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Royal Enfield to Ramp up 350cc Production Capacity After GST-Revision Demand Rise
In its Q2 FY26 earnings call, Royal Enfield highlighted that the GST reduction on motorcycles under 350cc resulted in increased inquiries and sales conversions. The demand for the 350cc models surpassed that of the 450cc and 650cc categories, with conversion rates rising from 20-21% to 29-30%. The company has increased its production capacity to approximately 1.35 million units through operational enhancements and initiated a new module at the Cheyyar facility to meet future demand, particularly for the festive season.
Keshav Rajput
Updated Nov 23, 2025, 09:41 AM IST
Royal Enfield to Ramp up 350cc Production Capacity After GST-Revision Demand Rise
During its Q2 FY26 earnings call held on November 13, 2025, Royal Enfield said that the GST rate cut on motorcycles below 350cc led to higher enquiries and conversions. The company noted that the 350cc portfolio - covering models such as the Classic, Bullet, Meteor, Hunter and Goan Classic saw stronger momentum compared to the 450cc and 650cc range.
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The company said the lower tax rate clearly altered buying behaviour, stating that the "350cc demand is slightly higher than the 450 and 650. As I mentioned, 650 is catching up faster than the 450, but the demand of 350 is higher than what we were looking at."
Royal Enfield also reported a rise in conversion rates across channels following the GST change, saying the enquiry-to-booking ratio increased from "20–21%" to "29–30%."
Debottlenecking Begins in Existing Production Lines
Management said the original installed capacity of around 1.2 million units per year had been stretched to roughly 1.3 to 1.35 million units through debottlenecking and operational changes. These steps focused on enabling higher 350cc output within the same manufacturing footprint.
According to the company, "We also did debottlenecking operations during this quarter for festive inventory buildup. So we have ramped up the capacity to almost about 1.3 million to 1.35 million motorcycles." This included process changes and additional equipment to free up space for more 350cc models.
New Module to Support Additional Capacity From Next Year
The company confirmed that an additional production module has been initiated at the Cheyyar facility. This module is expected to become operational in the first quarter of the next financial year. The move is meant to support future demand and prepare for festive season inventory requirements.
450cc and 650cc Demand Recovering at a Slower Pace
Royal Enfield stated that demand for the 450cc and 650cc models improved briefly due to pre-buying ahead of the GST revision but stabilised afterwards. The company said it continues to monitor these segments, where GST is still at a higher rate than the 350cc category.
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