is KTM going to the gallows?

[p6x]

You may have heard about it, but KTM is in dire financial situation since the end of 2023;

Today the CEO of the company has released a statement about the company's future; the same causation model for the same consequences. During Covid, KTM ramped up production to meet the insatiable demand. They invested a lot of money to produce more, also detrimental to quality.

The extreme measures they have taken have seen a lot of cost cutting, including shuting down factories and transfering activity to countries with cheaper manpower.

Are they going to survive? CF Moto, where KTM does some of its manufacturing in China is coming strong in the European market. This is one of the downside of manufacturing in China. You have to share the technology with the local company.

 

Edited November 26 by p6x

[audiomick]

I read on the german forum that they have filed for insolvency. That is no doubt what he meant with "legal restructing proceeding with self admistration". They've filed insolvency, but are not being put in the hands of an administrator to sort it out. I guess we'll see how they come out of it.

 

Incidentally, crappy video, and really bad suits.

Edited November 27 by audiomick

[p6x]

2 hours ago, audiomick said:

I read on the german forum that they have filed for insolvency. That is no doubt what he meant with "legal restructing proceeding with self admistration". They've filed insolvency, but are not being put in the hands of an administrator to sort it out. I guess we'll see how they come out of it.

 

Incidentally, crappy video, and really bad suits.

The situation seems to be serious... they are going to stop the complete production on January and February and furlough the employees.

I understand they are, they have taken steps to prevent Pieirer mobility to be run by an external administrator during the recovery. They have apparently refused financial help from Red Bull for the same reason.

They have also said that MotoGP would not be impacted, but I have a hard time believing that. KTM needs to start developing the next generation bike for 2027. Potentially, it is going to be a big financial effort because they need a new engine, and new chassis, and compose with the new aerodynamic rules. I don't know if this year's debacle had anything to do with the cost-cutting.

As for the video, it seems to be clear they improvised it without any help from the usual advice companies. It is aimed at reassuring people they can continue purchasing KTM motorcycles.

On some of the forums I follow, I read about several issues that should have been taken care under warranty, where warranty was denied. Obviously, Internet is not the most reliable source.

They have been in financial trouble since 2023 now, and it seems they have a lot of debt and creditors; hence the reason why they are trying to stop the vultures to break the company.

Edited November 27 by p6x

[gstallons]

stop the vultures to break the company or from breaking the company ?

[GuzziMoto]

My two cents. They are in deep issues, but I think they will emerge out of this okay. They have had similar issues in the past. Their biggest issues affect sales of their bikes, things like poor quality control and baked in mechanical issues like cams shaft failures that they tried to bury. There are plenty of KTM owners that had cam shaft failures, and some of them were denied warranty repair despite it being a common known issue because they did not have their KTM serviced at the KTM shop. Imagine being told your design / build induced engine failure is your problem because you did your own oil changes. That doesn't help sell motorcycles. They also acquired a number of other brands that compete against KTM, and they really did not create a separate market for those brands. Currently you can buy a KTM dirtbike, a Husqvarna dirtbike, or a Gas Gas dirtbike, and they are all the same dirtbike with little more difference then the bodywork. That just isn't smart business. They need to separate the different brands into different market segments. I like KTM, we own a pair of Husqvarna 401's and I have an old mid 90's 440 dirtbike. But I would not buy a current gen 790 / 890 / 901.

But, as far as MotoGP goes, much of the money to race in MotoGP comes from Red Bull, and the actual MotoGP race team is a separate company. So, as long as KTM doesn't actually fail I don't see them folding the MotoGP team. They may reduce their footprint in other forms of racing, but I would think they will keep racing. If you think about it, KTM likely race more per motorcycle sold then any other brand.

[gstallons]

Are their bikes having rocker arm problems now ?

[po18guy]

Chinese ownership: Benelli, Moto Morini, Pirelli. Manufacturing/Tech agreements: KTM and who else?

Chinese money has been the quick fix, but you might as well give them the company as the CCP will steal everything it can. Remember that "China" is a 75 year old, amoral nation, where the national motto is 可以的话作弊 (cheat if you can).

[p6x]

With regards to KTM, it seems they are really in deep doo doo. I read their debt is in the billions... if the sources I read are correct, they even are in difficulty to pay employees for December...

I hope they manage to come through. I wonder if potential KTM interested purchasers are going to think twice.

I does not really make sense to continue in MotoGP.

[p6x]

On 11/27/2024 at 9:30 PM, po18guy said:

Chinese money has been the quick fix, but you might as well give them the company as the CCP will steal everything it can. Remember that "China" is a 75 year old, amoral nation, where the national motto is 可以的话作弊 (cheat if you can).

One of our main competitor exported its production line to China. I don't know if this is still the case, but at the time, if you wanted to produce in China, you had to share the technology.

