KTM's in trouble ?

[PrivatePilot]

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Part of that may be the ridiculous financing people sign up for with RV's where they're so far underwater pretty much permanently (owe too much to start, value plummets as it ages and it's worth very little later despite still owing a lot), so they bite the bullet and hang on rather than sell. We went to a lot where they wanted us to sign up for 15 year financing. It's not a bloody house.

Financial literacy is at an all time low it seems.

Modern motorcycles, like modern RV's and tractors are durable,

Umm.. Will have to disagree on modern RV's being durable. They're built by crackheads with twigs and bubble gum held together with staples.

Anyhow, back on the topic of KTM, I delivered two brand new ones to the little shop beside the Iron Rooster on highway 7 today. So apparently people are still buying regardless.

 

[Lightcycle]

Anyhow, back on the topic of KTM, I delivered to brand new ones to the little shop beside the Iron Rooster on highway 7 today. So apparently people are still buying regardless.

Yes they are.

My buddy in Vancouver just picked up one of the $5K discounted 890s.

Another friend who works on his own bikes is also looking to get one. He doesn't care about warranty. Fixes everything himself. Engine rebuilds are nothing to him. Perfect guy for a bike like that.

 

[Mad Mike]

KTMs financial situation appears to be unsolvable.

I don’t know if anybody wants to take them over, I can’t see how they can keep their top staff past the end of the month as they don’t have cash for payroll.

Could me the MC version of Nortel.

 

[TK4]

MV Augusta is on the block - https://www.autosport.com/motogp/ne...or-puts-shares-of-mv-agusta-on-sale/10683567/

 

[Mad Mike]

MV Augusta is on the block - https://www.autosport.com/motogp/ne...or-puts-shares-of-mv-agusta-on-sale/10683567/

It gets worse. Austrian finance authorities and the Vienna stock Exchange started investigations into financial reporting improprieties, the Austrian gov't is getting into the fray after KTM failed to make the payroll this week.

All their key partners declined investment -- hard no from CF Moto, Bajaj, and Redbull. They had to hand over capital reorganization to Citibank -- that is expensive for existing shareholders and comes with no guarantees.

Kinda sad to see a rising star start to explode before your eyes.

 

[MacDoc]

 

[GreyGhost]

 

[xrljoel]

MV Augusta is on the block - https://www.autosport.com/motogp/ne...or-puts-shares-of-mv-agusta-on-sale/10683567/

I read their press release touting that they had a great year selling 4000 motorcycles which represented growth of 116%.

Even at their high prices I can't see how they continue with such low production/sales numbers.

I mean there's niche then there tiny little fragile niche.

 

[GreyGhost]

I read their press release touting that they had a great year selling 4000 motorcycles which represented growth of 116%.

Even at their high prices I can't see how they continue with such low production/sales numbers.

I mean there's niche then there tiny little fragile niche.

And they had 2000 more ready to go. You always need to be careful with "sales" numbers. Detroit used to game the system and force dealers to buy inventory so they could register sales and get exec bonuses. Most reasonable people wouldn't count those as sales until they went to an end user. I have no idea if MVA is playing similar games. I too am shocked at how low those numbers are. Amortizing development and manufacturing over a really small number of vehicles is a rough go unless they are six or seven figures each. McClaren sells 2000-5000 cars per year. They start at $200K per vehicle. They also ran into financial trouble and had to find an owner with deeper pockets.

 

[Mad Mike]

How about some levity in this discussion - post your best KTM meme.

 

[xrljoel]

And they had 2000 more ready to go. You always need to be careful with "sales" numbers. Detroit used to game the system and force dealers to buy inventory so they could register sales and get exec bonuses. Most reasonable people wouldn't count those as sales until they went to an end user. I have no idea if MVA is playing similar games. I too am shocked at how low those numbers are. Amortizing development and manufacturing over a really small number of vehicles is a rough go unless they are six or seven figures each. McClaren sells 2000-5000 cars per year. They start at $200K per vehicle. They also ran into financial trouble and had to find an owner with deeper pockets.

Exactly, how can a manufacturer continue at this level and this price point? The supercar companies sell one of their units for what is likely the gross margin for MV's entire year. An you're probably right, there's likely another 1000-2000 units not delivered to dealers sitting around.

They must demand dealers take on quite a few units as GP Bikes seemed to have a lot of MV inventory that last time I was there.

