While every automaker in India is gearing up for the BS VI era, Royal Enfield is facing a dispute with parts maker Flash Electronics at a US court. This issue relates to a Regulator Rectifier which is the main component in all BS VI compliant engines.
The Delhi based Flash Electronics claims to have a patent for this component both in US and European markets and have hence filed a case against Royal Enfield in the eastern district court of Wisconsin, USA. The company claims infringement by Royal Enfield asserting that the company sourced this part from Varroc Group in Aurangabad.
Royal Enfield, in their defense, claims that they follow a multi vendor strategy so as not to depend on a single vendor for the manufacture of BS VI compliant motorcycles. However, if the issue is not sorted and the matter is not resolved by the court, Royal Enfield could have to search for another supplier.
This could not only increase costs significantly but would also affect the launch timeline as it is also too short a time frame to locate a new vendor ahead of the BS VI emission norms coming into effect from 1st April 2020.
The Regulator Rectifier is one such part that converts alternating current (AC) produced in the engine into direct current (DC). This is used for all electricals such as charging of batteries, powering headlamp and lighting up instrument consoles.
Sales of Royal Enfield motorcycles had been on a steady decline over the past several months. This could be attributed not only to a general slowdown across the segment but also to the recent increase in prices brought about by Royal Enfield earlier this year. Any further increase in prices would have a catastrophic effect on sales which is what the company is trying to avoid.
The company had approached Flash earlier this year in an effort to resolve the case. Flash, along with their legal council, had a series of meeting with the management of Royal Enfield though no agreement was arrived at.
Royal Enfield had offered Flash all its international business. Though further legal action was put on hold, it has now once again been initiated with Flash determined to penalize Royal Enfield and stop further production. Apart from Royal Enfield, Bajaj Auto also procures this regulator rectifier from Flash Electronics as the same product from other OEMs proves to be more expensive.