KTM Outlines Plan for North America

Publish Date: 
Sep 5, 2008
By Guido Ebert

KTM EXPECTED to sell about 95,000 units worldwide for its fiscal year ended August 31. The OEM sold 90,306 bikes in the 2007 fiscal year, up 7 percent from 83,985 units sold in 2006.

It's been a busy year for KTM. In August 2007, KTM North America, Inc. announced it would take over Husaberg distribution in North America; in September, the OEM showed its first two ATVs and announced construction of a new facility in Graz, Austria, to produce the X-Bow automobile; and, in November, the company unveiled its 1190 RC8 sportbike at the EICMA show in Italy and announced India's Bajaj had bought more than 25% of KTM.

Then in 2008, KTM announced that, while revenues were up, earnings would worsen "due to the continuously weak U.S. dollar." The OEM said price adjustments and a selective product policy in North America would partially compensate the negative exchange rate influences. For its fiscal third quarter ended June 30, KTM Power Sports AG said that while worldwide revenue was up 10.4 percent compared to last year's third quarter, a depreciating dollar, greater R&D and facility expenses, and higher supplier costs combined to bring third quarter earnings down 70.3 percent in the comparable periods.

Jon Erik Burleson, president, KTM North America, Inc., says the Austrian brand's dealer-related goals in this new fiscal year include cleaning up existing floor stock and further establishing presence in the on-road category.

Burleson and Hubert Trunkenpolz, managing director, Sales & Marketing, KTM Power Sports AG, recently met with Dealernews to discuss plans for KTM's new business year. The conversation was edited for brevity and clarity.

What are KTM North America's main goals for 2008/2009?
Burleson: I think we need to concentrate on our ready-to-race brand philosophy and build on the asset of the KTM brand — building the brand as a premium European on- and off-road motorcycle manufacturer.

We'll do that in two phases: 1) by rebalancing the market so our motorcycles are being sold in a market without discounts or anything like that; and 2) by taking that next step with our dealers regarding how we develop our on-road motorcycle dealer network, our on-road motorcycle client base and our overall activities in the on-road market.

How do you plan to accomplish those goals? Does 'rebalancing the market' pertain to dealer stock?
Burleson: Regarding the first point, I think the number one issue, in a market like this, is to adjust your market expectations and your sales expectations to what you believe the premium segment of the market has in it. It's always good to have one less of a product than what the market wants if you want that product to maintain a good demand at the price you sell it for.

On the streetbike side of the business, we have to get into the lifestyle, and we have to do that with our dealers — it's about dealer commitment, and about dealer staff commitment. For us, it's really going to be key to find those KTM dealers on the street side of the business that really embrace the street side of the business, and give them the opportunity to really make a good business model out of KTM street product model line. And those are likely not to be the total count of dealers we have for off-road. (continued)