and an EV wave looming for both performance and low cost.
Right now it's mostly at the very low end pulling dollars..EV TukTuks and scoots, even trials bikes plus a scattering of performance bikes like the Lightnings that aren't there yet on price.
Not an environment to be confident of investment value in any ICE marque.
Add on the cost of meeting increasingly stiff environment standards.
The Bonneville T100 too, really fun because people get on their high horse about a british motorcycle, and I'm like, "What British motorcycle? Your Bonneville is Thai. Mine is too. Quit being a douche."
The Bonneville T100 too, really fun because people get on their high horse about a british motorcycle, and I'm like, "What British motorcycle? Your Bonneville is Thai. Mine is too. Quit being a douche."
The problems moving production to the developing world get bigger as your product rises in sophistication. Production engineering, material control, machine maintenance all contribute to product dependability and performance.
producing a 12hp 150cc thumper is a lot different than a 1200cc 150hp performance ADV.
It was just a couple of years ago that Pierer Mobility-owned KTM celebrated 12 straight years of record growth. Now, the company is in a dire crisis that requires a halt in production and the sacking of more than 300 employees. How did it get here?
Die KTM AG mit Sitz in Mattighofen im Innviertel bereitet einen Antrag auf ein Sanierungsverfahren mit Eigenverwaltung vor, teilte die Firma des Industriellen Stefan Pierer mit. Der Finanzierungsbedarf sei hoch. Man gehe nicht davon aus, eine Zwischenfinanzierung zeitgerecht sicherstellen zu können.
ooe.orf.at
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KTM AG filed for bankruptcy today
This is actually much worse than I thought. Seems they couldn't get Bajaj to buy in, so are now unable to pay their bills. They will contort a million different ways to avoid saying 'bankrupt', as that would crater sales even further than they already are, but they're in real trouble.
I can't imagine a company with the infrastructure and sales volume as significant as KTM will disappear altogether, but I can see an ownership change as part of any capital infusion, and likely significant contraction of the excessive brand proliferation discussed above. Poor MV Agusta. Just when it looked like they found some stability.
As for the MotoGP effort, I suspect it's not so easy to shutter, as agreements with Dorna include penalties for withdrawal. It took quite a while for Suzuki to extricate themselves (and a rumoured payment to Dorna of substantial size), so I suspect it'll be up to the new managers to decide whether to continue or get out at a cost. Either way, the deep pockets are likely to get much shallower, and that'll have even more impact in the smaller classes where KTM has been a big player.
I have a feeling there will be other casualties of the current tight market in the disposable income space. Whether it's boats, RVs, sleds, you name it. Add potential tariffs for the US market and it's even more complicated for the Euro manufacturers. I just hope that Piaggio is selling enough scooters to keep Aprilia and Moto Guzzi going...
I've read in multiple places that KTM was the largest Euro motorcycle maker by production numbers, or some other measure.
It reminded me of going to a conference in the US back in the 90's. We had a nursery business and at the time the industry was booming. We were doing well too, but we were a small, family-run business in both acreage and sales.
I was chatting with a guy from North (maybe south) Carolina who was telling me about how big his company was. He was operating on about 5x the land we used and had 30 full time employees, where we had 5 or 6. I was interested in his experience with specialized equipment, of which he apparently had a ton.
As the conversation (!) progressed, he told me that his sales were HUGE, but as it turned out the were only about 30-40% higher than ours in terms of actual dollars. His version of success, was a very different measure than mine.
It would seem KTM/Pierer suffered from the same attitude.
Ducati's production volume is +/- 60 000 per year - which I consider remarkably low for how much brand recognition they have. BMW apparently sells approx 210 000 per year. Triumph around 100 000 per year. Pierer Mobility Group (including all brands) is around 380 000 per year. (Honda builds +/- 15 million per year ... mostly small and inexpensive models.)
Expanding too quickly, and buying GasGas, Husqvarna, and MV Agusta in the process, stretched them too thin.
If you include scooters, Piaggio sold 436,000 in 2023. Not sure if a scooter counts differently than a 390 etc. Was a bit nervous about their health, but turns out through Q3, despite a significant drop in sales for 2024, they're still quite profitable.
In other words, not everyone was caught by surprise with this downturn. Seems like KTM got high on their own growth supply. Pretty unusual for the Italians to be the grown-ups in the room...
Ducati's production volume is +/- 60 000 per year - which I consider remarkably low for how much brand recognition they have. BMW apparently sells approx 210 000 per year. Triumph around 100 000 per year. Pierer Mobility Group (including all brands) is around 380 000 per year. (Honda builds +/- 15 million per year ... mostly small and inexpensive models.)
Expanding too quickly, and buying GasGas, Husqvarna, and MV Agusta in the process, stretched them too thin.
They also made a couple of big mistakes that we've seen from European bike manufacturers in the past.
1) Overstuffing dealer channels. Dealers are an elastic inventory buffer that manufacturers must manage closely. KTM appears to have gamed its numbers by expanding its dealer network and dealer inventories faster than the sell-through rates. Anyone in the auto business will tell you there is no party for a vehicle that has a 'birthday' on a dealer lot.
2) Unrealistic Guidance. At the end of their 24' Q2 (1H for Europeans), they painted a rosy recovery picture. It was unrealistic and investors punished them hard.
3) Quality Issues hurt the brand. It's one thing to have quality issues that you acknowledge and make right. It's another when you deny them and make it difficult for loyal customers. KTM has done a lot of the latter which has hurt the brand.
Right now they owe a lot of money to creditors and can't make payments against their loans. They need a mountain of cash to do a proper recovery, that's not coming from debt, they are going to be sold or shareholders will be highly diluted.
If Harley Davidson was smart, they would snap KTM up now. KTM market cap is about $330M, HOG over $4B.
They also ramped up production of E-Bikes (bicycles, not motorcycles) after sales went through the roof during the pandemic, and they struggled to keep up with demand.
Then post-COVID... nobody bought E-Bikes anymore, leaving them with excess inventory and factories primed and tooled for pandemic-numbers demand.
3) Quality Issues hurt the brand. It's one thing to have quality issues that you acknowledge and make right. It's another when you deny them and make it difficult for loyal customers. KTM has done a lot of the latter which has hurt the brand.
This can be connected to growing too quickly: Not enough time spent refining designs before they go into production.
There's more than one video online that shows the lengthy, torturous path of oil through the cylinder head of a KTM 790/890 before it eventually, hopefully, reaches a set of oil-squirter jets that dribble oil down the side of the cylinder head casting (as opposed to placing the oil right at the cam interface).
Japanese engines often have hollow camshafts in which the central passage is also the oil gallery, and drillings in the camshaft put the oil right where it's needed. I made the mistake of hitting the starter button on my lowly CBR125 with the valve cover off. Oops. That made an oily mess in the two seconds or so that it took to hit the kill switch. No shortage of top-end lubrication there.
KTM could have done that and simplified the design of the cylinder head.
At the very least I think HD could teach KTM quite a bit about product planning in terms of production numbers vis-a-vis demand and planned scarcity, as well as developing models from the same basic platform that don't cannibalize sales.
But from an HD perspective, there would be no value in their owning KTM, or not enough value anyway.
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