Is KTM doing as well as it says?

The 2009/10 KTM annual report, issued this morning, is full of phrases like, “all expectations exceeded,” “significant improvement” and “world market leader.” Hell, it begins with, “KTM back at the top” and makes the claim that, “market shares could be doubled.” But, even with sales of 85,000 vehicles during the financial year, is KTM as healthy as the sunshine and lollypops would lead you to believe?

We asked an industry analyst, who prefers to remain anonymous so he can keep his clients, for some perspective. “This release is a nicely spun bit of accounting, that says KTM is on solid ground in difficult times, while making some speculative remarks about global market position,” he explains.

“As I understand it, the key improvements are in operating efficiency, and these figures are still only reflecting a recovery mode from the disastrous 2009/2010 sales period.  Note that the phrase "wold market leader" is in parenthesis, because it denotes a personal opinion, and not market fact.  Selling over 85000 units is great for a small niche OEM, particularly one that makes expensive fare, but bear in mind that this is only bringing them back to 2005/2006 levels. In 2006/2007, they sold 90,000 units, and more still in '08.”

Perhaps the release’s boldest claim is of doubled market share in some undefined off-road segments while its most worrying aspect is the company’s reliance on off-road sales. 79 percent of their products are dirt bikes.

“For some perspective, the total off-road (including dual sport) market has been shrinking in the US since 2008 by about 25 percent a year (and flatlining globally).  Considering that this is KTM's core market in both geographical and product placement terms, this is especially relevant.”

“The statement points out that road bike sales are in the 18k unit sales region, that makes them a hobby manufacturer in that sector, not unlike MV or Moto Guzzi. This is something that should worry any OEM, because that is the growth area in the industry.  The plants in India and Brazil ought to bring that growth in '11-'12 with the 125 and 250cc Duke models. Bajaj/KTM are aiming for 200,000 unit production by 2013, a very tall order considering the current numbers.”