Good evening, all participants, welcome to-
Recording in progress.
Q1 FY25 post-result conference call of Eicher Motors. Thanks to the management for giving us the opportunity to host the call. We have with us the senior management, represented by Mr. Vinod Aggarwal, MD and CEO of VECV, Mr. B. Govindarajan, CEO of Royal Enfield, Mrs. Vidhya Srinivasan, Chief Financial Officer, Eicher Motors Limited, and rest of investor relations team. So without wasting any time, over to the senior management for their initial comments.
Hello, everyone.
Good evening.
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Yeah. Hello, everyone. Welcome to the Eicher Motors Limited earnings call for the quarter ended June 30, 2024. Being slightly under the weather, Siddhartha was not able to join the call today, so I will begin with the broad level EML summary before getting into the updates for Royal Enfield. After an excellent FY 2023- 2024, we have begun this financial year in a very strong note. We have registered our highest ever quarterly revenue, EBITDA and profit after tax, and marked significant milestone both at Royal Enfield and VE Commercial Vehicles, which we will go through in a while. Last week, we released our annual integrated report for EML for FY 2023-24. We hope all of you would have had a chance to go through it.
In addition to the performance and highlights, the report captures our ESG vision and our consistent work and efforts towards achieving it. This year, we have also published the Royal Enfield Sustainability Journal, showcasing a selection of stories from our sustainability journey across our social mission programs and green business operations. Now, coming to the consolidated financial first quarter FY 2024-25. Our revenue, EML clocked its highest ever quarterly revenue at INR 4,393 crore, marking a growth of 10.2% over INR 3,986 crore from Q1 of last year. Our EBITDA was at INR 1,165 crore. Once again, our highest ever quarterly earnings, up by 14.1% from INR 1,021 crore in Q1 last year. EBITDA margin for the quarter is, stood at 26.5%, as against 25.6% last year.
PAT at INR 1,101 crores, which includes INR 175 crores of EML share of profit from VECV, up by 20% from INR 918 crores in Q1 last year. Now, I will first talk all through the business highlights for Royal Enfield before I hand over to Mr. Vinod Aggarwal for updates from VECV. As far as Royal Enfield is concerned, after registering a stellar performance in FY 2024, we have had a good start to FY 2024-25. To begin with, let's look at the performance for this quarter. Our total sales, it stood at about 227,736 motorcycles in this quarter, as against 225,368 in Q1 FY 2024. In India, we sold 204,686 units in Q1.
The retail continues to grow in April to July 2024 for Royal Enfield over last year in the domestic market, despite the dampened consumer sentiments owing to extreme weather and general elections. Also, we completed the transition to auto replenishment model during this quarter. This helps us to enhance the motorcycle availability to the end consumer, while at the same time lowering the inventory buildup at the dealership, which we'll also discuss. In the international markets, our volume stood at 23,050 units, marking a growth of 26% over last year. Our retail volumes have increased steadily in these markets. Amidst an uncertain macro backdrop, we steadily improved our position in key international markets over the last one year and maintained our market share and position in these markets.
We are now among the top four mid-weight motorcycle brands in many countries around the world, such as UK, Italy, Thailand, New Zealand, South Korea, Australia and Continental Europe. We launched the Super Meteor and Himalayan 450 in several international markets now, and these models have garnered excellent response from all our consumers. Last month, we also launched the Guerrilla 450, our premium roadster on the Sherpa 450 platform. We had our first global media ride and launch at Barcelona amidst global press and experts. The motorcycle marks a bold evolution in our roadster lineup. Designed and developed alongside the Himalayan, our adventure tourer on Sherpa 450, the Guerrilla is an absolutely gorgeous motorcycle. It is unique in design and mechanically characterful. We have had great feedback from world press and from riding communities across the globe. We continue to bring engaging rides and events for our community.
We have also opened registrations for Motoverse 2024, and have already received thousands of registrations from our communities across the globe. Earlier this week, we celebrated 20 incredible editions of pure motorcycling by flagging off our most iconic ride, Himalayan Odyssey. For two decades, the Royal Enfield Himalayan Odyssey has been more than just a journey. It's been a symbol of adventure and relentless human spirit. In keeping with our sharp focus on customer centricity, we introduced first-of-its-kind service for our customers, the Borderless Warranty Program, backed by a network of over 3,000+ Royal Enfield authorized service touch points in 70+ countries. This program offers a number of services under warranty across anywhere in the world for our adventurous riders, ensuring convenience and peace of mind.
On our sustainability, social mission, and CSR journey, we launched our first Green Pit Stop, Camp Kharu, in Ladakh. Managed by local women, Camp Kharu will help foster local entrepreneurship, environment, sustainability, and promote intangible cultural heritage, protection, all in a differentiated way. This is the first of many planned in the popular riding roads up in the hills. On our environmental, social, and governance ESG mission, we have made steadfast progress. Over the years, we made significant efforts to design and develop our motorcycles in concurrence with principles of circular economy. Our motorcycles are designed for more than 97.5% of recyclability and reusability, and the activity is intensely continuing. Our, our plants, over the years, our plants now consume 36% of electricity from renewable sources and are net water positive to the tune of 2.6 times.