At some point the deep pockets you reference become empty ones.

 

[GreyGhost]

At some point the deep pockets you reference become empty ones.

The government of abu dhabi bought mclaren. The pockets are infinitely deep but they may decide to stop dumping money in the hole at some point. Do sheiks love bikes too or just cars?

 

[TK4]

It sounds to me like there are going to be a lot of KTM/Husqvarna/GasGas sponsored racers looking for jobs.

 

[Mad Mike]

And they had 2000 more ready to go. You always need to be careful with "sales" numbers. Detroit used to game the system and force dealers to buy inventory so they could register sales and get exec bonuses. Most reasonable people wouldn't count those as sales until they went to an end user. I have no idea if MVA is playing similar games. I too am shocked at how low those numbers are. Amortizing development and manufacturing over a really small number of vehicles is a rough go unless they are six or seven figures each. McClaren sells 2000-5000 cars per year. They start at $200K per vehicle. They also ran into financial trouble and had to find an owner with deeper pockets.

Companies that sell goods through distribution channels (distributors or dealers) record revenue & sales at the moment a product ships from their dock to a channel partner. Those are their 'revenue and units' reported.

Manufacturers also monitor sell-through rates and channel inventories. They use this information to scale production rates to match sell-through rates.

Manufacturers can game this system in a number of ways by 'channel stuffing'. There are several ways manufacturers stuff channels:

1) Force dealers to hold more than 30 days of inventory.
2) Expand dealer networks with overlapping sales areas
3) Split products by colour, options, or by brand duplication.
4) Slow boat shipping.

KTM has done the first 3, not sure about #4. It takes time and money to clear inventory. KTM faces and another challenge in they need to convert buyers from other brands -- that is made difficult when quality and longevity are buying concerns.

 

[xrljoel]

Companies that sell goods through distribution channels (distributors or dealers) record revenue & sales at the moment a product ships from their dock to a channel partner. Those are their 'revenue and units' reported.

Manufacturers also monitor sell-through rates and channel inventories. They use this information to scale production rates to match sell-through rates.

Manufacturers can game this system in a number of ways by 'channel stuffing'. There are several ways manufacturers stuff channels:

1) Force dealers to hold more than 30 days of inventory.
2) Expand dealer networks with overlapping sales areas
3) Split products by colour, options, or by brand duplication.
4) Slow boat shipping.

KTM has done the first 3, not sure about #4. It takes time and money to clear inventory. KTM faces and another challenge in they need to convert buyers from other brands -- that is made difficult when quality and longevity are buying concerns.

"KTM faces and another challenge in they need to convert buyers from other brands -- that is made difficult when quality and longevity are buying concerns."

Which is why they need to articulate a recovery plan ASAP.

 

[Lightcycle]

"KTM faces and another challenge in they need to convert buyers from other brands

Instead of converting buyers from other brands, they bought the other brands instead, and cannibalized their own sales.

So... instead of selling 1000 orange bikes, you now sell 500 orange ones, 300 of the same bike but in white and 200 of yet the same bike, but in red?

So... you spent a snot-ton of money and still ended up selling the same amount of bikes...?!?!

Someone misunderstood the assignment.

 

[Brian P]

Instead of converting buyers from other brands, they bought the other brands instead, and cannibalized their own sales.

So... instead of selling 1000 orange bikes, you now sell 500 orange ones, 300 of the same bike but in white and 200 of yet the same bike, but in red?

So... you spent a snot-ton of money and still ended up selling the same amount of bikes...?!?!

Someone misunderstood the assignment.

A less expensive way of achieving this would have been to install a paint line capable of painting multiple colours.

... which they ended up doing, anyhow, but with the additional cost of buying out the other brands associated with those colours.

I'm not sure how much of their trouble relates to buying out the other brands, versus simply expanding too fast and chasing production volume that turned out to be phantom, while throwing away their brand reputation by denying technical problems instead of fixing them.

Instead of tooling up for 381,000 bikes per year ... spend less, to tool up for let's say 200,000 per year, and let them be in short supply and let people pay extra for the privilege of getting one. (Ducati seems to have mastered this strategy.) Then, WHEN there's a slowdown in the market, you're not stuck with surplus capacity and the debt associated with building that surplus capacity. And perhaps the mad rush (and expense) to expand production volume could have been better spent getting to the bottom of technical problems that owners were experiencing.

Hindsight is 20/20, of course.

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