Royal Enfield in the USA…. Big Problems!
Do you know of Royal Enfield? For those of you unfamiliar with the brand, it began as a British company building guns and canons for the military in 1890. In 1901, they built their first motorcycle. Around 1958, they opened a new motorcycle factory in India trying to expand the brand and keep costs down. Their bikes promote a style with an older, nostalgic look, like something your grand-dad would have driven, but with a few not-so-noticeable updates.
I own a motorcycle dealership in Sacramento, California that sells only Chinese vehicles. Because of the success of the dealership, I decided to try my luck selling something other than Chinese brands. I had never sold products from India and, from my research, thought it would be worth a shot.
I did a bit of online research on the brand in the United States to try and approximate how well they would sell. Everywhere I looked, I saw information showing that their sales were doubling each year. This of course caught my attention. Following this positive feedback, I made phone calls, filled out their company application, and became a dealer. Once I became a dealer, I started to see a different side to those “incredible” sales numbers.
One year into carrying Royal Enfield products, I began to notice sales were very slow, and definitely did not match the statistics we expected. During the first year we would sell one motorcycle per month, if we were lucky. The bikes were displayed right at the front of the store, so customers would see them upon entering. Beyond admiring the bikes, most people would ask what Royal Enfield was. No one knew anything about the history of the brand or had even heard of it. This was despite the fact that the company had been around since 1901 and claimed to have doubled their sales each year nationwide in the U.S. It was hard to believe national sales were that good, especially when their market base appeared to not even have heard of the Royal Enfield brand.
Most times when a customer came in to purchase a Royal Enfield, they would want a specific color or style. Because we like to cater to the needs of our customers, I would call Royal Enfield to see if the specific motorcycle and color was in stock. What I found was that, most often, the answer was “Sorry, out of stock”. They would claim it was because that model was more popular than others. If that was the case, why didn’t Royal Enfield just build and import more of the popular models? Here I began to think something was wrong. Having limited to no stock on the most popular colors and models not only doesn’t satisfy customer demand, but it also tarnishes the Royal Enfield name.
Around August 17th, 2015, I received a letter stating the current distributor (Classic Motorworks) for Royal Enfield, would no longer be our USA distributor, and the factory in India is setting up its own distributorship for US dealers called RENA. It also stated that our dealership will no longer be licensed to sell Royal Enfield vehicles as of December 31st, 2015.
I began digging, trying to find new names and contacts for the factory distribution so I could learn more about what this means for our dealership and our future with Royal Enfield. Eventually, I received an email from the new company RENA. In the email, I was told, in a very abrasive and insulting manner, that we were basically not worthy of carrying the Royal Enfield brand at our dealership. Now, regardless of whether their rudeness was based on our low sales numbers or some other factor, I do not take well to being treated rudely for no apparent reason.
On January 4th, I sent in my official letter to RENA stating that our dealership would no longer sell Royal Enfield products. I also stated that by California DMV Law, they need to come pick up all unsold bikes within 90 days, and bring us a check for them. RENA accepted the letter and let me know they would be picked up shortly.
At about the same time, I decided to contact other Royal Enfield dealerships around the country and see if they too had the same slow sales we did. Of course, I was also curious to see what the other dealerships’ experience was with RENA. To my surprise, I received 10-15 emails back from other dealerships saying they too were finished with the brand. They told me stories that proved to be very similar to my own experiences. Many even said they had a hard time getting parts, and that the bikes were constantly breaking down and having mechanical issues. I did not receive a single email from anyone that was going to stay a Royal Enfield dealer. I also didn’t receive any responses in which the dealership had anything positive to say about the new management under RENA.
Something else that struck me as odd was when I questioned other dealerships about their sales, starting from when they first started carrying the Royal Enfield lines. I asked if they had seen any large increases in sales, such as those claimed by Royal Enfield. I wanted to know if any of these dealerships had anything to say that could corroborate Royal Enfield’s data that showed 100% sales increases from year to year. All of the responses I received showed that these statistics were false. Many dealerships said that they didn’t have any kind of sales increases from the very beginning. Where did the these increasing factory sales numbers listed in countless online articles come from? It was clearly not happening now, nor at any other time that I could find evidence of.. Based on my experience and the dealerships I have spoken with, 2016 will probably see a huge decrease in US sales. The number of unhappy dealerships combined with a switch to a new and rude administration, tough and unrealistic sales expectations, and the (most likely) difficulty acquiring parts make it seem like I got out of this company at the right time.
