What does the product pipeline look like? Enough machines? Not enough machines?
Burleson: There's definitely a healthy supply of '08s; '07 and back is quite clean. I think, compared to our competitors, the pipeline is very clean. Models for 2009 have just started delivering, but our general feeling is that we should have a pretty spot-on matched production to what we think demand is going to be this year while also enabling that '08 product to move its way through the pipeline.
What kind of programs does KTM have to aid dealers in moving machines?
Burleson: Discounts and the devil begin with the same letter for a reason — discounts aren't something we like to go after.
On the street side, I want every street-qualified dealer to have a demo — at least one demo — because demos are what moves retail product forward. In off-road, we do have to have very good retail financing offers. We've got 5.99% for 48 months on anything over $10,000. And, as a small incentive to help push the '08s through, we have a no/no financing program through our GE Funancing card that offers no payments and no interest until March 2009. So, while we do have a couple of offers, you're not going to see us with $1,500 rebate ads and things like that because that's more damaging to the brand than almost anything else could be.
What has KTM had to do with pricing, due to the currency exchange rate, raw materials costs, etc.?
Burleson: We had to determine where we felt our product positioning needed to be, and what the market quantities could be, and so we re-priced '09 quite a bit. There's quite a bit of a price increase from '08 to '09.
I thought that was a step we needed a little confidence to do, and now that we've made it, I reflected on perhaps not having enough confidence in the value of the asset. People are willing to pay a good price for a good product. And I really believe in our product; we know KTM is a solid product, so our pricing is definitely at a place where we are at a significantly premium position to anyone else within the market.
MIC numbers show a slowdown in traditional ATV sales and in off-road. What do you believe is causing the slowdown?
Burleson: With our ready-to-race brand, one of the toughest issues has been fuel costs. To go race, you have to load up your truck, and your trailer, and if you've got only $1,000 or $1,500 in a weekend, to have $500 or $600 burn up on just gas is tough.
And land access?
Burleson: Huge issue. Land use is one of the critical issues for off-road motorcycling in the next decade. In the past it has been noise and emissions. It's going to be land use…general access.
Land use is something, unless we?re active as a company, we're going to get restricted more and more. So, this year, we're taking what we?re considering a proactive approach by underscoring land use rights.
As a result, we've asked the AMA, Blue Ribbon Coalition and the Off-Road Business Association to come and offer a seminar on how to work with dealers to take the land-use issue from a national level down to the local level. We have an army of orange-bleeders selling our motorcycles, we need an army of orange-bleeders protecting our rights to ride those motorcycles.
Burleson: This year you'll see us go a little bit more online in our advertising, as well as on various insertion pieces in many of the major magazines. We'll have one that focuses off-road, one that focuses on street. We don't want to show up as a page of advertising next another page of advertising next to another page of advertising. I want something to show up that's orange. I want something orange that's tailored to the customer — an informative piece that calls your attention to the brand and gives the consumer a teaser to go to either our Internet site, a micro site, or even using it as the springboard for going into the dealership. So it'll be a pretty big departure from our usual advertising program. (continued)