KTM in trouble

[bimota]

KTM In Financial Trouble; Seeks 100 Million Euros For Staying Afloat

KTM finds itself in financial trouble, with a significant slowdown in US and European sales among other things.

www.ndtv.com

rob

 

[Wallkeeper]

Yeah, I saw a similar article. As I look at them I really do not understand what the rationale is for their acquisitions and operating/market structure. I am not sure all the money in the world will fix them without a wholesale management change and major surgery

 

[Cycledude]

Easy money gets wasted easy

 

[RCinNC]

I think a big problem is that corporate culture dictates that you're either growing or you're dying; there's no inbetween. Taking on debt to produce more product to service a market that might not be big enough to justify that debt doesn't seem to be an uncommon business philosophy. Harley fell victim to it in a major way, believing that their rapidly booming sales up to around 2006 were an indication that the whole world was dying to buy a Harley, in spite of their market research telling them that their target market was rapidly aging out of ownership, and they had no plans on how to penetrate into a younger demographic. Their response, as sales plummeted, was to try and turn the bike into an expensive boutique brand by limiting production while raising the price. Current sales figures for them pretty clearly point out that that idea isn't working. They seem surprised that motorcycle riders for some reason aren't willing to part with almost 50 grand for a Harley touring bike.

KTM also may have very well overestimated their future market for what is a fairly expensive motorcycle with a reputation for both high performance and maintenance headaches/quality control issues. There's a definite market for expensive motorcycles with sex appeal and a reputation for "character", but it's a finite market. I'm sure it's easy to look at the sales figures for a couple of good years and start believing the idea that everyone wants your bike, but quarterly sales figures and balance sheets can pretty quickly throw cold water on that fire.

Businesses and investors love unrestrained growth, but there's anotherr name for unrestrained growth: cancer.

 

[Dirt_Dad]

As a big KTM fan, I certainly hope they can make it through to the other side of this market slow down. It's a very difficult sales picture across the entire powersports industry right now.

Half of my miniature fleet is comprised of KTMs. I hope to always have that option available to me in the future.

 

[WJBertrand]

I think KTM needs close and honest look at their quality issues. They’ve come home to roost now.

 

[Checkswrecks]

One of their Board Members summed it up well with this:
"
“We damaged the KTM brand with overproduction and quality problems and now we have to iron that out,” said Hubert Trunkenpolz, Pierer board member, in an interview with Motorrad a couple of months back. COVID was one of the primary reasons for the crisis, according to Trunkenpolz, who explained that the pandemic led to a huge demand for quarantine-friendly recreational vehicles like motorcycles, bicycles, and RVs.

But sadly, by the time the company had increased production to catch up, the demand had started to decline sharply. Post-COVID, there were suddenly a lot of goods in the showrooms, but far fewer customers – partly due to post-pandemic inflation.
"

 

[Venture]

I think KTM needs close and honest look at their quality issues. They’ve come home to roost now.

I agree. I own two KTMs, and one of them has the "camshaft failure prone" LC8c engine (not failed yet, time will obviously tell). Bad enough KTM already had a reputation for quality problems, then this camshaft issue comes up and they refused (still refuse) to address it head-on, and that has lost them a TON of what little quality reputation they may have had.

 

[RCinNC]

One of their Board Members summed it up well with this:
"
“We damaged the KTM brand with overproduction and quality problems and now we have to iron that out,” said Hubert Trunkenpolz, Pierer board member, in an interview with Motorrad a couple of months back. COVID was one of the primary reasons for the crisis, according to Trunkenpolz, who explained that the pandemic led to a huge demand for quarantine-friendly recreational vehicles like motorcycles, bicycles, and RVs.

But sadly, by the time the company had increased production to catch up, the demand had started to decline sharply. Post-COVID, there were suddenly a lot of goods in the showrooms, but far fewer customers – partly due to post-pandemic inflation.
"

Yep, that sounds about right.

 

[OldRider]

The motorcycle industry is in very bad shape right now. Do you know what these large dealerships all have in common? Southern Tier Harley Davidson, Mach 1 Motorsports, Hellbender Harley-Davidson and California Harley Davidson. They all went tits up, in just the last week. Artic Cat sent all their dealers a warning that they are in trouble. Yamaha has halted the sales of Ebikes. It goes on and on.

 

[RCinNC]

Frankly, I'm surprised that the number of HD dealerships going belly up doesn't look more like a Stalinist purge than it already does. They've been a truck going downhill without brakes since 2014, and their debt has got to be massive, based on their expansion back in the early to mid 2000's. Got to be a lot of dealership owners that are afraid to open their mail.

 

[Silver Badger]

Fox Business reported this morning there are @ 3,000,000 new cars and trucks that have been sitting on dealer lots for more than 60-120 days.

 

[RCinNC]

Which makes the six figure price tags on trucks sitting on those lots seem like they're flipping a big old middle finger at the law of supply and demand. Sometimes it seems like the science of economics is on par with phrenology.

 

[Highwayman]

Big KTM fan and have been on their stuff for almost 20 years. Their 300s have been my choice and are amazing bikes for the So Cal stuff I do. That said theyve blown it with the camshaft issues. They sell as a premium brand and have treated the affected owners like a chinese branded low brow company. Definitely not cool.

