Royal Enfield Maps Growth Strategy Amid GST Hit

Royal Enfield delivered record sales in Q2 and during the festive season from September to October, supported by the GST reduction on motorcycles up to 350cc from 28% to 18%. This tax relief helped the brand sell over 2.5 lakh vehicles during the festive period. However, the GST increase on bikes above 350cc from 28% to 40% has weakened demand in the higher-capacity segment, which contributes nearly 9–10% of Royal Enfield’s volume.

In an exclusive interview to CNBC-TV18 at the Motoverse festival in Goa, CEO B Govindrajan said that while inquiries for sub-350cc models remain robust, the tax hike has caused a clear decline in interest for motorcycles above 350cc.

He added that the company is actively engaging with the government to advocate for a uniform 18% GST rate across categories, arguing that such a move would enable scale in 450cc and 650cc motorcycles and support exports at more competitive prices.

Strategic Shift and Product Planning

Govindrajan emphasised that the company will not make knee-jerk decisions but is evaluating alternatives to safeguard R&D investments in larger motorcycles if domestic demand continues to shrink. Despite the GST challenge, Royal Enfield has not deferred its product roadmap.

At Motoverse, the company unveiled four new models: the Flying Flea electric scrambler, Bullet 650, all-black Himalayan Mana rally edition, and Meteor 350 Sundowner edition. All models are scheduled for launches in India and global markets.

Royal Enfield is also targeting a 30% year-on-year increase in export volumes in FY26, supported by new products and deeper international penetration.

Domestic Capacity Expansion

With strong demand for its 350cc lineup, including the Hunter, Meteor, Classic, and Bullet, Royal Enfield is expanding annual production capacity from 1.2 million to 1.5 million units by Q1 FY27. Instead of setting up new factories, the company is adding modular capacity in existing facilities to optimise costs and improve operational efficiency.

Strengthening Global Presence

Royal Enfield continues to scale its global footprint. The brand is the number two player in the UK’s middle-weight motorcycle segment and holds leadership positions in SAARC markets. It is also among the top three in several Asian countries.

To stay closely connected with customers, the company has established subsidiaries and six CKD assembly plants worldwide, taking direct control of distribution and retail operations in major markets.

Brazil has emerged as the next big growth driver, and Royal Enfield plans to intensify its push in the region. For global consumers, the company launched the 650cc Bullet to mark its 125th anniversary, reinforcing its focus on durable, timeless motorcycles.

Future Vision and Segment Priorities

Despite rapid changes in customer preferences and geopolitical uncertainties, Royal Enfield remains focused on the middle-weight 250cc to 750cc segment. Govindrajan believes that demand for heavy motorcycles is fading as riders prefer manageable, versatile machines.

While he did not confirm upcoming 250cc or 750cc models, he hinted that Royal Enfield may showcase new products at the EICMA Motor Show in Milan next year.

Also Read: Oct 2025 Auto Sales: Tata Motors, Maruti Suzuki, and M&M!

Conclusion

Royal Enfield is navigating GST-related challenges while strengthening its domestic and global strategy. Through capacity expansion, new model launches and export growth, the company aims to offset demand pressures and reinforce its leadership in the middle-weight motorcycle category.

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