A few years later, in Africa, we responded to a call for tender, and we were surprised to learn that a Chinese company was also tendering for the work. Basically proposing the tools of our main competitor. They had only partially altered the names of the tools, so the customer would recognize them for what they could do. They ended up getting the contract, because as the customer pointed out, they were so cheap compared to the traditional companies, that there were not even a big debate.

However, the technology they had copied was not applicable in all situations. So we had to bail them out a few times. I had a chance to speak to their lead guy. They were paid peanuts... but their salary still made them king of their land.

The major drawback, is that by manufacturing outside of your frontier, you lose the know how. For a long time, maybe still now, the design teams were located in Europe while the manufacturing would take place in China. It seems that now they have gained enough experience to do their own design.

The auto makers in Europe, where EVs are being pushed full speed, can't keep up with the Chinese car makers, mainly because the Chinese have secured all the rare metals that are currently required to make the batteries. So just about the complete world have to purchase batteries to the Chinese as it stands. There are new battery types being studied, that would require less of those rare metals, but until they can take over, I am guessing some car makers may go down under.

Edited December 2 by p6x

[gstallons]

China is going to eventually own everything and rule the world. If you don't like the way things are going , hire an attorney.

[docc]

25 minutes ago, gstallons said:

China is going to eventually own everything and rule the world. If you don't like the way things are going , hire an attorney.

Otherwise, like something out of Through the Looking Glass :

Attorneys are eventually going to own everything and rule the world. If you don't like the way things are going , hire China . . .

[Lucky Phil]

You know when I started my aviation career the managers were all people that worked their way up in the organisation, knew the detail of everything and when they got to management level they managed to avoid chaos and catastrophes. Then came along "professional manager" you know people with MBA's and business degrees and it all went to hell as they made short term decisions aimed at looking good on their resume. They often had a "throw the deck of cards into the air and see what lands" philosophy because then they could all get together in their MBA club and "crisis manage" the situation they had in fact created. It was truly pathetic to observe. My original managers managed to AVOID a crisis and the new ones managed to help create them so they could look like the guy that rides in and takes charge and "sorts it out". 

KTM is a classic example of modern management. Covid hits and the market goes on a buying spree and instead of pausing and thinking "this is a blip" lets make hay while the sun shines but not lose sight it's short term, no they react like a "blue sky thinking" muppet and go gang busters ramping up everything on a a short term "bubble"

The Aussie wine industry did the same with the Chinese market. They all got on the Chinese gravy train as it pulled out of the station and neglected the other markets because the Chinese market was "going to last forever" but it didn't for political reasons and then they all fell on their arses and wanted the government to help bail them out. 

It's a very old story and if you want to see a classic version of it read "on a clear day you can see General motors"  by John De Loreon. GM used to do similar to their smaller suppliers then swallow them up. I read that book 40 years ago and the lessons are still valid today.

Phil   

[Chuck]

Quote

GM used to do similar to their smaller suppliers then swallow them up.

Oh, yeah. I worked for GM in the good and bad old days. Bunkie Knudsen was the last "engineer" at the top. Once the bean counters came in it was all over. They never looked more than 90 days down the road..

[gstallons]

On 11/29/2024 at 6:22 PM, docc said:

Otherwise, like something out of Through the Looking Glass :

Attorneys are eventually going to own everything and rule the world. If you don't like the way things are going , hire China . . .

That should be easy to find. I read this statistic some time ago :  70% of all lawyers on Earth live on the N American continent !

Edited December 1 by gstallons
more info

[Scud]

7 hours ago, Lucky Phil said:

You know when I started my aviation career the managers were all people that worked their way up in the organisation, knew the detail of everything and when they got to management level they managed to avoid chaos and catastrophes.

Phil   

This is still the philosophy at Honda. Every CEO, starting with founder Soichiro Honda, has experience in the company's research & development division.

https://www.historyoasis.com/post/honda-ceo-history

I had an opportunity to go on a private tour of Pierer Group US Headquarters a few months ago. It was shortly after they announced the acquisition of MV Agusta. I was impressed by the racing culture and how they have vertically integrated (making so many of their own components). But at the time, I was also wondering "how do they afford to support so much racing?"

I'm a huge fan of my two newer Husqvarnas, the 701 Enduro and the FE501S. When they bought Husqvarna in 2013, I thought they might have just bought if "for parts" but I was surprised to see that they made Husqvarna a premium brand (some components and price above the KTM equivalents). I see a lot more new Husqvarnas than KTMs. But the Huskys have KTM engines (along with Gas Gas), so it's all related somehow even if it's between "sister" subsidiary entities. 

Hopefully, this restructuring will be a wake-up call and they can regain their footing. There might be some good consumer deals out there if they get desperate for cash.