Royal Enfield targets 2.45 million unit production capacity by 2030

Royal Enfield has outlined an ambitious manufacturing and international expansion plan following a strong Q1 FY27 performance, with capacity targeted at 2.45 million units per year by FY30 and a CKD assembly plant in Indonesia under active consideration. The announcements were made by Eicher Motors MD and Royal Enfield CEO B Govindarajan during the company's Q1 FY27 investor call.

1. Royal Enfield to expand capacity from 1.5 million to 2.45 million units by FY30
2. Rs 1,225 crore approved for Phase 1 of new Andhra Pradesh greenfield plant
3. Indonesia CKD plant decision expected this quarter 

Royal Enfield capacity expansion plans

Brownfield expansion at Cheyyar to take capacity to 2 million by FY28

Royal Enfield currently has an annual manufacturing capacity of around 1.5 million motorcycles across four production units in Cheyyar and Chennai in Tamil Nadu – up from 50 percent utilisation in FY20 to 90 percent in FY26. The first module of the brownfield expansion at Cheyyar is now operational, with daily production crossing 5,000 units. The remaining phases are expected to be completed by FY28, taking total capacity to 2 million units annually.

Beyond that, Eicher Motors' board has approved an investment of Rs 1,225 crore for the first phase of a new greenfield manufacturing facility in Andhra Pradesh. This addition is expected to contribute a further 4.5 lakh units of annual capacity and bring Royal Enfield's total manufacturing footprint to 2.45 million units by FY30. The combined brownfield and greenfield expansion represents a capacity increase of over 60 percent from current levels.

Indonesia CKD plant could be set up at faster pace due to low local content requirements

On the international front, Royal Enfield is actively evaluating a CKD assembly plant in Indonesia after finding that exports from its existing Thailand CKD plant are still subject to import quotas of around 10,000 units per year – despite the ASEAN trade framework. Govindarajan said the company had identified a local assembler in Indonesia and that a decision on setting up a CKD operation there was expected during the current quarter. He noted that Indonesia's local content requirements are relatively low, which could allow a CKD facility to come online quickly. However, he cautioned that a luxury tax of around 140 percent would remain even with local assembly, and the key benefit being the removal of the import quota restriction.

Royal Enfield currently operates seven CKD assembly units across Argentina, Bangladesh, Brazil (two units), Colombia, Nepal and Thailand, with a combined annual assembly capacity of 150,000 units. Indonesia would be the eighth. The company is also evaluating a CKD plant in Mexico following higher import tariffs there. Overseas revenue crossed Rs 1,000 crore for the first time in Q1 FY27, accounting for around 15 percent of total revenue, led by strong growth in Brazil and other Latin American markets.