KTM gone into administration?

[Crudeoink]

Janluke said:

I've had 3 ktms and am on my third Husky so clearly a fan of the brand but curious to see how its going to work for them now.

Talk of streamlining so I guess no more racing, prob dump or sell Husqvarna/GasGas, do they still make the XBow?

You'd have to be a very hardcore fan to be buying a new ktm over the next 12 months(assuming you can)

Who will buy Husvarna and Gas Gas ? Unless KTM sells the IP to a huge proportion of their own engine designs I'd have thought Husky and Gas Gas just a brand name. I think VW have the same problem with Skoda and Seat. It's only just a name really outside their sphere.

Problem i see with KTM is they're a bit confused. They run a MotoGP team but don't really sell any superbikes (apart from the new RC8 thing)
Their sister brands sells largely the same bikes with different plastics.
And they seemed to screw their own customers over with the 790/890 debacle.
It's a shame as I've always liked KTM's

[airsafari87]

It might take a little time, but ultimately I think there will be a positive resolution to this.

In the short term though it will be interesting to see what effects this will have on bike values. I guess there will be positive and negative fluctuations in values dependent on the bike model?

[hiccy18]

You've greater confidence than me, according to them they're getting close to running a billion euros in the red.

[stang65]

airsafari87 said:

It might take a little time, but ultimately I think there will be a positive resolution to this.

In the short term though it will be interesting to see what effects this will have on bike values. I guess there will be positive and negative fluctuations in values dependent on the bike model?

I'd agree with this. It is a refinancing which is quite a common business practice to reduce debt. They are getting in early to manage the process, and then they do not loose control of the business. All that really matters is that they can get enough financing to not have to scale back too much, it's fine reducing manufacturing capacity but if you have to reign in R&D you get behind in the market and start to loose ability to trade out of the downturn. It may even be planned as they'll get to write off debt, the share price is down so maybe the existing shareholders are buying back in to increase ownership percentage etc. A well managed refinancing will leave then stronger....but if they get it wrong they may never fully recover. Based on them jumping in and managing the process I'm going to guess it will go OK for them!

As to bike values, KTM are the new Suzuki, release bikes, discount at end of year, resales suffer. Bad for long term as everyone comes to expect it so they don't buy until you discount, but does mean you make your volumes in the short term. The Japanese output was traditionally manufacture led rather than market led which KTM seem to have followed, but will probably move away from now. I think the way they dealt with the cam issues will affect their resale value more than the refinancing, mainly on the 790/890 but anyone looking for good aftersales will be warned off by that for a while.

[Hugo Stiglitz v2]

I saw this coming a mile away. The 790/890 issue and denial was insulting. Customers having to pay thousands due to denial of oil feeder/cam issues and the press releases that it wasn't a problem..

I used to own a 1090 adv. I walked away from potentially buying a 890 adv.

From what I can see coming (a mile away).. CFMoto etc will really eat into and ultimately start taking over KTMs market share. With the bike market shrinking? Over time I can't see anything more than a Chinese KTM brand in the future.

[Neal H]

I don’t know how it works in Austria, but the same management team that led them into (effectively) bankruptcy are to stay in place to oversee a restructure. Very strange.

[Andy XRV]

hiccy18 said:

You've greater confidence than me, according to them they're getting close to running a billion euros in the red.

That compares quite nicely to the VW group's debt of around £174 Billion and BMW's £62 billion but don't let that put you off buying one of their bikes.

[Biker9090]

Steve Bass said:

One of the more curious decisions was to buy brands that effectively compete for same market share.
The C Suite executives will argue that niche brands broadens the market penetration but in reality you're cannibalising your own market with the aim of monopolising it.
Look at the offerings from KTM, Husky and Gas Gas in the offroad market. Tiny niche differences. Husky's might be a little bit up market with brembo brakes or other components compared to KTM, or GAS Gas might have a different suspension and hardware combo, somewhere between KTM and Husky but why??? If you're trying to cover all the possible permeabilities of buyer desires wouldn't it be better to offer a basic package with options rather than running multiple factories churning out essentially the same product....
And if buying up the brands is seeking to own the market, there's an awful lot of risk of maintaining the required sales to support multiple manufacturing facilities.
The quality issue is separate. Every brand has hiccups, Honda Fireblade oil rings? BMW S1000 cranks snapping, Aprilia valve train issues, the list goes on and on. I've had multiple KTM's, taken them to some pretty inhospitable places and I have never had an issue. Currently have an 1190 Adv with 30k kms and it's spot on.
Manufacturing in Asia is a no brainer due to import tariffs and trade agreements and it's obviously a QA issue that needs addressing but I wouldn't firebomb the entire brand due to some made in India camshaft troubles...
The problem is their growth hasn't been organic rather based on acquisition of already failing and indebted brands. Might have been better to buy the brands and shutter them up to stop the competition and eventually find a clear brand target focus instead of making multiple copies of essentially the same thing with different badges to bolster the portfolio and make yourself feel good about yourself....
And the administration? It's nothing to worry about, simply a way to protect yourself from potential investor interference while you reorganise. And force a new debt reconciliation agreement terms. If you're thinking of buying a PMAG product, don't let it put you off....