We are also committed to send no waste to landfills from any of our operations. Looking ahead, we have an exciting year full of new launches. After the Guerrilla 450 launch, we are now excited about upcoming new Classic launches. We are focused on maintaining this momentum and continuing to grow, as per our business plan. Now, I will hand it over to Mr. Vinod Aggarwal to take you through the VECV performance and updates. Over to you, Vinod.
Thank you, Govind. Good evening, everyone. I am happy to inform that at VECV, we recorded our highest ever first quarter sales of 19,702 units in Quarter One, 2025 financial year. As you have seen, the Indian economy has remained resilient through this period of geopolitical turmoil, elections and monsoons. Economic growth, including government investments in infrastructure spending, is supporting VECV demand across all key sectors. VECV continues to maintain its growth momentum in the CV industry with best ever first quarter milestones across all segments. Eicher Heavy Duty Trucks, we had the highest ever first quarter sales of 4,689 units, as against 4,662 units last year, first quarter, and market share of 8.4% with Eicher brand.
Light and Medium Duty Trucks, first ever first quarter sales of 7,842 units. Financial year 2024, Quarter One was 8,308 units, and we had the market share of 34%. Bus division, we had the highest ever sales of 5,232 units in the first quarter, and financial year Quarter One was 4,842 units. Exports in Quarter One grew to 1,192 units, registering a robust growth of 57.5% over Q1 of financial year 2024. We continue to launch new products and variants addressing market needs. Our small commercial vehicle program, showcased at the Bharat Mobility in January, is on track with pre-production vehicles undergoing customer trials in real-world operations.
During the quarter, VECV also formed a joint venture with iTriangle Infotech, which is now called VECV Connected Systems, to develop and commercialize next generation surround services linked to the transportation business. This joint venture will leverage our industry-first, 100% connected vehicle ecosystem and serve as a development factory for segment-specific embedded and digital solutions to serve Eicher customers. Now, coming to VECV's financial performance for the first quarter. We had the revenues of INR 5,070 crore against INR 4,980 crore last year, Quarter One. We had EBITDA of INR 384 crore, as against INR 387.2 crore last year. Our EBITDA margin in Quarter One is 7.7%, against 7.9% last year.
Our PAT for Quarter One is INR 319 crore, against INR 180.5 crore last year. Our PAT has significantly increased because of the write back of Deferred Tax, because now we have opted for the new tax regime at 25% tax rate. Earlier, we were at 35% tax rate, so the excess tax which was provided earlier under Deferred Tax, that has been reversed. Basically, we were continuing under higher tax regime, because we had the unutilized MAT credit. So that credit has been completed last year. That's why now we opted for the current tax regime of 35% tax. So due to that, our PAT for Quarter One is much higher than Quarter One PAT of last year. So back to you, Govind.
Thanks, Vinod, sir. Can we start the Q&A session, Anubhav?
Yes, please.
Yeah. So participants, kindly raise your hands, to ask questions. So first question is from Pramod Kumar. Pramod, please unmute yourself.
Pramod, you are on mute.
Oh, yeah, sorry, sorry, I didn't realize that. Thanks a lot for the opportunity. So the first question is on the demand side. I think Govind and Siddharth would love to get your insights here. Because what we're seeing is in a very broad-based premiumization trend across industries and sectors in India, for some reason, the premium motorcycle category, as the way you define it, above 250, is not seeing much of a thrust as such, despite entry of Harley, Triumph, and even some of your product action as well. So just want to understand, given your extensive customer engagement, what you do, the kind of interaction you guys have at the dealer level and at the riding levels as well.
So what if you can just help us understand what explains this phenomenon? Is it, is it just affordability, which is kind of really broken here? Or, or are we seeing downtrading? Or if you can just help, what are, what are your findings when you go, check in the market as to what's happening? So that's, that's the first question. Sorry for the long one, but yeah, the-
Yeah. Yeah, yeah. No, I was expecting that will be the first question, Pramod. You know, let me just give the context to the whole thing. You know, India business, what is happening as of now? Currently, the two-wheeler industry and the commuter segments are seeing some very good catch up on part of the COVID time level, because that's what it was not catching up, now it is catching up. We could see it. In fact, I was just going through the data to put that straight. We have surpassed the pre-COVID levels in FY 2024 itself. While many of the segments are just seeing the growth from the base, which they are catching up. Middleweight, what is happening? The middleweight, the entire motorcycle, which has seen only almost about 4-4.5% of growth over the first quarter of FY 2024.
