KTM turns over a new leaf with Bajaj Auto’s 2008 rescue

The KTM RC 390 and 200 are based on the Moto3 Championship winning experience.

Pune | Updated: September 10, 2014 5:00:41 am
KTM’s CEO Stefan Pierer with Bajaj Auto MD Rajiv Bajaj at the launch of superbikes — the RC 390 and the RC 200 — in Pune on Tuesday. KTM’s CEO Stefan Pierer with Bajaj Auto MD Rajiv Bajaj at the launch of superbikes — the RC 390 and the RC 200 — in Pune on Tuesday.

From a company caught in the 2008 global meltdown to getting back on track to become a billion-dollar-sales company in 2014, KTM raced past BMW to become the largest European bike maker. And all this with a little help from India. Austrian bike maker KTM Sports Motorcycle sees Bajaj Auto as the knight that rescued them. KTM’s CEO Stefan Pierer acknowledges the hand of Bajaj behind the KTM’s success.

Bajaj Auto picked up 48% in KTM in 2008 and bailed out the loss-making company. KTM’s 2008 sales was at 70,000 units with losses but business turned around last fiscal and it sold 1.4 lakh superbikes globally. This year, global sales would be 160,000 with a turnover of around 850 million euros or $1 billion and at an EBIT margin of 9%. Pierer says the joint development and strategic alliance with Bajaj Auto made it possible for them to enter emerging markets and take on Japanese companies.

“Bajaj was for us key to become a global company, enter emerging markets with small displacement bikes and at a competitive price. That was the key to our global expansion,” Pierer said. Together, they want to become the biggest sports motorcycle company in the world and sell 250,000 bikes by 2020, says Pierer after launching two new KTM superbikes, RC 390 and RC 200, in India on Tuesday at Pune.

KTM has managed to go to China with these India-designed and developed bikes and through the CKD route to Malaysia. It is selling these bikes in Columbia. It is working on Philippines, Indonesia and Brazil. It is already getting a third of its global sales from India, which is now the third biggest market for KTM after the US and Germany. It has sold 30,000 units of KTM in India in the last two years. Last year, KTM grew 46% in India and this fiscal, the company has grown at 120% so far at a time when the motorcycle industry in India is growing at 10%. “Everything is from the Chakan factory and is jointly-developed and designed with Bajaj and that is something Bajaj can be proud of and it is a benchmark for the Japanese, says Pierer. Next year, Bajaj Auto would be manufacturing one lakh KTM bikes at the Chakan plant in India

Bajaj Auto MD Rajiv Bajaj says they have no plans to increase their stake in KTM as they do not view this only as an equity investment or a game of ownership as he says such financial investments are not sustainable in the future. Bajaj says the basis of the relationship between KTM and Bajaj is the integration of the two kitchens and they are cooking together and what binds them was equal purpose not equity.

While KTM is a racing champion, Bajaj had a brand like Pulsar which gave them an opportunity to look at KTM, which is now produced out of the same facility that makes a million Pulsar bikes every year, says Bajaj. “On our own, it would not have been possible to participate in markets of KTM,” Bajaj said. Bajaj is KTM’s vehicle to take it to emerging markets and Bajaj is focused on ramping up and increasing production to meet the increase in demand.

The KTM RC 390 and 200 are based on the Moto3 Championship winning experience. The 390 RC is a pure racing bike that can also be used on city roads while the 200 RC is a bike for regular use which can also be used on the track.

KTM’s market share in India in this segment is at 28%. So far, it had only two models the KTM 200 Duke, an KTM 390 Duke and the addition of two more superbike models RC 200 at R1,60,000 and 390 at R2,05,000 (ex-showroom Delhi) will expand portfolio and improve profitability at dealerships. In FY14, Bajaj Auto sold over 11,050 KTMs in India and exported 24,016 KTMs.

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