KTM Cuts Staff, Plans Decreased Production

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KTM says it plans to cut production 25 percent this year compared to last year as sales for its off-road bikes continue to fall.

KTM motorcycle sales for the half-year ended Feb. 28 were €213.5 million ($279.8 million), down 25.9 percent from €288.2 million during the same six-month period of the previous business year. Revenue fell 33.3 percent to €102.7 million ($134.6 million) in the Off-road Product Group; slumped 24.4 percent to €38.8 million ($50.8 million) in the Street Product Group; and decreased 13.2 percent to €54.1 million ($70.9 million) in the Related Product Group.

The company sold 5,452 sportminicycles during the first half of the year, up 595 units compared to the same six months in the previous year; 20,462 off-road motorcycles, down 12,271 units from the comparable period; and 5,252 street motorcycles, down 1,604 units from the comparable period. ATV sales totaled 696 units, down from 1,390 units in the comparable half-year period.

RESTRUCTURING
KTM this month completed the staff cuts and finalized plans for the capacity adjustments that it had announced in January. The OEM intends to produce about 70,000 motorcycles this business year, down 25 percent from production last year.

The OEM recently dismissed approximately 300 employees and, from May to August, plans to install shortened production shifts. The company says 733 of its 1,482 employees in Austria will be affected by the shortened shifts.

“Our new reduced working hours scheme will mean that we can largely prevent further cutbacks,” says Stefan Pierer, CEO of KTM Power Sports AG. “We can also create liquidity by reducing the dealer stocks and KTM stock as planned.”

PRODUCT DEVELOPMENT
Despite the gloomy outlook, KTM says it is investing heavily in research & development. Key projects are the development of a 125cc street motorcycle together with Bajaj Auto Ltd and the development of an electric powered off-road bike. Both motorcycle types are to be offered in the 2011 model year.

The 125cc street motorcycle destined for the European market will be presented at the EICMA international motorcycle exhibition in Milan in November. The 125cc model for the Indian and emerging markets will be unveiled at the Delhi motor show in January 2010.

KTM says co-development with Bajaj will continue on other models and vehicles featuring “alternative drive concepts” for off-road and urban use. As Dealernews previously reported, KTM has filed a patent application for a two-wheel drive motorcycle whereby the front wheel is driven by an electric motor and the rear wheel is driven by an internal combustion engine. However, whether the alternative drive concepts the OEM refers to include a two-wheel-drive application remains to be seen.

KTM ended its 2007/2008 business year Aug. 31, 2008, 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. The OEM currently operates 19 sales subsidiaries and five joint ventures that distribute products to 1,400 independent KTM dealerships worldwide.

— Submitted by Guido Ebert