KTM, the Austrian motorcycle manufacturer, is making waves in the sales charts and has become the most successful European motorcycle brand. The company is always looking to expand its operations and grow further with its brilliantly strategized branding policies and financial decisions. As of now, the company has finalized its first-half statistics and it shows tremendous growth when it comes to sales. KTM has successfully sold more than 190,000 motorcycles in the first six months of the current year which is estimated to be around a 16.5% increase when compared to the previous year's sales.
With more expected sales, growth, and success, KTM has decided to take a complete shift from its production strategy. The company has decided to move its production units to China as a step to cut down its production costs. A major association has formed between KTM and a notable Chinese motorcycle brand, CFMoto, to carry on with the production of KTM bikes. It will also result in the downsizing of the local production plant in Austria, causing approximately 300 employees at the KTM factory to lose their jobs.
Photo credit: @Cycle World
As of today, the majority of the KTM shares are owned by Pierer Mobility AG. Meanwhile, Bajaj Auto Limited is also a notable figure and shareholder in the Pierer Group, providing it with authoritarian rights over KTM. Alongside KTM, the parent company also constitutes notable subsidiaries, including Husqvarna, Gas Gas, and WP Suspension.
KTM is no longer a lesser-known motorcycle brand. It has come a long way to be included in the list of top motorcycle brands alongside Japanese Big Four and American giant brands famous for their V-Twin-powered motorcycles. The naked and adventure touring bikes by KTM are globally successful among riders of all types with various skill levels. The company is also a major competitor in the dirt bike category.
After all the successful years, the news has caused a stir among motorcycle enthusiasts and to a certain extent has raised several concerns in the motorcycling community. Chinese motorcycle brands are well-known for their ability to produce top-end technology and parts at a low cost. The announcement of shifting the production units to China has made KTM fans and motorcyclists worldwide raise questions about the quality, reliability, and authenticity of KTM motorcycles being manufactured in China. What if the new production strategy causes a loss of trust in motorcycle enthusiasts? What if they are not satisfied with the quality of KTM motorcycles being manufactured and assembled in China? This can have a huge impact on the sales of KTM motorcycles.
Most motorcycle riders and those who belong to the motorcycle community may not be familiar that this development is an extension plan to the already ongoing association between KTM and CFMoto. The Chinese company is already producing and assembling most parts of the middleweight adventure and naked KTM models, including the KTM 790 Adventure and the KTM 790 Duke. The recent decision made by KTM is per the results obtained from the previous experiment and is in favor of the company. KTM plans to lower their production expenses further and ensure a better reach to the Asian and Far East motorcycle market.
Another good reason why KTM is urged to take this decision is to focus more on the other subsidiaries, including Husqvarna, MV Agusta, and GasGas. The economic situation and the latest amendments in the European economic landscape have also made the parent company take solid steps. The Pierer Group has also decided to cut down its dealer network for more savings.
The announcement made by the European Central Bank that the interest rate will stay unchanged for the 2024 year has also urged the company to make amendments to its financial policies. Despite a tough economic environment, the strong liquidity condition of the Pierer Group has assisted KTM in staying firm and maintaining its position in the market. Both the Pierer Group and CFMoto have decided to further strengthen their association by shifting more production load to China. The Chinese marque will now have to increase its production capacity from 50,000 to 100,000 motorcycle units. It is estimated that the Pierer Group will maintain its revenue in 2024 and will also be able to save a huge amount of money through its cost-cutting plans.
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