Flash Electronics says they will ensure Royal Enfield is penalized and forced to stop production of the BS-VI motorcycles
Royal Enfield, India’s foremost mid-capacity motorcycle manufacturer, is facing a lawsuit against them in the U.S that could create trouble for the Chennai-based brand. Flash Electronics, a United States based firm had filed a lawsuit in a court of Wisconsin, US, over the patent infringement by Royal Enfield.
Royal Enfield, sourced a component crucial in converting BS-IV engines to BS-VI engine from Varroc Group and Flash Electronics claims that this is an infringement of its patent. The component is called regulator rectifier is mandatory for all BS-VI compliant products.
With a lawsuit, the Indian two-wheeler brand will be forced to get the mandatory component from a new supplier, increasing cost of the motorcycles and delaying the conversion process that will come to force from 1st April, 2020.
With the Indian auto industry going through subdued demand and manufacturers facing the cost issue for the BS-VI technology, this setback will surely create a problem for the Royal Enfield. However, sourcing this crucial component will not be a problem and Royal Enfield might move to another supplier if they lose the lawsuit.
The problem here is the cost, which is already on the higher side of the spectrum due to the implementation of new emission norms. Royal Enfield which sells bikes to the U.S and Europe, apart from India will most likely be hit by the cost increase in the motorcycles and will also affect the exports.
The trouble has already started brewing for the company as this news has been cited as one of the factors behind the reducing shares prices in NSE of Eicher Motors, Royal Enfield’s parent company.
Sanjeev Vasdev, Managing Director, Flash Electronics talked to Livemint and said that the company will ensure Royal Enfield is penalized and forced to stop production. The BS-VI compliant Royal Enfield models have been spotted testing many-a-times and are ready for roll-out. Royal Enfield currently sells 650 Duo in the international markets along with the Himalayan and Classic series.