KTM Year-End Cycle Sales May Shrink 30%

[jduke]

From DealerNEWS:

KTM anticipates motorcycle and ATV sales could fall 28.5 to 30 percent to between 64,000 and 66,000 units for its fiscal year ending Aug. 31. The company ended its 2007/2008 business year with sales of 92,385 units, up from 90,306 units sold during the 2006/2007 business year and 83,985 units sold in the 2005/2006 business year.

KTM motorcycle and ATV sales for the first nine months of its fiscal year, ended May 31, totaled 46,026 units, down 19,896 units compared to the same nine-month period in 2008. The Austrian manufacturer's vehicle sales dropped 27 percent in the United States and 19 percent in Europe during the comparable periods.

KTM obtains 68.3 percent of its sales revenue in Europe, 18.8 percent in North America and 12.9 percent in the remainder of the world.

Worldwide, the company's sportminicycle sales for the first nine months of the fiscal year totaled 6,132 units, up 791 units compared to the same period last year; full-size motorcycle sales totaled 38,928 units, down 18,777 units; and ATV sales totaled 966 units, down 1,910 units.

Motorcycle sales revenue for the nine-month period totaled €330.4 million ($474.8 million), down 25.4 percent compared to €443.2 million during the same period last year. Off-road segment sales revenue dropped 25 percent to €130.5 million ($187.5 million); sales revenue for the streetbike segment declined 36 percent to €96.6 million ($138.8 million).

KTM planned to cut production 25 percent this year compared to last year. The OEM earlier this year dismissed approximately 300 employees and, from May to August, installed shortened production shifts that impacted 733 of its 1,482 employees in Austria.

Operating profit before depreciation and amortization (EBITDA) and reorganization costs dropped to €6.2 million ($8.9 million) from €29.6 million in the comparable period last year as the company initiated the capacity adjustments. The OEM says those capacity adjustments also impacted finished good inventories, which decreased by 4,654 units or 22.1 percent in-house and by 3,893 units or 11.7 percent at dealerships.

[Rapid Dog]

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[Mad Otter]

Do they offer an explanation?

[cageyar]

Originally Posted by Mad Otter

Do they offer an explanation?

The explanation is the worldwide economy.
Most vehicle manufacturers are off 30-40%.
The automobile industry is down as a whole 32% YTD with some brands down 50%.
That's why I'm unemployed.
Motorcycles, being a more discretionary purchase, are down even more. Two weeks ago, Harley-Davidson laid off 1,000 employees and may close the York, PA factory. To put that in perspective, my former company, Hyundai Motor America, employs 650 people in the US. HD laid off the equivalent of more than all the Hyundai distributor staff.
This clunker program will be a blip in the sales figures but will not forestall the general losses this year.
Smaller companies like KTM are at particular risk. It's only been several years since they were all but bankrupt. They only recently started to gain some momentum with all the new models. This economy is taking the wind out of most companies sails.

[markjenn]

In KTM's case, I think it is the poor economy AND poor product planning. The last couple years have seen them produce some great bikes, but have them not available or very limited availability. And they've produced some products for microscopic niches while ignoring mainstream products that people are clamoring for.

- Mark

[cageyar]

I think that's true and also, segment for segment, their prices are a little stout.
$18K+ for the base RC8 is a little strong-you're at 1098S/1198S territory for that number, with Ohlins.

[shreddr]

Originally Posted by cageyar

I think that's true and also, segment for segment, their prices are a little stout.
$18K+ for the base RC8 is a little strong-you're at 1098S/1198S territory for that number, with Ohlins.

yeah, but the RC8 does have WP stuff, which is right there with Ohlins quality wise, especially on the MX front

have you seen this stuff?

http://www.wpsuspension.com/products/BMWEDS.php

[cageyar]

Originally Posted by shreddr

yeah, but the RC8 does have WP stuff, which is right there with Ohlins quality wise, especially on the MX front

Okay, but you get the forged Marchesini's with the S. The KTM forged wheels are an additional KTM power part. The bike is cool but a little pricey, considering the scant dealer expertise. When the last time you've been to a KTM dealer in our area-lots of neat KTM dirtbikes, maybe 1 Duke and maybe 1 Adventure.

[shreddr]

Originally Posted by cageyar

The bike is cool but a little pricey, considering the scant dealer expertise. .

People in glass houses....

[cageyar]

Originally Posted by shreddr

People in glass houses....

It's like we're in kind of a dead zone around here for European brand dealers.

