikes)
- Personalization Option and pricing of new products will ensure higher ticket size from each bike
- Selling an experience ā Personalization of Bike using 3D configurator, In store experience, arrangement for financing and conducting official rides and long-distance tours for the RE owners
- Increasing Touchpoints ā India: ~2000 @ 1500 Cities and Outside: ~700 (100 Exclusive + 600 MBO)
- Aspirational product at reasonable price
- Focus on growing Service Revenue: In Store (Access. + Apparel) and In Use (Spares+Road. Ass. + Ext. Warr.+AMC)
- Focus on exports and aspire to grow it to 20% of overall sales
- Recently setup CKD facility in Argentina and evaluating opportunities to set up CKD facility in priority markets at APAC and LATAM region
Key Risks:
- A large part of International sales is on credit
- Model specific capacity constraints even though overall Capacity 1.2 Million
- Delayed Demand
Key Monitorable for FY 2021-22: Monthly Bike Sales
Disc: Invested in last 4 weeks.
Highlights from management commentary
ļ® RE demand remains strong on the back of a strong order book, expected pent-up demand, and a surge in export numbers. It has 2ā3 months of order backlog, which would be catered to once the lockdowns are lifted. It expects to achieve 80k units/month in 2HFY22.
ļ® RE has a very exciting pipeline of new products, with FY22 having the highest ever number of model launches.
ļ® RE has reduced rhodium consumption by 66%; however, the benefit of this would be reflected in the coming quarters.
ļ® RE added a total of 535 stores, including main stores (>100 stores) and studio stores (>430 stores), in FY21, taking the total number of outlets to 2,056 across 1,750 cities (from 1200 cities). Network expansion in India is largely complete, except in one state.
I liked the earnings call for Q4FY21 as a whole but was disappointed that neither any analyst nor the management gave any update / insight on where is Eicherās position on EV front .
I have recently started tracking this co. so unaware if there is any current update on EV front ā¦all i could google and find is this report from Decā20 which talks about a āWhile the development of an electric Royal Enfield is in process with a dedicated team handling the EV department, a production version of the product will not become a reality until at least 2024ā
I think Mgmt should be giving some update every Qtr on this front or rather the analyst should be asking about this ā¦as if they have an ambition to go aggressively global with their brand ā¦than lack of such an imp. category in their arsenal is going to be really a deficiency i think ā¦as all international brands they are competing with have this imp. category Already in Ops.
What does the veterans who are tracking this co think ? I am happy to be corrected in my thinking ā¦all views welcome ?
report : Royal Enfield electric motorcycle might debut in 2024, says Siddharth Lal
Disc: Invested
As an amateur investor, my thought is that Royal Enfield is not too concerned with electric bikes at this point. To see, this seems to make some sense, they are trying to expand into new markets and they do not advertise on mileage, fuel etcā¦ but rather as a mids-sized lifestyle bike which is an alternative to far more expensive European and Japanese bikes. On that front, they are focussed on the battles that they can win and not on those which are not their strength.
Thanks for your response but i dont think this will help in the long run ā¦ultimately you need to be prepared for the shift and its better to start your orientation now when everybody is in the same boat i.e trying to get a handle on the electric side ā¦rather than do a catch-up game later which will be detrimental to long term growth of the co.
Already i know so many folks in INDIA who are interested in the next electric option whether in cars or bikes ā¦so i would imagine that other markets will also have this latent need / desire ā¦maybe they understand the market or winds of change better than me but this is just my 2 cent opinion ā¦Lets see how this pans out ,will watch the mgmt on this front closely.