Interview with KTM’s Stefan Pierer – Half 1

Interview with KTM’s Stefan Pierer

Because the Coronavirus pandemic step by step disappears within the rear view mirror of historical past, in its aftermath the worldwide bike business continues to expertise speedy and sustained development. Main this cost amongst European corporations is the KTM Group, whose dad or mum firm PIERER Mobility AG completed 2022 on a continued excessive, after a twelfth successive report 12 months which noticed gross sales of its three present manufacturers KTM, Husqvarna, and GASGAS proceed spiralling upwards to 375,452 bikes in 2022, a rise of 13% in contrast with the earlier 12 months’s 332,881 models. Of these, 268,575 of those bikes carried the KTM badge, 75,266 have been Husqvarnas and 31,651 have been GASGAS bikes, a gross sales quantity of 375,492 bikes. Add to that the 118,465 pedal cycles and E-bicycles bought in the identical interval underneath its Husqvarna, GASGAS, Felt and R Raymon labels (up 15% in comparison with 2022’s 102,753 bikes), and the corporate’s total revenues elevated to EUR 2.437 billion in 2022, up 19% year-on-year.

Pierer Mobility kicked off the 12 months with success on the famed Dakar Rally, sweeping the rostrum with KTM’s Kevin Benavides and Toby Worth joined by American Skyler Howes using for Husqvarna.

This resulted in an EBIT (Earnings Earlier than Curiosity and Taxes) gross revenue of EUR 235 million, an enormous 22% improve over one 12 months in the past, which means its President/CEO Stefan Pierer, 66, duly celebrated the thirtieth anniversary of his taking management of a bankrupt KTM and its 160 staff in January 1992, and making 6,300 bikes that first 12 months, by consolidating his place as essentially the most vital determine within the European bike business. PIERER Mobility is a world participant in virtually each completely different mannequin sector, each on and off highway, with each combustion engines and, more and more, electrical energy. The possibility to talk with him at size for the primary time in two and a half years in his workplace in KTM’s dwelling manufacturing unit at Mattighofen in West Austria, uncovered the background behind this roll name of success, and his plans to construct on it for the long run.

Alan Cathcart: Stefan, in 2022 PIERER Mobility achieved its twelfth 12 months in a row of report gross sales, with a 19% improve over 2021. However, may it have been even higher than that if not for issues with the availability of parts?

Stefan Pierer: Sure, I’m sorry to say that we misplaced 15,000 models within the first half 12 months of 2022, owing to our Tier 1 electronics provider Bosch working a type of triage system, whereby they lowered the availability of all orders by 30%. So, we received 70% of what we ordered from them and missed 30%, which in total phrases equals 15,000 streetbikes which we had clients ready for. So, apologies to them – however it was outdoors our management. In any other case, we would have ended up with a 35% gross sales improve as a substitute of simply 19%! After which, there was additionally the growth in demand each for the brand new five-nanometre semiconductors, and the previous 20-nanometre sort. They stopped manufacturing of the 5nm ones to extend the amount of the 20nm variations, however nonetheless we had restricted availability.

AC: Has the conflict in Ukraine affected your manufacturing, additionally?

SP: Not within the bike enterprise, extra for the automobile business, as a result of there are some particular provide corporations positioned there. So, automotive wiring harnesses and suchlike have been closely affected, however not for bikes. Within the quick time period, the escalating worth of power provides was a priority, though that’s lastly decreasing finally, however leaping again to the primary half of final 12 months, the unbelievable, ridiculous improve in transportation prices because of the constraints within the provide chain have been a critical concern. So, we had double digit value will increase for air freight, and sea freight was as much as eight occasions larger! Usually, a 40-foot container from China to Rotterdam or Hamburg ought to value round $3,000/3,500, however a 12 months in the past, it was $24,000! And whenever you requested the logistics firm, “Hey, is that for actual?” they’d reply “Would you wish to get the products, or not? In any other case we now have one other buyer for that cargo.” Loopy!

AC: Did these points have an effect on the dimensions of your workforce? How many individuals do you utilize now?

