45MICHAELA
HANDREK-REHLE/BLOOMBERG
thespicy ItaliannameplatethatVolkswagen AGis
consideringselling,andTriumph,a venerableBritish
brandthat’sbeenstrugglingtosustainitsgrowth.The
companieseachsoldabout60,000motorcycleslast
year—toosmall,Pierersays,toeffectivelycompete.He’s
seekingtieupsthatwouldbenefitallpartiesbyspread-
ingdevelopmentcostsacrossa largernumberofbikes.
“We’resavagingourselvesin Europe,”Pierersays.“Let’s
createa unitedEuropeanmotorcyclecompany.”Triumph
saysit hasnoplanstosell.
Piererhasmadehisshareofmissteps.A partnership
withU.S.off-roadvehiclemakerPolarisIndustriesInc.,
whichownstheclassicIndianMotorcyclebrand,foun-
deredoverstrategicdifferences.KTM’sfirstfour-wheeler,
a $135,000roadstercalledtheX-Bowthatwasintroduced
in 2007,neverreallytookoff.Dealerssayaggressivesales
targetsin recentyearshaverequiredheavydiscountsto
moveinventory,threateningthebrand’svalue.AndPierer
missedanopportunitytobuyKTM’sbicyclebusiness,
whichis nowthrivingundera separateowner.
Thepedal-bikeunitwouldhavegivenPierera stronger
footholdin electricbikes,whichheexpectstoaccountforthebulkofcommutercycleswithinfiveyears.Although
he’ssold5,000full-sizeelectricmotorcyclessince2014,
hesaysthetechnologyis expensiveandill-suitedtosuch
bikes,becausethehighvoltageneededtopowerthem
canbedangerous.Buthepredictsthatabouta quarter
ofKTM’s 2025 revenuewillcomefrombattery-powered
mopedsandpedal-electriccycles.“E-bikesarebecom-
inga hugedeal,”Pierersays.“Themarkethasexploded,
andas a largemanufacturer, youhavetobe there.”
�RichardWeiss,withMatthiasWablTHE BOTTOM LINE KTM’s purchase of Husqvarna and its cooperation with
India’s Bajaj have helped it cut costs and expand sales. The company says
forging similar ties with Triumph and Ducati would benefit all parties.◼ SOLUTIONS Bloomberg Businessweek June 17, 2019presentsassortedchallenges:Salesintheregionhave
stagnatedsince2010,atabout 1 million bikes per year,
and stricter rules on emissions and noise threaten to
further depress them. “Making motorbikes cleaner and
quieter costs a lot of money, and so does developing elec-
tric engines,” says Jürgen Pieper, an analyst at Bankhaus
Metzler in Frankfurt. “A brand like KTM that’s known for
sports and racing may find it difficult to maintain its image
while adopting more environment-friendly technologies.”
KTM dominates Mattighofen, the town of 6,000 just
south of the German border where it was founded in 1934.
As Austria emerged from the rubble of World War II, KTM
churned out inexpensive, durable two-wheelers to help
a broken nation hit the road again. Over the next four
decades, founder Hans Trunkenpolz and his son Erich
built KTM into a national icon with bikes suited to Austria’s
rugged Alpine terrain. But when Erich died on Christmas
Eve in 1989 at age 57 with no heirs, the company ended
up in the hands of outside investors with little industry
knowledge who soon rode it into insolvency.
Enter Pierer, who’d been introduced to KTM by
acquaintances working with the company. He paid only
$4 million ($7 million today) and quickly dropped mopeds
and street bikes to focus on off-road motorcycles. In 1993
he sent a team on the three-week Paris-Dakar rally, an
unforgiving trek across the Sahara Desert. After a bumpy
start, KTM has won the competition every year since
2001, creating a mystique that’s made the bikes must-
haves for motocross fans worldwide.
Pierer reintroduced road models two decades ago, and
today they make up about half of sales. Then in 2007 he
formeda partnershipwithIndia’sBajajAutoLtd.Thecom-
panyis theworld’slargestmakerofthree-wheelers—used
as taxis in developing countries—but it lacked technolo-
gies such as four-stroke engines, fuel injection, and anti-
lock brakes. In exchange for updating Bajaj’s offerings,
KTM gained a manufacturing base with wages just a frac-
tionofthosein Austriaanda strongdealershipnetwork
in theworld’sbiggestmarketformotorcycles. The com-
panies are developing small electric models to be built in
India and sold under both brands.
In 2013, Pierer spotted an opportunity to supercharge
his expansion: buying Husqvarna from BMW AG, which
had bought the Swedish nameplate a few years earlier
butdecidedtheoff-roadbranddidn’tfittheGermancom-
pany’s lineup of highway rockets. Husqvarna helped KTM
achieve something akin to the auto industry’s strategy of
making multiple models based on almost identical parts.
The two brands today share engines, suspensions, gear-
boxes, and other components but retain separate identi-
ties vis-à-vis consumers. “KTM and Husqvarna are rivals
on the racetrack and when it comes to sales,” Pierer says.
“For everything else, they are family.”
His aim now is to do something similar with Ducati,KTM’sfactory
in Mattighofen,
wherethe
companywas
foundedin 1934