The oddball stuff like Gas Gas brand buy was weird. I still don't understand why they felt there would be payoff with the Gas Gas brand as a third tier "cheaper" KTM / Husky buy. The price difference isn't worth not going KTM / Husky in the 1st place. Juice was never worth the squeeze.

I honestly wouldn't worry about PMAG / KTM until I see them starting to drop stuff like the Gas Gas lines.

 

[WJBertrand]

One of their Board Members summed it up well with this:
"
“We damaged the KTM brand with overproduction and quality problems and now we have to iron that out,” said Hubert Trunkenpolz, Pierer board member, in an interview with Motorrad a couple of months back. COVID was one of the primary reasons for the crisis, according to Trunkenpolz, who explained that the pandemic led to a huge demand for quarantine-friendly recreational vehicles like motorcycles, bicycles, and RVs.

But sadly, by the time the company had increased production to catch up, the demand had started to decline sharply. Post-COVID, there were suddenly a lot of goods in the showrooms, but far fewer customers – partly due to post-pandemic inflation.
"

My concern is that this analysis is still KTM not being honest with themselves and facing facts. The statement makes it sound like quality issues have only been recent and due to Covid. They still have blinders on as their quality issues go way back before Covid. Airboxes that did not seal, swarf remaining after machining processes, to name a few. They can’t blame this all on how they handled Covid.

 

[Wallkeeper]

Frankly, I'm surprised that the number of HD dealerships going belly up doesn't look more like a Stalinist purge than it already does. They've been a truck going downhill without brakes since 2014, and their debt has got to be massive, based on their expansion back in the early to mid 2000's. Got to be a lot of dealership owners that are afraid to open their mail.

you forgot about their massive stock buy back…..with borrowed money

 

[RCinNC]

you forgot about their massive stock buy back…..with borrowed money

I confess that I don't keep up with all the financial shenanigans of the MoCo any more, since my Harley days are well over a decade in the past. The fact that the CEO is a typical financial wonder bro who formerly ran Puma pretty much told me all I needed to know about the future of the Bar and Shield. I'm probably too cynical though, since the ability to sell overpriced discount sneakers obviously makes Jochen Zeitz the ideal person to chart the course of a motorcycle company with a 120 year history. I'm sure the markets for both products have massive overlap.

 

[OldRider]

Fox Business reported this morning there are @ 3,000,000 new cars and trucks that have been sitting on dealer lots for more than 60-120 days.

I'm seeing Ram trucks marked 25% or more off sticker. I saw a post yesterday of a new 2025 model marked down to $41K and sticker price was $62K.

 

[HeliMark]

I'm seeing Ram trucks marked 25% or more off sticker. I saw a post yesterday of a new 2025 model marked down to $41K and sticker price was $62K.

One problem I had with RAM was the availability of mechanics at the dealerships, much less available parts. When I had my RAM diesel, even in '22, if I had a warranty issue, it would take two weeks to get the mechanic to look at it, much less get the parts. Talking to some friends, they still have that problem in a number of areas around the U.S. Breaking down 400 miles from home, and 4 dealerships around me all saying 2-3 weeks just to see the truck was my last straw.

 

[RCinNC]

My concern is that this analysis is still KTM not being honest with themselves and facing facts. The statement makes it sound like quality issues have only been recent and due to Covid. They still have blinders on as their quality issues go way back before Covid. Airboxes that did not seal, swarf remaining after machining processes, to name a few. They can’t blame this all on how they handled Covid.

I don't think they're ignoring the facts; I think they're just separating their business history into pre COVID and post COVID. I think before KTM's expansion and surge in popularity, they were a lot like other companies that had a dedicated core audience that loved their product and were willing to accept that the product they loved had flaws. Harley guys, Ural owners, classic British sports car collectors, etc. The kind of people who love the vehicle to death, and even though they'd spend hours on forums complaining about this or that, their love for that bike or car can't be dulled by the reality of "this damn thing is broke again!". The surge in popularity of a product like that brings in a whole new type of buyer; they want it because it's cool now, or trendy, or badass, but they aren't oriented the way the core buyer was. They don't have the same abiding love for the product; they (reasonably) expect it to work they way that Toyota Camry in their driveway works. They aren't willing to eat the same shit from a corporation as they diehards are; they don't accept that brand new camshafts disintegrate, or radiators constantly spring leaks, or the corporation is very shifty about honoring warranty work. For that sort of buyer, one bad experience with a really expensive bike with a really expensive flaw is enough for them to say sayonara and move on to another brand, or to lose interest in the activity entirely.

I'm not a KTM guy, but I think it's safe to say that KTM was well aware of the flaws in their bikes prior to COVID, just like they were confident (at one time) that their main die hard customer base would accept these flaws and keep buying KTM, and in fact would become KTM apologists for the brand. Once they tried to jump beyond their traditional buyer and expand into a larger market, they magnified their opportunities for a lot more dissatisfied vocal customers who weren't "ride or die" for their brand. I don't think KTM is ignoring their pre-COVID history; I just think they they now find themselves having to admit publicly something that used to just be a subject of closed door internal meetings.