Is KTM doing as well as it says?

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The 2009/10 KTM annual report, issued this morning, is full of phrases like, “all expectations exceeded,” “significant improvement” and “world market leader.” Hell, it begins with, “KTM back at the top” and makes the claim that, “market shares could be doubled.” But, even with sales of 85,000 vehicles during the financial year, is KTM as healthy as the sunshine and lollypops would lead you to believe?

We asked an industry analyst, who prefers to remain anonymous so he can keep his clients, for some perspective. “This release is a nicely spun bit of accounting, that says KTM is on solid ground in difficult times, while making some speculative remarks about global market position,” he explains.

“As I understand it, the key improvements are in operating efficiency, and these figures are still only reflecting a recovery mode from the disastrous 2009/2010 sales period.  Note that the phrase “wold market leader” is in parenthesis, because it denotes a personal opinion, and not market fact.  Selling over 85000 units is great for a small niche OEM, particularly one that makes expensive fare, but bear in mind that this is only bringing them back to 2005/2006 levels. In 2006/2007, they sold 90,000 units, and more still in ’08.”

Perhaps the release’s boldest claim is of doubled market share in some undefined off-road segments while its most worrying aspect is the company’s reliance on off-road sales. 79 percent of their products are dirt bikes.

“For some perspective, the total off-road (including dual sport) market has been shrinking in the US since 2008 by about 25 percent a year (and flatlining globally).  Considering that this is KTM’s core market in both geographical and product placement terms, this is especially relevant.”

“The statement points out that road bike sales are in the 18k unit sales region, that makes them a hobby manufacturer in that sector, not unlike MV or Moto Guzzi. This is something that should worry any OEM, because that is the growth area in the industry.  The plants in India and Brazil ought to bring that growth in ’11-’12 with the 125 and 250cc Duke models. Bajaj/KTM are aiming for 200,000 unit production by 2013, a very tall order considering the current numbers.”

  • aristurtle

    Yes, in years when anybody with a pulse could get a massive loan for any purpose whatsoever, motorcycle companies did better than they’re doing now. Who would have guessed?

  • Tom

    very interesting article

  • markbvt

    It would be interesting to know the difference in how the pure off-road versus dual-sport market has performed in the past few years. I know for a while there the dual-sport market was the only one that was actually growing, due in large part to sales of small-displacement bikes during the high gas prices of 2008 and growing sales of ADV bikes.

    So removing dual-sports from the sales figures would presumably make the off-road picture even worse.

    • Ilya

      US dual-sport market in 2010 was actually down almost 50% compare to 2008 and got back to where it was in 2004.

  • AHA

    The only KTM dealer in London (the oldest in the UK I think) went belly up in 2010. It’s an open secret the road bike division is losing money. Their strategy is right I think, it’s just bad luck the credit crunch has set them back 2-3 years. If they can survive the next 24mths, they’ll be flourishing. I pray they do. Look at the (2005) pics of the Venom. We need bike stylists like KTM that push the aesthetic forward.

    • http://www.amarokconsultants.com michael uhlarik

      KTM motorcycles are designed by Kiska, a large (100+ employees) design consultancy that has a similar mutual-exclusivity arrangement like Yamaha and it’s design outlet, GK have.

      Kiska is an outstanding, highly professional company of seriously talented individuals, led by charismatic Gerald Kiska. As much as I like him, the company and even appreciate many of the KTM designs, styling like what is on the Venom and RC8 is so divisive that the typically conservative public have largely rejected them.

      For KTM to succeed on the road, they need to strike a balance between radical detail, and classical proportion. Pushing “the aesthetic” is great for winning design awards and coffee table books, not so great for growth.

      • Kevin

        I love that RC8, I’m just not superbike-inclined.

      • AHA

        Agreed but this problem is also true of Ducati (999 & 1st Multistrada) and actually any bike design that isn’t either retro or conservative. Here in London (for instance) you see all manner of weirdness gaining acceptance – not least in the sheer variety of cars you see on the road. Bikes? No chance. I see more GS’s in a day than fellow KTMs in a month.

  • gofaster

    I agree the RC8 is a nice looking bike. The other motards though with the Spy vs. Spy thing going on not so much!

  • GuyP

    http://bit.ly/gZUXmw

    The case for the defence rests.

  • Taco

    I’m just waiting for the 2012 250 Duke to hit the U.S. That’s all I care about.

  • http://www.smartcycleshopper.com/author/doug-dalsing/ DougD

    It’s just astounding how much hyperbole corporate marketing folks can pack onto a PDF page these days. I’m beginning to think the phrase “cautious optimism” actually denotes, “We have no fucking idea what this year will hold.”