If I have to say, there is so much of action which was there in that middleweight, so many new entrants, lot of store additions, lot many actions which were there. In our understanding, you know, it's a, it's a period of the whole confusion settling. Sometimes the deferment can take place, because there is bombardment of so much of an information which comes in about as an alternative. But currently, whatever is the claim which was there, I can tell you, I think Royal Enfield could able to do a very good retail. In fact, we are at a low single digit in the retail during this window.
Mm.
That's a positive sign which we are seeing. When the market is growing, when your retail is better, there is also on the wholesale, probably we could have done more, but we also took a conscious decision because we went in for an auto replenishment model.
Mm.
Right product at the right location, so we have to do a consolidation of that. We also have something which is going to happen, very exciting and Classic. The inventory build should not take place in those areas. We are also cautious about it. As I mentioned, the whole middleweight motorcycle, as of now, has to pick the pace with respect to the rest of the motorcycle, which I see with all our actions which are coming up, and the too much of a noise which was there is slightly settling down.
Mm.
I'm very positive it will start picking up in few months time, Pramod.
Would we still kind of aspire to have a high single digit growth for the 2W category as a whole for the year?
I think yes, directionally, because premiumization is continuing.
Yeah.
So that's the... There is no indicator which shows that this will not grow. I'm confident that it is going to actually grow. And our new products, as I mentioned, because the market also had to be grown, which we will be continuously working. Our Classic, which is going to see a lot of actions, where the focus is going to be. On Hunter, we are going to do a lot of brand building exercise. And on top of it, now we have launched the Guerrilla 450.
Mm.
It's just about a week, 8 days old in the market, which is also getting a very good traction. That's why I see in the coming months, the growth pattern will be back.
Govind, second question, leading into Guerrilla. So any plans for introducing Guerrilla as a trial product for a lot of your existing riding groups, what you have, or which are many of them are voluntary, some of them are run by the dealers? Because there's one feedback which we get from dealers is that what helped RE connect to the customer back in the day, during, in, say, IT and other areas, was the lending the bike for customers to ride for on an experiential basis. So is there a plan to introduce 450 to the existing customers and see what, how they respond to that product? Because that's a very big untapped customer base we have of several million of them, right?
Is there a plan to kind of use this product to go back to them? Because this is something which can be used for commuting, this can be used for touring, has got all the performances, it's a world-class product in terms of specs. So any plans of rekindling that customer connect in terms of weekend riding and all of that? Is there any plans on that?
Thanks. I mean, I don't need to explain, I suppose. You know, obviously, you know, community connect and making community to enjoy our motorcycles, we always try to find very innovative ways of reaching out to them and give them a frictionless, experience of your pure motorcycling. And as you are also mentioning, one as such action is also reaching out to them and trying to get them onto the saddle of Guerrilla, wherein they will really enjoy the Sherpa platform's potential, which is there, on a roadster, which will, which will actually help us to tap the market.
Any booking numbers you're seeing, Govind, on this? Or potential volumes, what you can do once ramp up is done, across domestic export?
K Platform as a whole, if I have to tell you, Pramod, it is, which is what? Six months old,
Uh.
Six months young baby. It is almost about 8,000 to 8,500 numbers per month is what we are clocking.
This is just the Himalayan, right? Am I right?
Because Guerrilla is on the ramp up.
8.5 is with Guerrilla, part of Guerrilla, or it's, it's excluding Guerrilla?
Part of Guerrilla also. It's-
If I were to push you on that, Govind, where would you think, or at what level, if you don't hit what levels, will it kind of disappoint you?
Look, I think, if this question had been asked to us in about a few years back, what would be the middleweight total number-
Yeah.
If I have said some numbers, I would have not been very happy, because we always felt that the market can be grown.
Yes.
Our fundamental belief is we can grow the market, and we feel here is a, it's a fantastic platform which we have created. The first adventure tourer which we have created a category in almost about 6 months of its launch, we have crossed almost 32,000 motorcycle sales as of now, the Himalayan. And now, Guerrilla also, the same way which we are talking about, we do see there is a good potential for it, but we have to ramp up on the production, so which is also happening. And already we shipped almost 6,000 across India and international. The demand is high. It's in a positive note, Pramod.
Thanks a lot. I'll come back in the queue. Thanks a lot.
Thanks, Pramod. The next question is from Chandramouli. Please unmute.
Hi, good evening, and thank you for taking my questions. My first question is on the VECV PAT number that was discussed. You said that there is a write back in the deferred tax, which I'm, I'm assuming is one-off. But going forward, would it mean that the tax rates on VECV will perpetually be assumed at 25% going forward? Versus historically, that was 35%, so is that sort of a structural 10%, sort of YoY, improvement in, in profit opportunity in VECV going forward?
Yes.
