The world’s oldest motorcycle brand is about to get some new blood, as Dr. Venki Padmanabhan has been named Royal Enfield Motors new CEO. Serving Royal Enfield for the past two years as COO under then CEO R.L. Ravichandran, Padmanabhan has a bevy of management experience, which has seen him serve as the Managing Director of Chrysler’s South East Asia Global Sourcing Office, along with other positions at General Motors and Mercedes-Benz. While Padmanabhan has been at Royal Enfield, the company has posted 21% growth in sales volume, 54% growth in sales turnover, and double-digit profitability (that’s the business equivalent to a triple-double).
Reporting to Siddhartha Lal, the Managing Director of Eicher Motors Limited (Royal Enfield’s parent company), we imagine Padmanabhan’s marching orders will be to continue the strong growth the company saw under Ravichandran, and to continue to expand into emerging markets, while solidifying Royal Enfield’s position in India against outside producers.
Get ready to pour some peanut sauce on your spaghetti as Bologna Bullets destined for the Southeast Asian markets will soon be produced in Ducati’s newly planned factory in Thailand.
Being called a “final assembly” plant, the move is similar to the one that Harley-Davidson undertook late last year, where the Bar & Shield brand setup an assembly plant in India in order to side-step the extremely high tariffs the country puts on foreign-made motorcycles.
In addition to Harley-Davidson, Ducati will be joining the likes of Honda, Yamaha, KTM, and Brembo, all of whom have increased their presence in the Asian markets within the past year to capitalize on the growing economies of India, China, and Southeast Asia.
We know it’s a cryptic headline, but there’s a
big HUGE move happening today in India as far as motorcycles are concerned, and we couldn’t help being overly dramatic. Holding a 26% stake in Hero Honda, Honda announced that it will be selling its position in Indian joint-venture, the world’s largest two-wheel manufacturer, to the Hero Group’s founders, the Munjal family, and various investment funds.
Honda in turn will be pumping its resources into its own fully-owned subsidiary in India called Honda Motorcycles and Scooters India (HMSI). Buying its stock back at a discounted rate, the Honda will be selling the stock to Hero Honda for $1.2 billion, presumably in exchange for a larger percentage of the company’s early revenue (Honda currently takes home 2.5% of Hero Honda’s yearly revenue).
After successfully launching its cars in the growing markets of Asia, BMW plans on having its motorcycles available for purchase in three Indian dealerships by December of this year. Making available its R & K series street motorcycles, along with the S1000RR superbike, BMW will have a presence in New Delhi, Mumbai, and Bangalore, with the bikes being imported directly from BMW’s factory in Berlin. BMW has targeted India as an area for strong growth in the future, and joins companies like Brembo, Yamaha, Honda, Royal Enfield, and KTM who have increased their presence and production in the budding Western Asia area.
According to Indian publication Bike Advice, Bajaj is looking to cultivate its relationships with KTM & Kawasaki further, hoping to create a three-way alliance that would build off the strengths of each company. Since 1986 Bajaj has had technical ties to Japanese manufacturer Kawasaki, with Bajaj paying royalties to Kawasaki for basing its creations off Kawasaki designs. Bajaj and Kawasaki also share distribution channels, with Bajaj motorcycles being sold at Kawasaki dealerships, and vice versa.
In 2007 the Indian manufacturer bought a 17% stake in KTM (Bajaj has since increased its stake in the Austrian company to 35% in 2008, with further investment plans rumored), which allowed Bajaj access to Europe and KTM access to India. Bajaj has also gained some of KTM’s knowledge on two-stroke motors, while KTM has seen the small-bike specialist help them with its soon-to-be released KTM 125 Duke project.
With all these relationships being fostered, and obvious synergies existing, Bajaj wants to take its relationship with each company to the next level (in America we call that Third Base), and change the level of collaboration so it goes three-ways. The affect would be a merger, without the merger.
Royal Enfield Motors has released a statement saying that the historic company is getting ready to double its current production levels in the coming years. The proposed expansion, which would see the company’s current production level of 52,000 yearly motorcycles get bumped to 70,000 units in 2011, 90,000 units in 2012, and finally 100,000 units in 2013, stems from the positive response the company has seen to its fuel-injected motorcycles. This would seem to be refinement of Royal Enfield’s similar announcement 6 months ago, where the company also said it planned to double production.
Honda has announced that it intends to build a second production plant in India in order to meet the rising demand in the world’s second largest motorcycle market. Located in western Rajasthan, the production facility will cost Honda over $100 million, but will also allow the Japanese firm to churn out an additional 600,000 units per year starting in the second half of 2011.
As we reported last week, there were rumors circulating that Bajaj was poised to take a controlling interest in KTM, which could see the Indian manufacturer owning up to 90% of the Austrian company. After the circulation of these rumors KTM released a statement (posted after the jump) that touched on some of the issues brought about by the weekend’s news coverage, namely the future ownership structure of the company.
Some publications have taken this release as a denial of the acquisition rumors (which the release at no point actually says), but like many press releases what is said is often less important that what isn’t said. Sensational headlines aside, KTM’s response only suggests that CROSS Industries AG will remain the majority shareholder in KTM, and in no way denied rumors that Bajaj would be increasing its stake in the Austrian company. While CROSS and KTM’s current leadership seem set to remain intact at KTM (what was actually stated in the release), our sources continue to point to Bajaj increasing its stake in KTM, while the company’s glaring omission to address that part of the industry rumors seems to confirm that initial suspicion.
With KTM’s shareholder general assembly only two weeks away, we won’t have long to wait to see how the over $40 million of additional stock gets spread out over current and potential investors. Press release after the jump, for you to make the call yourselves on what was said.
Rumors are indicating that KTM has invited Indian manufacturer Bajaj to increase its stake in the Austrian company from the current 30% to up to 90%. While neither party has confirmed the news, it is reported that Bajaj has accepted KTM’s offer, and will immediately purchase an additional 21% of the company’s stock, making it a 51% majority shareholder. Bajaj will then increase its ownership to 90% at a later undecided time.
Investing in emerging markets, Yamaha Motors is set to invest $150 million in a new motorcycle manufacturing plant located in Pakistan. The plant, which is to be established in the National Industrial Park at Bin Qasim, Karachi, will serve as a central location for Yamaha’s move into Pakistan, India, and other emerging Asian and African markets.
After aquiring Indian firm JV KBX from Bosch last October, Brembo has opened the doors of its brand new plant in India this week. The plant will be dedicated to the production of disc brake systems for scooters and motorcycles between the displacement of 125cc and 250cc’s in the Indian market.
The move positions Brembo to challenge the Lombard Group, which currently holds over 50% of the market share for disk brakes of motor vehicles in India. In case you didn’t know, the Indian market is mainly composed motorcycles between 50cc’s and 350cc’s. This makes the acquisition and new factory a huge strategic move for Brembo in a rapidly developing nation.
Brembo is selling the brake products under the name Breco, which is their mark specifically dedicated for motorcycles and scooters with small and medium displacements in developing countries like Brazil, Russia, India, China and in the other nations of Southeast Asia.
Brembo’s activities in India began in 1998 through a license of its technology for the production of brake discs for motorcycles to the Indian Kalayani Brakes, later acquired by Bosch Chassis Systems India Ltd., the Indian subsidiary of the German multinational of a similar name. In 2006 it was turned into KBX, the Joint Venture Joint between Brembo and Bosch.