Royal Enfield, the two-wheeler arm of Eicher Motors, plans to set up its third plant in Tamil Nadu to double its motorcycle production capacity to around 9 lakh units per annum by 2018.
The company is already in the process of raising production capacity at its two plants in the outskirts of Chennai to 4.5 lakh units per annum by the end of this year.
Eicher Motor’s board, which met on Friday, accorded in-principle approval for additional capacity creation at Royal Enfield.
“The board has approved to set up third plant at Vallam Vadagal in Tamil Nadu. It will eventually give us total capacity of 9 lakh units per annum by 2018,” Eicher Motors Managing Director and CEO Siddhartha Lal told reporters here.
The additional capacity will primarily come from the first phase of the new plant, the work on which would begin early next year, he added.
When asked about the proposed investment in the plant, Lal said the company would finalise the amount during its board meeting in February next year.
On new products, he said the company will launch two new models, based on new engine platforms.
“One model would be launched early next year and the other one in 2017,” Lal said.
The company, which sells various popular models like Bullet, Classic, Thunderbird and Continental GT, also plans to expand its sales network in the country.
“By the end of the year, we plan to have 500 dealerships across India in a single unified retail identity,” Lal said.
Besides, the company is also looking to expand its presence in the international markets. In the last quarter, Royal Enfield had taken some significant steps as part of its growth strategy of leading and expanding the mid-sized motorcycle segment (250-750cc) globally.
Towards this, Royal Enfield announced its first direct distribution subsidiary outside India, in North America in August this year.
“North America is a nodal market for motorcycles and one of the biggest in value terms. Given its critical importance to our global ambitions, we have decided to operate our wholly-owned subsidiary there,” Lal said.
Headquartered in Milwaukee, Wisconsin, the Royal Enfield team will be led by Rod Copes, President Royal Enfield North America, and will directly conduct all market development and sales activities.
“We will open our first exclusive branded retail store in the United States in Milwaukee in first half of 2016,” Lal said.
In August, Royal Enfield also announced its entry in Indonesia, the third largest volume motorcycle market in the world.
“Our first exclusive store in Jakarta will be launched later this month,” Lal said.