Got it. That's helpful. My second question is related to Guerrilla capacity. So I think, over the past couple of quarters, as the Himalayan has been getting introduced into more markets globally, you did mention that, you had to keep upgrading production capacity on the Himalayan 450. So just trying to understand when we are planning production capacity for the Guerrilla, which is slightly more affordable platform, I mean, affordable price point on the same Himalayan platform. Just trying to understand how you're thinking about production capacity, in your, you know, current 1.2 million units annual capacity that you have just for, you know, these two products.
No, overall capacity is 1.2 million, Chandramouli, so 1.2 to 1.3, because capacity can be modularly increased. As far as the K Sherpa platform, 452 cc engine platform, we are, as I mentioned, we are almost clocking 8,000+ units, and Guerrilla has just got launched. Whereas in the international markets, it will get launched over the period of time. You know, we are not a company wherein we'll put the capital in and wait for it. We'll always be looking at and how the response and how do we actually enhance the capacity. But all the actions are there, and that's how it is slowly catching up.
If in case I have to tell you, even our 650 cc platform, from the time when we launched to now, and the capacity unlock, which has to happen, that also has been consistently happening. We keep investing on debottlenecking the specific suppliers and ramp up of production. So we will, we can, we will and we can comfortably supply the K Platform also according to the market demand in next 1 or 2 months' time.
Got it. That's helpful. My last question is on exports. This seems to be the first quarter of wholesale growth in exports over the past 5 quarters. Would you say that the export markets are now turning a corner for us, now that we are able to introduce more and more 450 and 650 cc models in a broadening range of markets?
Look, I think exports, there is even still, I have to tell you, the sentiments are not the way we are expecting even in the international markets. But what has happened is last year we had our inventory, corrections and all those things, which we have done up. And now, as I mentioned last call also, we won't look at the wholesale as the primary key indicator for us. We'll always be looking at, is there a retail traction? In Q1 FY 25, our retail sales have increased over Q1 FY 24. That's why our wholesales also has been, becoming better. I do see, green shoots in the international markets. It's slightly opening up, but we are cautiously optimistic, about the international growth, which is coming in time, Chandramouli.
Got it. Thank you very much, and all the best.
Thank you.
Thanks. Next we have a question from Arvind Sharma. Please unmute yourself, Arvind.
Yeah, hi, good evening, sir. I hope you can hear me.
Yeah, yeah.
Yeah, thanks. Thanks for taking my question. First on the Classic, since you said the 2024 Classic is coming, could you share some highlights with us? Is it just cosmetic changes, or what are the kind of changes that we expect from the new model year version?
Look, I think Classic, for us, it's a very important product. You know, that has actually opened up for our own growth. We had a lot of love, consumers had a lot of love, and it is really, really the product which changed the Royal Enfield in the global arena. That hasn't seen any major changes in the model since the launch of the Classic Reborn, which we did in 2021, when we were doing the J platform transition. You know, for the Classic, the brand track study, which we normally do, it is showing it is quite strong across all pockets in India. So there are, you know, if I have to tell you, there are a lot of many forms and clones trying to take a stab at it.
The model is very resilient and continue to lead the segment. Now, what we are looking at is, we are working on very exciting updates, collaborations. You will see all those things getting announced, a very, within a short span of time, wherein you will see, wow, Royal Enfield is now getting into the Classic in a very different mode. So we'll wait for another week or so.
Sure, sure. Thank you, sir. Second would be on the Hunter. Had a good volume when it first launched, but over last few quarters, the volumes have kind of stabilized. You did allude to some action there as well. Will it be primarily marketing and pricing driven? Or, in the Hunter also, you are planning some update to the product?
You know, Hunter, I think we all know it has created a big mark in the segment and made a very good foothold in the young, first-time motorcycle buyers. That's what we were looking for. And, the model has a very strong identity of its own, and it is not impacted by the motorcycles of any other brand. The first-time buyer market is a bit muted, as I was mentioning, and we are trying to improve the model's spontaneous awareness, because we launched it in August 2022. It's almost, what? It's about one and a half years old, new brand. So there will be a lot of marketing activation activities, which we will see it, in time to come. But the good news is... And we are constantly working on the product also.
You will see something or other, which is happening even in the Hunter, what sort of a collaboration which we are doing. In fact, we did a collaboration with HUEMN. We did a collaboration with Spotify, and all those collaborations are also really, really helping because it's a brand-building exercise which we have to do to attract the younger consumers who have to come in. So the associations are also getting done in that way. So it is going to be more on brand building, market activation activities, and getting the young consumers and first-time buyers to the customers. You will see those actions in next few months, which is rolling out.
Thank you. Thank you, Govind. Just one more question, if I may, try my luck here. Apart from the product revamp in Classic, is there any other product that you plan to launch over the next, say, six months to a year? Any white spaces that you've identified and you want to fill that up?
I'll come back to you, Arvind.
All right, sir. Thank you so much for this. Thank you so much for taking my questions.
Yeah.
That's all from my side.
Thanks, Arvind. Next, we have a question from Gunjan. Please unmute yourself.
