Eicher Motors SWOT and PESTLE Analysis

Strength

1. Eicher Motors Ltd is a zero-debt company: Eicher Motors Ltd has maintained its position as a low debt company since the past many years. This is the primary strength of the company as the company does not have to pay any interests from the revenue or profit earned. The company is at a strong position in terms of debt and does not pose any threat to the shareholders. The non-current loans of the company in the financial year 2019-2020 was around 0.38 crores. The current loans were around 1.14 crores which is very low. Other financial liabilities of the company stood at around 0.01 Crores which is insignificant for such a big company. The company has a very low debt-equity ratio and this puts the company in a strong position. The company does not have to sell any of its assets or dilute its equity to repay loans.

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Weakness

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Opportunity

1. Huge potential to increase its presence across Indian states: If we look at the market share of Royal Enfield in Indian markets in the above 125 cc+ motorcycles then we can divide the market into 4 categories. After looking closely, we find that the states in which Royal Enfield has less than 26% market share are Andhra Pradesh, Odisha, Telangana, North East states, West Bengal, Karnataka, Maharashtra and Tamil Nadu. These are the major Indian states and there is a huge business potential in these regions. Major Indian cities like Bangalore, Kolkata, Chennai, Hyderabad, Bhubaneswar etc., are present in these states. These states are categorized into high potential and low penetration categories. This shows that Royal Enfield has a large domestic market to capture. If we look at the high potential and high penetration states then we can find that only a limited number of major states have been captured by Royal Enfield. This shows the huge opportunity for the company to capture new markets.

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Threat

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Political

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Economic

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Social

1. Consumer preferences shifting towards the electric vehicle segment: Several factors are supporting the shift of consumer preferences towards the electric vehicle segment. Factors like fuel price hike, PLI schemes for electric vehicle segment etc. are the major drivers for the increase in electric vehicle demand. Government is also supporting the electric vehicle industry as a pledge to reduce the global carbon footprint. The demand for EV is going to manifold in the coming years as more and more consumers are recognizing the need to shift to EV vehicles. The schemes introduced by governments at the state and center level are making the EVs more affordable. Major vehicle producers have to produce EVs to retain the market shares. Eicher Motors has produced EV buses. Royal Enfield is also looking to enter into the EV segment in a strategic manner but not very soon. EV vehicles are going to be a market disruptor and to stay relevant the company has to foray into this segment.

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Technological

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Legal

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Environmental

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