SP: No, we now have elevated the full workforce 16% with 839 new workers within the final 12 months, so now we make use of 6,088 individuals altogether – round 5,000 right here in Austria, and 1,000 overseas. Like everybody, we’ve had some issues with recruitment, however we’re doing just a little bit higher than others as a result of we now have on common the very best wages and salaries within the sector. For us, it’s simpler to recruit, however it’s nonetheless a problem. As a result of we even have a leaving fee of 5% or so, which is regular, which means to extend the workforce by 800 individuals total I needed to discover 1100 individuals in whole! That’s a major problem, however the measurement of our firm and the model consciousness of the product makes it simpler to recruit in comparison with different industries. By the way in which, about 1,200 staff or 20% of the workforce are engaged in product growth!

AC: How most of the 376,000 models you delivered in 2022 have been on- or off-road?

SP: 40% was off-road, and 60% road. So, we now have three manufacturers, and we’re copying what the automobile business is doing, like Volkswagen, utilizing the identical engine with completely different covers branded as KTM or Husqvarna or GASGAS. After I first began doing this in 2013, I used to be involved about buyer response, however it’s working simply advantageous. I saved my market share with KTM, and I took total market share from the Japanese, due to the opposite manufacturers. So, perhaps not everybody needs to experience the market chief, however she or he needs to purchase a European product, and right here the younger Spanish model GASGAS was an enormous assist, as a result of we’re pricing it at 8% to 10% cheaper than the equal KTM. It’s for the youthful riders who don’t have the liquidity from Grandma, however they get the identical efficiency as a KTM, plus the fairly completely different look and model values. And for the goal buyer it’s excellent – particularly after Sam Sunderland gained the Dakar Rally on a GASGAS final 12 months, which gave the model nice credibility with them.

Photograph by Kiska

AC: Will GASGAS evolve into an on-road producer?

SP: For certain, sure.

AC: Utilizing the identical mannequin platforms as KTM?

SP: It relies upon – this can be a youthful viewers, bear in mind, however we’re solely on the beginning line. We tried it very quick with the LC4 platform, however perhaps that was fallacious as a result of we’re dominating that section anyway – it’s our dwelling turf, and in creating extra complexity, you’re competing in opposition to your self. However for certain, ultimately, you will note a road authorized GASGAS Supermoto or Bare bike, and this model may also enter the middleweight twin-cylinder class within the quick time period, too.

AC: Was this the purpose of going Moto 3 racing in 2022, and dominating it – it was a quite profitable enterprise, with GASGAS riders 1-2 within the Championship?

SP: Sure, very profitable certainly, and now, we push into Moto 2 and MotoGP. The Spanish followers are very pleased to have their very own model on the high stage.

AC: Why did you select Aspar to run your Moto 3 and Moto 2 GASGAS groups?

SP: As a result of we’ve had an extended relationship with him, and I’d say there are numerous sharks within the racing world, however he’s one of many critical ones. He’s the uncommon instance of an ex-racer, an ex-World champion, who grew to become good at enterprise. We like him, he’s very dependable, very reliable, and he’s additionally built-in properly into our huge household – with the three manufacturers. We’re operating it like a household. Every child has his personal character, however he’s nonetheless guided by the dad and mom.

AC: Properly, there was a fourth model in 2022, when CFMOTO did Moto 3 for the primary time. Do you see them stepping up a stage like GASGAS?

SP: Sure, we satisfied them that they need to take part to make a higher model consciousness. Moto 3 is the most affordable method of doing this – in Moto 2 it takes time, however it was a assist. Now, we’re going to begin dealing with their distribution in Europe in 2023, so perhaps in two or three years’ time they need to begin a Moto 2 crew.

AC: It appears the connection between CFMOTO and PIERER Mobility has just lately developed to be a lot nearer than earlier than. Do you now personal a part of their fairness, so are they a part of the PIERER Mobility household?

SP: Not utterly – we personal 49% of the three way partnership with them that we arrange 4 years in the past, and as our contribution to the fairness, we introduced in mental property referring to design and engineering. Should you go to China and produce mental property with you, you have to put a price ticket on it beforehand. In any other case, you’ll wind up disposing of it anyway, freed from cost! The Chinese language wish to rule the world, so to cope with them and to information them in a three way partnership is a sure problem.

