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Harley Davidson : MILWAUKEE - Its North American sales are still minuscule

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09/22/2017 | 06:00am CEST

MILWAUKEE - Its North American sales are still minuscule, not even a blip on the radar screen of Harley-Davidson Inc., but motorcycle manufacturer Royal Enfield is settling into the U.S. marketplace via Milwaukee, Harley's hometown.

A year after opening its flagship North American dealership in the city, India-based Royal Enfield says it's about to ramp up sales through 60 dealerships and new bikes, including one in the popular dual-sport category.

"Phase two, which we will hit next year, is really about introducing new products," said Rod Copes, a former Harley executive and now the president of Royal Enfield North America.

Known for its bikes that capture the essence of old-school motorcycling - a throbbing engine, simple electronics and a low price - Royal Enfield produced its first motorcycles in Britain in 1901, two years before William S. Harley and Arthur Davidson built their first bikes for the general public.

But while Royal Enfield is revered in India, one of the world's largest markets for two-wheel vehicles, it's barely had a presence in the United States.

Copes, who previously led Harley-Davidson's sales efforts in Asia and other emerging markets, has been setting up Royal Enfield for growth in the U.S. and Canada.

Worldwide, the company expects to sell more than 825,000 motorcycles this year - although only a tiny fraction of those bikes will be sold in North America.

"That is our opportunity. But we want to be very deliberate and very careful because we have one chance to reintroduce the brand to this marketplace," Copes said.

Royal Enfields are manufactured in India and, for the U.S. market, are shipped to Dallas, where each bike goes through a 100-point inspection before it is sent to a dealership.

The company selected Dallas for its distribution center because from there it can deliver motorcycles anywhere in the U.S. in two days. Also, there are fewer winter weather issues than in northern cities and no threats of hurricanes, like in Houston, where the bikes arrive by ship.

Bikes are held in Dallas until a dealer places an order. There are three models: the Classic, the Bullet and the Continental GT, priced from about $5,000 to $6,000.

These are midsize motorcycles, smaller and less powerful than even the smallest Harley, and less expensive.

"We really don't feel we are competing against any of the big players, especially Harley-Davidson. There might be a little crossover but a different type of consumer is going to be looking at our motorcycles," Copes said.

The company is stepping up its marketing in 2018, and a good portion of it will be aimed at young, urban adults wanting unique and affordable transportation.

The bikes also are popular with riders nostalgic for British motorcycles from the 1960s.

Soon, Royal Enfield hopes to have its dual-sport motorcycle, the Himalayan, available in the U.S.

That bike, with a 410-cc engine, will be aimed at riders wanting to travel dirt roads and trails, as well as paved highways.

The Himalayan was built for India, but Copes said he convinced Royal Enfield to offer the bike in the U.S.

"We brought a couple of them over here and the response we got from people who rode them was incredibly positive," he said.

Royal Enfield is getting the Himalayan certified to meet U.S. regulations.

"Adventure bikes are the only segment of the U.S. motorcycle market that is really growing," Copes said.

With the overall North American motorcycle market in decline, Royal Enfield has struggled a bit to establish its dealerships.

"Not a lot of dealers want to add a new brand and one they really don't know. But we are OK with that. We are in a marathon, not a sprint," Copes said.

© Copyright 2017, Daily Commercial, All Rights Reserved, source Newspapers

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Financials ($)
Sales 2017 4 913 M
EBIT 2017 929 M
Net income 2017 595 M
Debt 2017 5 472 M
Yield 2017 3,05%
P/E ratio 2017 14,11
P/E ratio 2018 12,76
EV / Sales 2017 2,79x
EV / Sales 2018 2,71x
Capitalization 8 229 M
Duration : Period :
Harley-Davidson Inc Technical Analysis Chart | HOG | US4128221086 | 4-Traders
Technical analysis trends HARLEY-DAVIDSON INC
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 22
Average target price 51,0 $
Spread / Average Target 5,7%
EPS Revisions
Matthew S. Levatich President, Chief Executive Officer & Director
Michael J. Cave Non-Executive Chairman
Michelle A. Kumbier Senior VP-Motor Company Product & Operations
John A. Olin Chief Financial Officer & Senior Vice President
Sara L. Levinson Independent Director
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