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End of the road for Bullet?

Eicher is transferring its Royal Enfield unit, which may be its first step towards pulling out, writes Suprotip Ghosh.

india Updated: Jul 11, 2006 02:49 IST

It is make-or-'brake' for Royal Enfield, India’s answer to Harley Davidson. Commercial vehicle manufacturer Eicher Motors has decided to transfer its Royal Enfield Business unit, which makes the Bullet motorcycle, to a new subsidiary proposed to be set up in the National Capital Region.

The company says it will look for strategic and financial investors in the subsidiary to exploit the growth potential of the Royal Enfield Business. Analysts, however, feel it’s the first step towards Eicher pulling out, which could mean the end of the road for the iconic bike.

Enfield’s problems start with scales, specifically sales figures. In the last financial year, it sold around 25,000 motorcycles. Compare that with Bajaj Auto, which sold 1,88,000 units in June 2006 alone.

Makeovers, including a five-gear version and a 750 cc cruiser, didn’t rev up sales. Nor did the poaching of R.L. Ravichandran, then VP (marketing and strategy) of Bajaj Auto. Eicher watchers say it’s possible that he might take over the company with venture capital participation. Ravichandran was not available for comment.

“Consumers have moved on, while Enfield is stuck where it was,” said analyst V.G. Ramakrishna. Enfield currently has only two models. Bajaj, in comparison, has more than 20.

Others feel Royal Enfield needs huge injections of cash. “There’s a question mark over Eicher’s ability to invest further, and Royal Enfield needs investment to reinvent itself,” said a Chennai analyst.

Another major reason for poor sales is the Bullet’s low fuel efficiency. The 350cc model is a gas-guzzling monster, churning out a maximum of 20 to 25 km per litre. Soaring petrol prices haven’t helped. “I’m not riding my bullet for some time now,” admits Sajeev, who owns a 1983 model of the bike.

The Bullet’s cult status is rooted in history. The basic four-stroke, 350cc model was introduced in England in 1949 and has been manufactured in India since 1955 — a record for a production model motorcycle.