The launch of Himalayan 452cc by Eicher Motors Ltd, the listed parent of Royal Enfield (RE), is attracting everyone. The vehicle is a significant upgrade from the old version with better features, attractive design and improved performance. As such, the strong initial response for the vehicle is encouraging.
Given that the automobile industry is currently seeing good demand in the premium segment, Eicher could well capitalize on the trend with the launch of the Himalayan. The new Himalayan comes in three variants – Base, Pass and Top. The prices start at Rs2.69 lakh (ex-showroom); and the top model is tagged Rs2.84 lakh. This is an introductory price, valid until December 31st.
These prices are premium to other vehicles in the super-250cc segment. The price of the Harley-Davidson X440, which was launched in collaboration with Hero MotoCorp Ltd, starts at around Rs2.4 lakh and goes up to around Rs2.8 lakh, ex-showroom.
“Priced about 25% higher than the old Himalayan, the focus (of RE) seems to be on maintaining exclusivity rather than selling in large numbers,” analysts at Nomura Financial Advisory and Securities (India) said in a report dated 27 november
So far, so good. But the new Himalayan can do little to protect against market loss due to the competitive intensity. Apart from Hero MotoCorp, Bajaj Auto Ltd also launched a premium vehicle earlier this year, in collaboration with Triumph Motorcycles. Both companies plan to ramp up their respective launches in the coming months.
Nomura estimates that RE’s market share in the super-250cc segment will fall to 82% in FY24 from 88% in FY23.
The new launch of RE would help increase volumes. In FY23, RE’s earlier Himalayan model clocked 37,108 units in the domestic market, which is around 3,000 units per month. Eicher’s earnings could get a boost if the monthly average doubles.
Also, RE is expected to launch its recently revealed Shotgun 650 model next year. For now, investors are capturing the optimism adequately, with Eicher Motors shares flirting with their 52-week highs of Rs3,920 each on Friday. However, due to competition concerns, the stock’s one-year performance lags the Nifty Auto index by a wide margin.