Edited by Steve Bass on Tuesday 26th November 21:28

This reminds be of British Leyland

[Marquezs Stabilisers]

Debt is one thing - borrowing to invest in kit and facilities is fine as long as you can service it. Can KTM service the debt?

Their competitors do seem to be themselves half the time - should just concentrate on KTM and not Husky, GasGas going forward. Moto3 they probably make money selling bikes to customers, but the MotoGP programme needs to deliver more, unless Red Bull are picking up the tab? Which they won't forever without winning...

[KTMsm]

stang65 said:

It is a refinancing which is quite a common business practice to reduce debt.

They are getting in early to manage the process, and then they do not loose control of the business.

I'd suggest the pi$$ poor management is what got them into this mess and the best thing for KTM would be to replace them (but Turkeys rarely vote for Christmas)

[KTMsm]

NS400R said:

Never understood the attraction of KTM myself. Poor quality bikes sold at mega discounts thus destroying the value for people that paid full price.

They aren't poor quality but there are annoying niggles - most other manufacturers have similar - the TFT dashes on 690's crack (as do Aprilia and Ducati gauge faces)

Yes they discount at year end - everyone knows this - so if you want a cheap one, buy then - it's the same as the used market - but most of you will pay more in Spring

I don't understand it myself but most of you have more money than patience

[Hugo Stiglitz v2]

KTMsm said:

stang65 said:

It is a refinancing which is quite a common business practice to reduce debt.

They are getting in early to manage the process, and then they do not loose control of the business.

I'd suggest the pi$$ poor management is what got them into this mess and the best thing for KTM would be to replace them (but Turkeys rarely vote for Christmas)

The Captain hit the harbour wall on the way in, it appears he's going to have another go.

[Freakuk]

KTMsm said:

NS400R said:

Never understood the attraction of KTM myself. Poor quality bikes sold at mega discounts thus destroying the value for people that paid full price.

They aren't poor quality but there are annoying niggles - most other manufacturers have similar - the TFT dashes on 690's crack (as do Aprilia and Ducati gauge faces)

Yes they discount at year end - everyone knows this - so if you want a cheap one, buy then - it's the same as the used market - but most of you will pay more in Spring

I don't understand it myself but most of you have more money than patience

Have to agree on this, I've owned 3 and I still have my Gen3 SDR which is probably the best road bike I've owned, I think in the 3 years of ownership it's had one issue... a common one which is well documented.

I'd certainly buy another, I was looking at their adventure bikes a while ago, but life got in the way so didn't end up buying one.

I think the problem is they have grown exponentially over the last decade, gone from MX/Enduro bikes to really ramping up road bikes and buying multiple other companies and there just isn't the people buying the volume of bikes they are now producing.

They dominate in MX and if you look at MotoGP, they supply the Red Bull Rookies, 1/2 Moto3 grid, a handful of bikes in Moto2 and 4 bikes in MotoGP it's a huge investment to be in such high-profile 2 wheeled sports.

I'm sure KTM will survive, it's just how and when, do they sell brands... probably, will someone invest.... Red Bull seems the obvious choice, Chinese investment maybe....

But they need to trim the models, too many models trying to fit every possible use case, they just need to focus on 3-4 bikes per range - road, off-road (MX), off-road (enduro) and nothing more.

[stang65]

Freakuk said:

I'm sure KTM will survive, it's just how and when, do they sell brands... probably, will someone invest.... Red Bull seems the obvious choice, Chinese investment maybe....

Surely Bajaj more obvious to put more money in? Do Red Bull own any manufacturing companies (non-Energy drinks manufacturing)? They own sports Teams but taking an investment in KTM would be a jump from that.