[Kieran R1100S]

Originally Posted by cageyar

I think that's true and also, segment for segment, their prices are a little stout.
$18K+ for the base RC8 is a little strong-you're at 1098S/1198S territory for that number, with Ohlins.

I have to agree with you about price being a bit much (Stout)
From a marketing point of view, wouldn't it make more sence to lower the price and try to move more units? Then there would be a knock on effect, instead of keeping price and slowing production and laying of workers.

In OZ KTM would not budge on price with there RC8S. They wore stead fast with price $32,990. My mate only got movement of the pipe which retailed for $5,800 and they came down to cost $3,500 to seal the deal.

[shreddr]

here is the race replica they are selling, 180 BHP

[cageyar]

That's pretty cool but what do you think that will sell for with the base RC8 at $18K+, the RC8R, which isn't even available here close to the mid $20K's.
I'd put it somewhere near the current Bayliss 1198R which is listed at $43,995.

[markjenn]

Originally Posted by cageyar

That's pretty cool but what do you think that will sell for with the base RC8 at $18K+, the RC8R, which isn't even available here close to the mid $20K's.
I'd put it somewhere near the current Bayliss 1198R which is listed at $43,995.

I agree. Perhaps there are folks buying these bikes, but if present trends continue, KTM is going to sell one sportbike each year for $20M. A halo bike's shadow only extends so far and halo bikes should typically associate with a high profile racing series. Is anybody racing an RC8? KTM desparately needed to get the price of the RC8 at or below the 1198 price and at least in the states, they failed miserably.

I know people around here love their HP2S bikes and they're undeniably gorgeous, but I'd bet BMW lost money on every HP2S they sold. What if BMW had expended their HP2S effort into updating the R1200S with the more cost effective technology (e.g., the DOHC heads) and producing bikes in quantity rather than just producing it for a couple of years and then abandoning it? I don't get it. I think they're doing the right thing on the S1000RR though.

- Mark

[cageyar]

Originally Posted by markjenn

I agree. Perhaps there are folks buying these bikes, but if present trends continue, KTM is going to sell one sportbike each year for $20M.

That's funny

Originally Posted by markjenn

A halo bike's shadow only extends so far and halo bikes should typically associate with a high profile racing series. Is anybody racing an RC8? KTM desparately needed to get the price of the RC8 at or below the 1198 price and at least in the states, they failed miserably.

They are apparently competing in the IDM (German Superbike series) which I guess makes sense since 68%+ of their sales are in Europe. According to their racing website, they just signed veteran Jeremy McWilliams to compete with a third entry.

[bradzdotcom]

Originally Posted by Mad Otter

Do they offer an explanation?

another factor was the lead law ban. ktm sells a lot of little minicycles and they were yanked off the showroom floors for quite a long time...it was enough to cripple many dealerships in the usa. that probably helped cause the larger dip in sales over here compared to world-wide.

[cageyar]

Originally Posted by bradzdotcom

another factor was the lead law ban. ktm sells a lot of little minicycles and they were yanked off the showroom floors for quite a long time...it was enough to cripple many dealerships.

That's reason #5,294 why you don't want the government involved in your heathcare decisions. I noted with pleasure several weeks ago that Malcom Smith decide in his retail store to completely ignore the ban and continued selling mini-cycles and ATVs. I've heard no further reports but I don't believe anything happened to him. Did you hear anything more out there in La La land?

[markjenn]

Originally Posted by cageyar

That's reason #5,294 why you don't want the government involved in your heathcare decisions.

Let's keep the debate on healthcare financing reasonable. Other than the usual "government in general sucks" argument, the decisions of a federal consumer agency to ban lead in kids toys has absolutely nothing to do with how we pay for medical care in this country. Both sides of healthcare debate have valid points and some reasonable compromise is probably the best solution. It's a tough problem and we don't serve ourselves by mixing in unrelated polarizing issues.

Or would you prefer to be against healthcare financing reform because you don't like helmet laws?

- Mark

[cageyar]

Originally Posted by markjenn

Let's keep the debate on healthcare financing reasonable. Other than the usual "government in general sucks" argument, the decisions of a federal consumer agency to ban lead in kids toys has absolutely nothing to do with how we pay for medical care in this country. Both sides of healthcare debate have valid points and some reasonable compromise is probably the best solution. It's a tough problem and we don't serve ourselves by mixing in unrelated polarizing issues.

I withdraw the comparison. Still, you have to admire old Malcom Smith for not drinking the Koolaid.

[markjenn]

Originally Posted by cageyar

I withdraw the comparison. Still, you have to admire old Malcom Smith for not drinking the Koolaid.

And I do also.

- Mark