AC: Which you’ve learnt fairly properly over the previous decade, I feel!

SP: Sure, we’re doing our greatest, however Corona wasn’t a assist, as a result of for 3 years I wasn’t capable of go to them and nor may any of my guys, so solely now are our first groups going there beginning in March. Sadly, the flight availability could be very restricted – air tickets to China went up 3 times in contrast with earlier than, however that’s the way it works. Nevertheless it’s getting again to regular, they usually made a fantastic job of making the three way partnership hub for our middleweight class of fashions. The standard of manufacture is extraordinarily excessive – actually, utterly on a par with making them in Austria.

AC: Will all future middleweight KTM, Husqvarna, and GASGAS twin-cylinder fashions be made in China?

SP: That’s the plan – they’ll be made in China, and the premium bikes right here in Austria. I distinguish between premium and entry-level middle-class fashions. The extra worth aggressive fashions are coming from China, and the premium bikes are coming from right here. However I used to be in India in January, and it appears now even the twin-cylinder bikes may also be made there, which could be very useful.

AC: I believed your future technique had been for CFMOTO to focus on producing twin-cylinder middleweight fashions, and Bajaj in India the single-cylinder fashions?

SP: Sure, that was our technique for some time. However for certain within the subsequent two years, the twins may also be made in India, too.

AC: Will this be the RC490 500cc parallel-twin that you simply’ve been engaged on for some years?

SP: No, it’ll be the 790 – why ought to I reinvent the whole lot from scratch?! Possibly they’ll title it the 690 or no matter like BMW, however that’s not a difficulty. Chinese language merchandise don’t have any probability in India, the place they need to have an Indian provenance. Should you present up with a Chinese language-made mannequin, neglect it. The five hundred class, for me, isn’t an fascinating class anymore, so we stopped the RC490 as a result of we’re bringing the 790 down just a little bit. We’re speaking in regards to the 690 or 650 – and that’s higher for advertising, as a result of extra is all the time higher than much less! Additionally, its pricing is all the time a difficulty. It’s simpler to make a passable price ticket with a 650 mannequin in comparison with a 500. A 500 is an entry-level bike.

AC: So, you’re saying the 790 parallel-twin KTM will likely be made in India throughout the subsequent two years?

SP: For certain – we’re already beginning the dialogue on the best way to obtain this, and with which form of element provide answer, however it’s coming. We could have the 790 constructed there for certain, and the Bare bike would be the first one, as typical.

AC: Will these be just for India, or will they be bought in Western markets, too?

SP: The thought is that India takes care of India, Nepal, Sri Lanka, Indonesia – it’s depending on worth sensitivity, in addition to geographic proximity.

AC: However for Australia, which is near each India and China geographically, would such fashions come from India?

SP: India, sure, for certain India. Nevertheless, for Asian markets China is forward as a result of the Chinese language guys are so quick – I’m severely impressed. They’re the world champions in copying, however to a excessive stage. Inside lower than two years we now have transferred our complete 790 platform to them with a 100% provide chain in China, and it’s working very properly – the standard is superb. So, we’re beginning this 12 months to deal with CFMOTO’s distribution for the entire of Europe, which is step one we agreed based mostly on the mental switch of the platform. We’re caring for importation to Europe of all CFMOTO merchandise based mostly on a KTM engine platform.

AC: How about different international locations, like North America or Australia?

SP: It relies upon. Possibly we’ll do Latin America, however we now have to debate it. What’s agreed is that Europe is our dwelling market, so we’ll deal with CFMOTO merchandise made in China with a KTM motor. I feel sooner or later, the true competitors in such entry mannequin middleweight ranges, comes not anymore from Japan, it’s coming from China. I used to be in EICMA for simply sooner or later final November, and I visited three cubicles apart from ours – CFMOTO, Benelli, and Voge, which is BMW’s three way partnership associate. What I’ve seen there convinces me that that is the place the true competitors will come from in future within the entry stage and middleweight sectors. Luckily, we now have an alliance with one of many three main such Chinese language manufacturers!