Yeah, hi. Thanks for taking my question. I'm going to extend on the same topic, which Arvind was, you know, getting into. You know, in terms of lot, lot of actions, I think what you spoke about Hunter and Classic is, again, a lot of in, you know, thought around brand building. I mean, there's no doubt that this brand is very, very incredible, and what you've done is, you know, it's, it's difficult to replicate. But what I'm trying to get at is, you know, how do you get the customer to convert?
You know, there is interest in the brand. So, you know, what is it beyond these refreshes that we are looking at over the next, you know, my... And my question is not six months. I'm just wondering from next 2-3-year perspective, how should the product portfolio change so that we can, you know, be very confident about double-digit growth?
Well, Gunjan, I think it's, it's a very pertinent question for a brand which has got launched. Where do we see, how is it growing? Probably, I have to give it with an example. Any brand or any of the genre which we develop, let me take the Himalayan as an example. In 2014, when we launched, at that point of time, the category was not there. People were not able to relate to. And when we were doing it, we took almost about, you know, just say, sharing the number on the Himalayan sale, right? The, the Sherpa platform. It took 37 months for us to cross the 30,000 numbers. You know, we were building the brand, we were trying to see. Now, when we launched the, the new Himalayan, we crossed the 32,000 mark in flat 6 months.
Now, you can see it takes time to build a brand, but when you are building it, then what happens is the growth comes in at a, on a disproportionate level. Hunter, as a product, you know, we wanted to attract the young consumers and first-time people who are not the Royal Enfield regular customers who are looking for the brand Royal Enfield in a different format. That's what we brought in the Hunter. I think it has given us quite a good start and a sustenance. Now, what is more importantly, when we do the brand track study in all those areas, in the rural market, still the brand salience is to be improved. So we have to do lot many activities in the brand building.
Second, in the urban market, what we are trying to do is now we are working with all the colleges and having a college connect to the young, people. Thereby, they can get into the motorcycle, and there are different methodologies with which we are trying to work around to get the college connect as a major program. And the Hunter second year is also going to be, getting over, where you will see the Hunter ride across the country. So thereby, more attractions have to come in, and the collaborations which is required for the youngsters to relate to, that, "Yes, I, I relate to the product."
So it's a, it's a brand building exercise one have to do, but the belief is that this product, the way we wanted to land, has landed. It started getting us the young consumers, first-time people, and that set is very huge. So let's continue our work in a sharper way, which eventually will get us a good number. That's the belief, and I think it is showing signs, Gunjan.
No, that's, that's quite helpful. I think, Hunter clearly has a lot more potential. So, you know, we'll, we'll watch out for the scale-up there. My second question was on, you know, the Guerrilla numbers that you mentioned, and, you know, maybe I got them wrong. 8, 8.5... Sorry, 8, 8.5 thousand for the Sherpa platform. Now, this includes the Himalayan and a little bit of ramp-up that you would have seen for Guerrilla. Is that understanding right?
Right.
So my sense is 6,000 was the typical run rate that we were seeing for Himalayan, and incrementally, we are now in the ramp-up stage for Guerrilla. That's the way-
Right.
to think about it?
Yeah, yeah, you're right.
Okay.
It is about a week.
Yes.
and it is about a week and days old in the market.
Yes. Okay, got it. And is there any insights to share as to how this product has landed? I mean, is it? Or how you are trying to position this? Is it the mix of inquiries that you're seeing are people who are buying Royal Enfield for the first time, or is it, you know, replacement, which is where, you know, this is landing more? So, you know, some thoughts on the positioning of the product from your perspective.
You know, it is a very early stage to say whether there is old-timers or, I mean, the existing consumers are upgrading or the new guys are coming in. But I can tell you, in the world, when there are so many roadsters not having an identity, Guerrilla has brought in an identity for itself, and the start is very strong. And the reviews by all the people who rode the motorcycles, I'm sure you all would have seen it. It's all across the globe. It is very good, and it is on the Sherpa 450 potent platform. So it's a roadster, and it is a take from Royal Enfield type of a roadster. You will see that positive trend which is coming up in the Guerrilla, Gunjan.
Okay, last question, just-
Thanks, Gunjan. Please, come back in the queue.
Okay. No problem. It's okay.
Yeah. So next, we have a question from Kapil Singh. Kapil, please unmute. Kapil, you are there?
Hello, can you hear me?
Yeah, yeah, please go on.
Yeah, just took some time to load. Thank you, sir, for the opportunity. Just one question on... We saw very good improvement in the average selling prices. So if you could share some color there, that, was it driven purely by mix, or you're seeing higher growth in spare parts and accessories? Some color there. And also now that, you know, the increase in pricing or commodity movement that you would have done, seen recently.
Yeah, Vidhya?
