Here's how Royal Enfield sales raced ahead in December despite demonetisation

Royal Enfield was the only two-wheeler company in December to register a growth in sales.

Royal Enfield bikes at a showroom. Photo: Royal Enfield official website

The two-wheeler sales in December saw a drastic dip in sales due to impact of demonetisation. Domestic two-wheeler companies underwent a volume decline in the range of 8% to 34% in December 2016.

While Honda Motorcycle & Scooters reported a 20% decline in sales in December, Hero MotorCorp sales dipped by a large 34%. TVS however saw a lower 8% decline, while Bajaj Auto reported a 18% decline in sales during the month.

The reason for this is as two-wheeler sales depend to large extent on cash transactions, the demonetisation drive by the government crippled buying decisions, especially in the rural regions of the country.

However, the only two-wheeler company to not only see a growth in sales by do exceptional during the month was Royal Enfield. The two-wheeler company reported a 42% jump in total sales in December. It sales grew to 52,398 units during the month from 40,453 units during the same month last year. Besides this, the motorcycle saw a 160% growth in sales in terms of exports.

Royal Enfield saw a higher growth for its models with engine capacity over 350cc. The sales of its bikes over 350cc grew by 56% as it sold 4,645 units during December 2016 as compared to 2,978 units during December 2015.

While its motorcycles with engines up to 350cc saw a 41% rise in sales. It managed to grow its sales to 52,753 units in December 2016 from 37,475 units in the same month last year.

Royal Enfield saw strong momentum in all its models and was not impacted much by the weak rural demand.

According to an automobile analyst that spoke to the Zeebiz team on the condition of anonymity said the reason for Royal Enfield to buck the trend of demonetisation and report higher sales in December was due to the long waiting period of the company. “Royal Enfield has a 3-4 months waiting period and as a result it has seen a lesser impact due to demonetisation. Apart from this, it also had better financing options for customers looking to buy it,” he said.

When asked whether the higher price range of Royal Enfield led to many purchasing by taking loan, cheque payment or digital transactions, the analyst said that people are still purchasing motorcycles through cash, although it is lower. He however said that since it has a higher wait period people have to make part payment and this could be of the reasons for higher sales of the company.

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