2 weeks Ago
India's high-end motorcycle market may be in for a shake-up! According to a Bloomberg report, the government is considering cutting import duties on high-end motorcycles in the 705 cc and above category to zero. In case this does happen, it will have significant implications on Eicher Motors, the parent company of Royal Enfield, known for its Bullet motorcycles. Royal Enfield is a dominant player in India's premium motorcycle market with a 6.
9% market share. Its market share in the 125+cc segment is close to 30 percent, nearly 1,000 basis points higher than its closest competitor. A zero-duty regime could pave the way for the re-entry of global players like Harley-Davidson.
In fact, it is lower sales due to higher import duties, that led to Harley-Davidson exiting the Indian market in 2020. The company's 750cc+ bikes appeal to long-distance bikers due to its larger engine, quicker acceleration and better stability on highways, exactly the same parameters on which Royal Enfield earns its brand recall. On the other hand, Royal Enfield’s bikes are more affordable, fuel-efficient, and better suited to India’s urban traffic conditions due to their lighter build and easier handling.
Back in 2023, Harley partnered with Hero MotoCorp and launched the X440, which is manufactured in Rajasthan's Neemrana. A tariff cut would mean a potential revival for Harley's premium offerings, this time with pricing power and a better product-market fit. It can't be denied that Royal Enfield and as a result, Eicher Motors, has deep brand loyalty and strong domestic distribution.
However, global competition on a level playing field could challenge its market dominance. Shares of Eicher Motors are trading 1.6% lower on Wednesday at ₹5,694.
The stock is trading close to its 52-week high of ₹5,906. The company currently has a market capitalisation of ₹1.56 lakh crore.
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