Right. So hi, Kapil. So I think as you rightly surmised, I think the growth in selling price is a function of 2, 3 things. One is, of course, the product mix, because we have greater than 350 cc, the share is going up. And also, we've had increase in the share of international markets, which also is kind of co-contributing. So it's a combination of these two factors, which is driving up ASP. We've not taken any price increases, as you know. As far as commodity is concerned, you know, I think we've got impact of about 0.6% as far as commodity is concerned. So that benefit is flowing through in the GC.
Great. And just on the spare parts and accessories, that is-
Yeah, I think that also has, you know, the share of spare parts and accessories are doing well, continues to be trending at around 15%. So that also obviously... But, you know, not necessarily on a ASP level, but certainly helps us from a GC standpoint.
Great. And just second, a more broader question on the demand. You know, there were some factors that you mentioned in the first quarter, like elections and heat waves, that affected demand. So now that all of these factors are over, is there some kind of improvement in demand that you are noticing? And also, you know, last time we talked about double-digit growth for the middleweight segment, this time we were talking about single digits. So has there been some change in growth expectations?
There's no change in the growth expectation per se. As I mentioned, the middleweight in the first quarter, you all know there is so much of noises and actions which are there. It's all, it's all settling down. And our new products, like Guerrilla, which is, which is going to hit the market now. Festive season is catching up. We are going to do lot many work on Classic. We have a lot of brand building activities and market activation activities, which are picking up in Hunter and in Meteor.
In all the products, our GT Cup, which has happened, which has brought in a quite a good eyeball and, and interest on the Continental GT. So all those which tends to make me to think and believe confidently that the market is going to come back within a short time in a good growth rate.
Thanks, sir. Thank you so much. Have a good evening.
Thanks, Kapil. Next, we have question from Raghu. Please unmute yourself.
Good evening, sir. Thanks for the opportunity. Sir, firstly, on the Bullet volumes, there has been some decline YTD. How do you see the improvement here in future? In new generation Bullet, how are people accepting the product? Is there any worries relating to higher pricing of the new generation, removal of kickstart or the design? Just trying to understand what is restricting the acceptance here.
You know, Raghu, for Bullet, when we launched, you know, there is always, these are all the discussions which will come. When we launched, it really had a very good start, and it had a good acceptance of the new Bullet in South, East, Central and West regions. There are few regions which is our, used to be the bastion market for, for the Bullet. There, we saw a little bit of slowness in the growth of Bullet, because that's where the Bullet is very important also for us. Then we did a deep dive, and we understood that there is a product intervention which is required for those sort of bastion market, which we have already started working on, and it will all be there, well before the festive season in those markets also.
So you will see the Bullet also picking back to the growth which we launched. But I must tell you, Bullet, in the market, which was not doing well, especially in UP, Maharashtra, where we really wanted that to get acceptance, it has really increased and acceptance has been very good.
Thanks for that, sir. And, on the exports outlook, which regions are currently doing well for you, and which regions are yet to recover? And also, if you can remind the broad breakup of exports, across Europe, North America and Asia.
You know, in the international markets, especially the LatAm, is doing very well because our CKD plant is also fully in operation. And Europe started showing good signs. That's another one market. APAC is just picking up. Individual areas, we can send you the numbers, but our market share in those areas, as I mentioned, retails have been very good. It's in the high single digits, and that is continuing. And we are seeing a green shoot in the international markets, and that's why... Also in the international market, I have to give you for a bit more understanding for everyone, is what happens is, in fact, our Super Meteor, which we launched almost about a year back, we are just launching in high number markets like Brazil and all.
Because it takes time for the homologation, different things which are there. We have to time the market. There is a riding season, non-riding season all together. So our products will be entering into those markets only now on. So to that extent, the international market, I see the growth is going to be better in this year.
Thank you, sir. To Vinod, sir, if you can talk about the CV industry volume outlook. Q1 had some impact of elections. How are you seeing the demand rest of the year? And Eicher has been doing well on the market share part. How do you see the focus on market share gains, and also your thoughts on current level of discounts?
As far as the commercial vehicle market is concerned, I think, you know, first, first quarter and, first, you can say July month and as well as this month also, because of the monsoons, market is right now not doing so well. Even first quarter also, even though the growth looks, looked good at 10% in first quarter. But that also, we have to see that the last year, first quarter, the numbers were very, base was small because we had just moved to OBD-II, and there was a lot of pre-preponement of sales to, quarter four of, you can say 2022-2023. So due to that, the growth that you look in quarter one also, it's not a, it's not a—I would not say a good growth.
July, of course, the market has dropped. However, going forward, we are very positive. The fundamental reasons are very clear that, firstly, the economy is expected to do well. We are still talking of 7%+ growth in the current year. Then huge money is allocated for capital projects, INR 1,111,000 crore. We should also note that, due to elections, nothing much has happened on the investments, on the capital spends from government. Of course, now it will also be a challenge that now they will have to do this entire spend in the remaining part of the year. So therefore, still nevertheless, the good spend will happen in balance part of the year.
