Royal Enfield reports domestic wholesales decline at 51.54 percent in September 2021
Royal Enfield September 2021 total sales fell to 33,529 units. Down 44 percent from just over 60k units. Sales volume fell by 26,802 units. YTD sales is still in the green at just under 2.5 lakh units, up from 2,08,078 units for the same 6 months in 2020.
The upto 350cc segment, which happens to be Royal Enfield’s core strength has taken a hard hit. In this segment, they sell Classic 350, Meteor, Bullet and Electra. Wholesales fell to around 25k units, down from 54,434 units at 53.12 percent decline. YTD segment sales grew 10 percent at 2,08,201 units, up from 1,89,608 units.
The above 350cc segment stayed in the green, at just over 8k units, up from about 5.9k units at 35.81 percent growth. In this segment, RE sells Himalayan and 650 Twins – Continental GT and Interceptor. Sales volume grew by just over 2.1k units in the segment. Exports in this segment grew by 52.41 percent at about 6.3k units, up from 4,131 units. Exports volume grew by 2,165 units.
RE Domestic sales volume fell by about 29k units. Down at 27,233 units from 56.2k units. Sales decline is reported at 51.54 percent. MoM total sales decline is reported at 26.89 percent.
Demand for semiconductors
Demand for semiconductors remains necessary, but a shortage of supply may limit the amount of new chips that can be introduced into production. Continuing shortages of product due to high demand and tight supplies caused the semiconductor industry’s production volumes for September to remain flat with those of August.
Across the industry, the lack of new products can be traced back to a tight supply capacity. However, manufacturers have in select instances been able to keep to schedule and introduce new product lines.
The bottom line is that if you don’t have any chips, you need to pay more to get them from other sources. This is a necessity considering its impact of production. As such, procurement of parts continues to be a key focus area.
Things to look up in Q3 FY22
Though things are expected to look up in Q3 FY22, despite this, supply of components is still expected to remain tight for many generations of existing products. The primary cause of the lack in supply is is oft attributed to production taking longer than anticipated to meet pent up demand. These slower production rates as compared to demand is limiting how much product can be shipped out.
The second factor that has led parts availability being tight is some components being used more often by high-volume customers who have smaller weights/smaller demand for some items relative to market trends. In all, while things are expected to look up, it could still be a while until matters on the chip front are smooth sailing.