AC: I perceive CFMOTO has constructed a brand new manufacturing unit in its Hangzhou base to accommodate this growth?

SP: Sure, it’s our CFMOTO and KTM three way partnership plant, with a capability of round 50,000 models a 12 months, and final 12 months, we already made virtually 20,000 regardless of the previous Coronavirus being nonetheless there in China. It’s a pleasant consequence, and I’m impressed. So now, we’ll velocity issues up.

AC: CFMoto is reportedly about to launch two giant capability fashions, a 1000cc V4 superbike, and a 1279cc Tremendous Bare! Are these derived from KTM fashions – within the case of the V4, out of your RC16 MotoGP bike?

SP: The Chinese language are very aggressive and really courageous, they’re world class in copying and saying new Present fashions! I don’t know who they have been copying with these concepts, however they’re nothing to do with us.

AC: But when these fashions come to market, and it’s attainable at the least one in all them will, will you promote these by way of your dealerships?

SP: Let’s see how lengthy it takes to get manufacturing prepared with such fashions, then we will talk about what to do!

AC: Is it true that various KTM fashions manufactured in India has now handed a million?

SP: Sure, that was the rationale that I visited there in January, it was the a million manufacturing milestone.

AC: Congratulations – however is your relationship with Bajaj nonetheless as sturdy now because it was once in mild of your rising alliance with CFMOTO?

SP: Between Rajiv Bajaj and me, it’s turned out to be an actual friendship. It’s a win-win scenario for us each, and if we’re each doing good, he’s benefitting and vice versa. With out Bajaj we by no means would have leveraged total manufacturing to the extent that we’re at now.

AC: Will Bajaj solely make KTM branded bikes for you apart from his personal merchandise?

SP: No, Rajiv is now additionally doing Husqvarna for us, after which for a few years he’s been making an attempt to do one thing with Triumph, which, hopefully, will lastly come to market later this 12 months, or subsequent 12 months. They’ve been speaking to one another since 2016, and have been imagined to be launching their first three way partnership mannequin spherical about now, however it appears, the earliest it’s going to now come is in Autumn this 12 months, as a result of they made some extra analysis and adjusted the styling, or one thing.

AC: Is the shut relationship between Triumph and Bajaj an issue for you?

SP: No, I like competitors, it retains you alive, retains you contemporary!

AC: It’s competitors inside a longtime partnership, although.

SP: Look, I’m doing the identical factor with CFMOTO, so all of it balances out.

AC: So if Mr. Bajaj finally ends up taking up management of Triumph, which appears attainable, it could be no downside for you?

SP: No, I’ve recognized for some time that’s his long-term technique – we’ve mentioned it. I’ve been doing so many acquisitions myself recently, however now Rajiv – it’s your flip! You’re the knowledgeable on the best way to handle issues along with your former ruling nation, not this man from Austria! So, good luck with that.

AC: Taking a look at one thing fairly completely different, is it true that KTM is growing a full-fairing RC890 twin-cylinder sportsbike as a 2024 mannequin?

SP:  Sure, it’s true. I feel will probably be launched round a 12 months and a half from now, as a 2025 mannequin. 

AC:  Properly, provided that KTM’s mantra is ‘Able to Race’, will you go Supersport racing with this bike?

SP:  It may occur, however initially, we should discover out if it’s aggressive or not, as a result of that is now a horsepower class the place the foundations are all the time altering. However lastly, if it’s attainable, why not?! As a result of whereas proper now we’re specializing in MotoGP, and that’s critical, we do wish to come again to the client racing section with such bikes. So for instance, we have been all the time taking part within the 300 Supersport class, and now, we wish to come again to that section extra strongly – there have been only a few KTM’s on the grid on this class final 12 months as a result of we stopped assist from the manufacturing unit. It was just a few seller entries. However for subsequent 12 months, for mannequin 12 months 2024, we’re bringing an entire new era of our joint merchandise from India. All new engines, the whole lot. For certain, there will likely be an all-new RC390, so prepare!

Keep tuned for half 2, by which Stefan Pierer discusses MV Agusta!

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