[Bikesalot]

Awful lot of money gets written off if a deal is reached.

[hiccy18]

Andy XRV said:

hiccy18 said:

You've greater confidence than me, according to them they're getting close to running a billion euros in the red.

That compares quite nicely to the VW group's debt of around £174 Billion and BMW's £62 billion but don't let that put you off buying one of their bikes.

Those figures are meaningless without scale: KTM are estimating ending up at debt in the region of 40% of last years (record) turnover and restructuring to reduce turnover by a similar amount.

[spareparts]

I don’t think their brand values align with what the majority of retail consumers are looking for when it comes to paying for a bike positioned at the upper end (1000cc +) of the market. Their halo products are competing in a segment where buyers are looking for performance, quality, refinement, technology, design/finish, and post-sales experience at their dealerships. KTM deliver on performance and technology, but lack in the others - in comparison with the competition. Ducati, BMW, Triumph, Honda all have more rounded products and it shows in their top end products and quality of dealers. The dealer network that can offer a premium customer experience affects buyer appetite, especially when target audiences typically enjoy oat flat whites with biscotti when dropping their bike off for a service… and KTM just don’t do this. BMW have this nailed.

KTM 1290/1390 products can’t trade on the same value proposition that their junior 125/250 products do. And if you can’t offer the experience in addition to the things that the buyer wants of a premium product, your sales revenue will always be behind no matter how much you think your buyers are ‘born to race’. It’s a cheesy brand value that doesn’t resonate well with buyers today.

[KTMsm]

spareparts said:

I don’t think their brand values align with what the majority of retail consumers are looking for when it comes to paying for a bike positioned at the upper end (1000cc +) of the market. Their halo products are competing in a segment where buyers are looking for performance, quality, refinement, technology, design/finish, and post-sales experience at their dealerships. KTM deliver on performance and technology, but lack in the others - in comparison with the competition. Ducati, BMW, Triumph, Honda all have more rounded products and it shows in their top end products and quality of dealers. The dealer network that can offer a premium customer experience affects buyer appetite, especially when target audiences typically enjoy oat flat whites with biscotti when dropping their bike off for a service… and KTM just don’t do this. BMW have this nailed.

KTM 1290/1390 products can’t trade on the same value proposition that their junior 125/250 products do. And if you can’t offer the experience in addition to the things that the buyer wants of a premium product, your sales revenue will always be behind no matter how much you think your buyers are ‘born to race’. It’s a cheesy brand value that doesn’t resonate well with buyers today.

I don't think you're their target buyer



It's "Ready To Race"

[snagzie]

• ready to race

But agreed on the above.

The dealer I used when I bought my 1290 SAS was new to KTM (Wigan Suzuki, part of MotoGB) and the whole experience was a bit meh. The staff warned me about KTM warranties not being quite as forgiving/lenient as Suzuki or other brands, and that was the day I picked it up!

The bikes gone now so not too bothered, but honestly I didn't have much faith in the long-term reliability of it, rightly or wrongly. Sticking to Honda or Kawasaki now I think

[Freakuk]

spareparts said:

I don’t think their brand values align with what the majority of retail consumers are looking for when it comes to paying for a bike positioned at the upper end (1000cc +) of the market. Their halo products are competing in a segment where buyers are looking for performance, quality, refinement, technology, design/finish, and post-sales experience at their dealerships. KTM deliver on performance and technology, but lack in the others - in comparison with the competition. Ducati, BMW, Triumph, Honda all have more rounded products and it shows in their top end products and quality of dealers. The dealer network that can offer a premium customer experience affects buyer appetite, especially when target audiences typically enjoy oat flat whites with biscotti when dropping their bike off for a service… and KTM just don’t do this. BMW have this nailed.

KTM 1290/1390 products can’t trade on the same value proposition that their junior 125/250 products do. And if you can’t offer the experience in addition to the things that the buyer wants of a premium product, your sales revenue will always be behind no matter how much you think your buyers are ‘born to race’. It’s a cheesy brand value that doesn’t resonate well with buyers today.

I don't disagree and I also don't agree.

I have had lots of Ducati's over the years and I would say it is a premium product over KTM, but you're paying for that also.

When I bought my Gen3 SDR I also considered Ducati's V4SF, but the KTM was £8-10K cheaper which goes a long way towards fuel, tyres, running costs and certainly swayed my decision.

No fancy coffees in the KTM showroom, but my expectations are lower as I am spending much less.