Eicher Motors Stock Declines as Hero MotoCorp and Bajaj Auto Challenge Royal Enfield

Eicher Motors Stock Declines as Hero MotoCorp and Bajaj Auto Challenge Royal Enfield

Eicher Motors stock declined by nearly 10 percent this week and investors in Eicher Motors are highly concerned about the competition Royal Enfield could face in near future. In premium motorbike segment, Royal Enfield currently owns 86 percent market share. This week, Hero MotoCorp launched Harley-Davidson X440 in partnership with American motorcycle major Harley-Davidson in India. Bajaj Auto also launched Bajaj Triumph Speed 400 in the premium motorcycle segment.

Eicher Motors managed to turnaround Royal Enfield brand in India and investors rewarded the company with massive jump in valuations. Between 2010 and June 2023, Eicher Motors stock offered 55 times return to long term investors. Investors are now concerned that Bajaj Auto and Hero MotoCorp will offer stiff competition to Royal Enfield. Unless the company launches a new model that can offer style, performance and affordable pricing, it would be a tough market for Royal Enfield.

As the launch of Bajaj premium bike received strong response from customers, the company has announced that it will ramp up production of Triumph Speed 400 and Scrambler 400X. The motorcycles were launched in Indian market on July 5 while bike was launched in the UK market by Triumph Motorcycles UK Limited on June 27. Triumph Speed 400 will be available for inaugural price of Rs 223,000 for first 10,000 bookings compared to its regular price of Rs 233,000. The bike will be available by the end of current month. The bikes will be manufactured at Chakan manufacturing facility with production capacity of 25,000 bikes per month.

Talking about the strong interest in Triumph bikes, Rakesh Sharma, executive director at Bajaj Auto said, “A pre-order of 10,000 bikes within such a short span is unprecedented and a testament to the unwavering faith that riders have placed in Bajaj Auto and Triumph Motorcycles. We are committed to our promise of manufacturing motorcycles that captivate riders with their performance, design, and technology.”

Hero MotoCorp will manufacture Harley-Davidson and will also offer after-sales services. Hero MotoCorp has a strong presence across India.

Talking about future competition, Bajaj Auto CEO Rajiv Bajaj said, “There was a famous bank robber in America called William Francis Sutton. When asked why do you rob a bank he said that’s where the money is. So if Royal Enfield is where the money is then we have no choice but to rob that bank.”

And, markets were quick to respond. Both Bajaj Auto and Hero MotoCorp stocks closed firm while Eicher Motors suffered a major decline in valuations within a week. However, the quick decline in Eicher Motors stock could just be a kneejerk reaction from investors. Royal Enfield has cult following in India and the company needs little spending on advertising as the bike has high demand across India. Royal Enfield registered 26 percent higher sales in June 2023 compared to the same month last year. Honda and Jawa Motorcycles have tried to grab market share in the premium motorcycle segment but both the companies have witnessed lackluster response after initial boost.

TopNews will have another update for the stock, once we see response for Triumph Speed 400 and Harley-Davidson X440. Initially, both the motorcycles have managed strong interest from consumers but if this continues, is yet to be seen.

An analysis by Motilal Oswal Financial Services suggests that over the next five years, the premium motorcycle segment will grow by around 15% annually.

The video offers a comparison between Harley-Davidson X440 and Bajaj Triumph Speed 400 by ICN Studio.

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