Features

Jun. 15, 2009 – Entering uncharted territory

By Karin Gelschus
Associate Editor
FARIBAULT, Minn. — For the past 10 years, heritage brand Royal Enfield sold roughly 500 units annually, a trend that is about to change as the company expands its presence internationally and to mainstream U.S.A.
While Kevin Mahoney, president of Royal Enfield, has no desire to compete with major brand names like Yamaha or Kawasaki, the company’s two new models are intended to attract more mainstream consumers, rather than only motorheads like it had in the past.
Prior-year models catered toward people who liked to “tinker,” said Mahoney. “Eighteen things needed adjusting. That was cool if you were a tinkerer, but if you were a mainstream person, it was the wrong motorcycle.”
The two new models Royal Enfield, a division of Classic Motorworks that is headquartered in India, will distribute this year will attract different kinds of riders.
“It’s broadened our market already,”?Mahoney said. “We’re getting a whole new kind of customer, and it’s very been interesting for us to deal with because these are people who don’t know anything about fixing stuff, and they don’t have to. We’re drawing in people who weren’t in this market before.”
That being said, the new motorcycles are still niche bikes, Mahoney notes. Even though the new bikes have modern upgrades, including electric fuel injection, their styles date back to the 1950s.
“It still has the old look,” Mahoney said, “the feel and the sound that comes from a long-stroke single.”
The Bullet Classic C5 is expected to be available for purchase in the United States at all Classic Motorworks dealers this month (MSRP: $6,395). The Bullet G5 models include the Classic G5, Deluxe G5 and the Military and are currently available. They’re priced to start at $5,995.
“The cost of ownership for these bikes is really very low,” Mahoney said. “Insurance is low. Parts are inexpensive.”
Along with a broader target audience, Mahoney says Enfield is working to expand its inventory, dealer network and parts and accessories segment.

Availability
The high demand in India and Europe can make it more difficult for Mahoney to get the full number of units he believes he can sell.
“I’m competing with Europe for production,” he said, noting, “Next year I should be able to get what I want.”
Combining all of its models, Enfield has been getting about 500 units per year, but Mahoney says they’re aiming to reach about 2,000 bikes in the next couple years.
“The problem I’m having now is Enfield is running at absolute full capacity,” he said. “I think I’m going to be challenged here because these new bikes we’re bringing in are pretty hot. There’s more stuff on the horizon.”
Enfield was a sleepy company for a long time, but Mahoney says that is all changing now. The success Classic Motorworks has had in India and Europe has allowed it to put more funds in R&D. Mahoney says the company aims to become a player on the world stage, but a small, niche player.
“If they’re going to be a real motorcycle company outside of India,” he said, “they need to meet world standards, and they get that. They are very much on that track.”
Dealer demographics
Accompanying the widened model lineup and broadened customer base is an expanded dealer network.
There are currently about 100 Royal Enfield dealers in 49 states, but Mahoney says they’re largely underrepresented in some states, including Texas and New York.
“It needs to grow,” he said of the dealer network. “One of the issues I run into is that my customers are all over the place, especially with a niche product. People come looking for this bike. The nearest dealer might be 200 miles a way, and that has its own set of issues, support issues.”
Enfield is working to increase the number of dealers, but the type of dealer is likely to become more universal. Mahoney says their most successful dealers are independents.
“Most always the owner of the shop works there. It ends up being the lead brand in a lot of these independent shops,” he said. “We’re in dealerships with Hyosung. My guys couldn’t go out and buy a Honda or Yamaha franchise. I’m dealing with guys who are working right where the rubber meets the road.”
Enfield dealerships have always had a large sales territory, says Mahoney. “We give a dealer at least a 50-mile radius, but there are a lot of places where we don’t have the representation we should.”
A large portion of the dealers Enfield has now is from the beginning years when Mahoney and his wife hopped in their RV and traveled the country. He says they picked up a lot of dealers through shows.
“After doing that for awhile, we’d kind of seen everybody and became less effective, so we started to work out of here,” he said of his location in Faribault, Minn. “Up until right now, it’s been all internal.”
There are eight employees at Enfield, and as of this year, one rep on the East coast.
“My best option would be to have three or four of those people,” he said referring to his rep. “I recognize that, but it’s expensive. I have a guy who I’m talking to now about the Midwest, but he’s more of an independent rep. I want to expand, but I have absolutely no aspirations of becoming a significantly larger company.”

Parts and accessories
With more than 200 pages of accessories, Mahoney had the confidence to say, “We have a better accessory catalog than anybody except maybe Harley.”
Parts and accessories have become a key profit center for the company. They now make up about 20 percent of the company’s total business, but Mahoney says it was a long journey.
The first year Mahoney put out a catalog soon after he started, he says he sold about
$12 worth of product. The parts and accessory side of the business has grown significantly since then. Initially, there was a huge gap in accessories available since there were so few bikes made.
“I saw that in the very beginning,” Mahoney said. “People were bugging me about it so I went out and traveled the world finding stuff that would fit.”
Royal Enfield sells little apparel, but Mahoney says they do some branding products that do well along with parts like exhaust, mufflers, carburetors and seats.
While Enfield doesn’t sell bikes directly to consumers, it does sell parts direct.
“My philosophy is I don’t care where the customer is, he needs the part in a day or two,” he said. “We’ve been able to do that.”
Royal Enfield’s aim is to expand its parts and accessories segment along with its dealer network, customer base and model lineup, all of which could bring them a few giant leaps closer to becoming a bigger player on the world stage.
“We’re on the front end of something here. How far it goes is anybody’s guess,” he said. “I have a feeling it’s going to take on a life of its own whether I like it or not. This bike (Bullet Classic C5) is a game changer for us.”

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