And then, of course, September onward, there will be festive season starting in, and replacement demand is expected to remain strong. So therefore, I'm very positive as far as the balance part of the year is concerned. Commercial vehicle industry should continue the growth. And even though the growth may not be very strong, because there are also a lot of structural changes happening. For example, in heavy-duty trucks, a lot of migration is happening towards higher payload trucks. That also results in reducing the, you know, the number of trucks. But on the other hand, you know, for all other fundamental factors which are in place, the industry is should be doing well.
Now, as far as we are concerned, you have seen that we have been outpacing the market consistently. Even month of July also, our light and medium-duty truck market share was 38%. In fact, we are consistently improving our market shares and heavy-duty trucks also we are continuously improving our market share. Buses also, we are getting good growth. So therefore, I think we are expected to continue to do like that because one is that we are expanding our dealer network. We are opening more and more dealerships across the country, and that is also helping us to to enter into the territories where we had been weak earlier. So therefore, that is also helping us.
Then, of course, we are also continuing to expand our product range. So we are getting into more and more applications and more and more segments. So therefore, we are expecting that we should do well. As far as the discounts are concerned, of course, there have been improvements. We have seen the results of the other companies. They have done. They have shown better margins. Even in fact, our margins are still low. They are continuing to be almost at the same level as we were last year. I think the reason is that my own belief is that when the heavy-duty trucks go up, the competition improve margin, because they are making better money in heavy-duty trucks. So that is the reason.
Otherwise, I think the discounts also should come down. So we are very positive that price management is going to play a very big role in improvement of margins in the entire industry, and we are very optimistic.
Thanks, sir, for the comprehensive answer. Wishing you all the best.
Thanks, Raghu. Next, we have a question from Jinesh. Please unmute yourself.
Yeah, hi. Am I audible?
Yes, Jinesh.
Yeah, hi. First, clarification on Guerrilla volume. So you said we have shipped 6,000 units so far. This is reflecting in July, or this is starting from August?
It will start reflecting partial quantity in July, but it will start reflecting more in August.
More in August. Got it. And last, you talked about the auto replenishment model, shift to that. So, can you talk about what, how it was earlier and what the changes, and did it have any influence in our, wholesales in the recent quarter?
Yes, Jinesh, I think you got it. Auto replenishment is on a replenishment model. So earlier, normally, is almost about the forecast model. So there will be a dealer forecast, there will be a sales forecast, and everything gets aggregated for an MRP run. And that's how we used to do the entire production. The production plan is against an indent. So now what we are doing is, that all have to go away, because no one knows exactly at what model is required, at what point of time, and the dealer profitability to be protected. So what we have done is, we have gone in for the theory of constraint-based replenishment model.
That is what we implemented in spare parts, as a business almost about two years back, which has showed us, extensive gain as a business to us and to the dealer partners also. So that extent, it had some impact on the wholesale, because we never wanted, anything which is left on an indent basis. Otherwise, what will happen is the motorcycles have to be moved from one place to one place. So to avoid all those things, when the replenishment model was being cut over as a system, we were also cautious about building the inventory, thereby the wholesale.
Okay. And what kind of impact it would have on the retail and wholesale?
Percentage term, I will come back to you, because we are still assessing about the availability of the motorcycle at that place. And because the festive season is coming, as a result, there will be always a multiplier for festive on the inventory holding. We are just we are just doing it, but the intervention which we've taken, that inventory build should not happen, and we maintained our dealer inventory only within about 2-3 weeks. So we haven't increased. You would have seen in the channel check everywhere, we have actually looked at keeping the inventory in check during this time.
Got it. Got it. And Vidhya, you talked about 60 basis points benefit of commodity. This is on year-over-year basis, right? Or on quarter-over-quarter basis.
Yeah, YoY basis.
QoQ, would it be largely stable or, there would be some benefit on QoQ as well?
I think largely stable, I would say.
Okay. And you expect this to go up, given commodity prices are, and, and for some of the commodities have increased?
I think it would take a braver person than me to predict commodity prices right now.
Got it.
I think aluminum is showing a bit of a pressure point, but what is happening is, you know, we have launched all the, all the platforms. So the J platform, K platform, P platform, all those things which are launched. So the VAVE will start kicking in, so it'll also help us over, over the period of time.
Got it. Got it. And given we are looking at brand activation across models, should we expect a material increase in investment in marketing and branding going forward?
Which is actually planned, Dinesh. So that's all planned in our P&L for the whole year. So you will see our investments, which will be there. But there will be increased spends on the marketing and brand building to build strong awareness for the products which we talked about. That's also part of our rebalance, which we mentioned. Growth is the mindset with which the organization have to go. And that's how we will see more activations, which will be taking place in time.
Got it. Great. Thanks, thanks, and all the best.
Thanks, Dinesh. Next, we have question from Amyn. Please unmute yourself.
Hi, can you hear me?
Yes, Amyn.