Early this year, I was contacted by RENA. They came to me with an all new attitude, and asked me to remain a dealer. When I asked what ideas they had to promote the company so we could keep up with their ridiculous sales expectations, they had no answer. They then began telling me that we must sell 3 times more motorcycles in 2016, than 2015, or there will be penalties. Another condition they had was that we would have to tie up $150,000 of our credit with GE Motor Credit to floor all future bikes, regardless of the fact that we have the cash to pay for them outright. Why would I want to use credit when I have cash, and pay interest? They told me that those were the new company policies, to which I responded that, in that case, I had no interest in being a part of the new company.
The next month, I received an email from RENA asking if I would take a check for $1500 each motorcycle and keep them on the floor. At this point, I had only 2 bikes still in inventory, and decided to take the deal. I lowered the prices almost to dealer cost, and sold them.
At the beginning of March, I received an email from another dealer that was also giving his notice to the new company RENA, letting them know that his dealership no longer wanted to carry the brand. He told me that they informed him that they will only have 2015 year bikes in 2016 for his dealership, until all 2015 inventory is gone. Despite the fact that these bikes were a year old, he would still have to pay full price. He would also have to tie up credit, pay interest to GE, and take automatic shipments every time a bike sells. Needless to say, he declined the offer.
Since this has occurred, we have been unable to locate any Royal Enfield dealerships in California. Many customers have come in our dealership the last few months asking about sales, parts, and service, but unfortunately, we are unable help them. Our customers have been telling us that they are unable to find places to buy or even fix these bikes, because even old dealers can’t get parts for these anymore.
Today, if anyone goes to the Royal Enfield USA web site, and clicks on the button for locating a dealership, it offers nothing. It only says…. “At this time, please direct any Sales, Warranty, or Service Inquiries to the Royal Enfield North America Customer Service”. They provide no direct contact number or any service provider for customers. They only provide an email contact. The email address reads: “U.S. Customer Service @ Royal Enfield.com” but, at first glance, it looks like USuck Customer Service, which I feel is rather fitting for how they seem to view their ex-dealerships.
My prediction is that within the next 12-18 months, the Royal Enfield factory back in India will begin to see what this new team they assembled in the USA is doing with sales and profits. When they see how horribly things have been run, how old dealerships have mostly all angrily quit, how they have almost no new or existing dealerships to sell their products, and how profits have gone down to almost nothing, they will fire the entire RENA team, and pull out of the US completely. India has a long, long way to go to learn how to run things to appeal to US dealerships and customers.
The old company, Classic Motorworks, which sold Royal Enfields for approximately 15 years was doing fine. They could have used a bit more factory support and money and eventually their sales numbers would have increased, and continued to do so. I believe the factory should have put on a huge national advertising campaign to make the American public more aware of the brand. Unfortunately, it’s too late for that now.
I have been communicating with another company in India that has been wanting to bring their products to the United States. They have been making promises to have US and California approvals for over 3 years now. They still have absolutely nothing. I am beginning to see a pattern with Indian vehicles and their management that I don’t support and can not work with.
For me, I am staying exclusively with my Chinese brands. I am done with Indian products. We sell roughly 2,000 new Chinese vehicles per year, and we love the relationships we have with our Chinese brothers. I go as often as I can to China to visit the factories. We meet with our partners there, have some fantastic authentic Chinese food, see some beautiful Chinese countryside, do some shopping, and soak up the rich culture. One of the most important things to me is that when I am dealing with the Chinese factories and owners I always feel respected, both as a person, and as a dealer.
We are beginning to expand our company across the United States. If our experience with Royal Enfield has taught us anything, it is the value of the friendships and the respect shown to me by my friends in China. Chinese vehicles only!