Yes. Yes, hi, thanks for the opportunity. I just wanted to go back to the Himalayan. You know, while you are doing, and this is more regarding the domestic market, you are doing close to 3,000 a month. If I see, you know, the new Himalayan is doing as much volumes as the older Himalayan was doing. So my question is, A, is this something that you were, you know, anticipating, or is... Are there any reasons why despite a completely new Himalayan and a much improved product, the volumes are still flattish compared to the outgoing model?
You know, Amyn, it's the Himalayan, as I mentioned, in the six months' time of our launch, we have almost crossed about 32,000, including domestic and international. You know, in a new product like this, because it's a new platform for us, okay? When it is launched and the existing 411, which had been there in the market, people do get it. It is an evolution, but the market will always be looking at initially how the product behaves, how is it getting accepted. Consistently, the growth, as you're also mentioning, reaching the older numbers, and now from there to go, initial consumers have to be very happy. That way, this platform has got very good acceptance in the market.
The product got very good acceptance, and everybody could able to link and desire to ride the Himalayan at the Himalayas, and it is catching up. It's a, it's a Bruce Lee in the adventure motorcycle category, which, which people are experiencing it. So that's how the growth will take place. It's, it's in the right track, let me put it like that, Amyn.
Okay. Okay, thank you. And just going back to the Hunter, I think you earlier in the call mentioned that you were getting, you know, a decent amount of first-time buyer. So just wanted to clarify, when you say first-time buyer, are you saying, like, first-time two-wheeler buyer? Because-
Yes. Yes.
Okay. Because the Hunter is still expensively priced. I mean, it's cheaper than your Classic and Bullet, but it's still a very expensive product.
Yeah.
So broadly, what proportion of Hunter would be for, I mean, first-time buyer, if you can give us a sense?
You know, first-time buyers, maybe about 13%, 12, 13%.
Okay.
-roughly.
Okay.
The portfolio level.
Okay.
Hunter, maybe slightly higher, maybe about 19%-25% level, starting.
Okay.
First-time buyers.
First-time.
But there are enough buyers who are actually looking at upgrading.
Of course.
So they want to own a Royal Enfield, which is a cool brand to hang out with. And, that way, it is really helping us to get the younger customers to our fold.
Okay. Okay, that's, that's helpful, sir. Thank you.
Thanks, Amyn.
Thanks, Amyn. Next, we have question from Prashant.
Yeah, hi. Thank you for the opportunity to ask this. So just going back to the recent kind of volume trends, I kind of hear you that maybe there is some confusion in the marketplace about different options that the customers have, and therefore, the volumes are low. But if I were to kind of think about, like, what was happening a similar time last year when there were actually launches happening, lot of noise around two new competitors coming in and that we launched, even then, our volumes were not kind of flat, like what we have seen now. So, I'm not able to fully appreciate the rationale that-
Yeah
You are giving for these low volumes, if you can explain it and maybe the other reasons. Other companies are talking about all reasons like elections and heat wave and whatnot, and other reasons for this slower profit that we are seeing.
Prashant, I just have to give it in a, in a slightly elaborate way. You know, in the middle weight, if in case it's normally we say what? Middle weight is at a particular price point. People have an inclination to upgrade, inclination to buy, because the price point is something there. If you actually look at who has gained, I don't think anyone has gained. So where are the customers? So because we have 7.5 million unique customers who actually come in and visit Royal Enfield website every month. So when we start looking at the leads and then trying to figure out, even in all the markets we started looking at, where exactly the consumer, why is it not getting converted? And we go back and then start checking. Everybody started saying: "Yeah, I considered, but now I, I think I'm clear.
I want to come back to the Royal Enfield." So that's the confusion which I was talking about. Everybody was actually given lot many options directly against Royal Enfield and all those things. That has, I would say it is, it's a deterrent in the decision making, and that is where we felt is a major issue there. It is subsiding, and that's how we are seeing walk-in inquiries going up. Even though, I mean, I must tell you, heat wave and the elections has had its own impact. I'm not saying no to that. Our walk-in was lower during that particular point of time, but the conversion rate has gone up. That's why our retail had been good. We have grown retail in a single digit. Primarily, the conversion had been very good.
So as I mentioned, it's in the confusion in the consumer's mind. In the consumer's mind, when the clarity is there for decision making, especially for middleweight categories, it actually helps. As that is settling down, it will help us to come back, because whoever has climbed very higher volume, no one could able to actually garner volume, and our retail has been very good.
Okay. All right. Okay. Thank you very much.
Thanks. Due to time constraint, this was the last question. So over to BGR, sir, and Vinod, sir, for the last, closing comments. Thanks.
Vinod, anything from you?
No, I think, thank you very much. It went well.
Thank you very much for taking time and attending our question and answer sessions also for this quarter one. All the best. Look forward to see you soon at the Motoverse.
Thank you.
Thank you.
Thanks. We can close the call.