KTM majority owner urges manufacturing move to Asia

The head of KTM’s majority owner, Bajaj Auto, is ruffling feathers - arguing that the Austrian brand should be so in name only, and that it should follow the lead of Triumph in moving production to Asia.

India-based Bajaj Auto has been the primary force in digging KTM out of its self-made financial hole, currently maintaining a 75-percent ownership of the brand. Bajaj also partners with Triumph in the production of its incredibly popular 400cc models. In a recent interview with India’s CNBC TV18, Raviv Bajaj, the managing director of Bajaj Auto, offered a straightforward assessment of KTM’s troubles and what needs to be done to overcome them.

“To put it very simply and bluntly, European manufacturing is dead,” he said. “Every single Triumph motorcycle that is made today is made either in Thailand [or], more recently, India. If Triumph can do this 15 years back, why not KTM?”

We’re pretty sure the folks up at Hinkley would want us to point out that Triumph’s ultra-premium TFC models are not assembled in Asia, but, yeah, Bajaj isn’t too far off the mark there. Triumph began gradually offshoring production/assembly in the 2010s. And it seems that the point Bajaj is trying to make is that doing so doesn’t appear to have hurt Triumph’s reputation too badly.

Bajaj argues that KTM should instead be focusing its energies on the ‘what’ of KTM - ie, what kind of brand it is and what it produces - rather than the ‘where’ of it.

“While it may appear that a motorcycle is a motorcycle is a motorcycle, there are two worlds of motorcycles out there,” Bajaj explained. “There is one world of the volume brands, such as Honda, Yamaha, [Royal] Enfield, TVS, Bajaj… and then there’s the more premium, more lifestyle space, dominated by Western brands such as KTM, Triumph, Ducati, BMW, Harley.

“These are very different business models,” he continued. “Obviously, because the scale is very different, the levers of brand, quality, technology, cost, and distribution work very differently.

“Quite frankly, scale is not the most important thing for KTM… the quality metrics are more important here,” he said. “We’ve obviously been grappling with this issue for the last six months… I can tell you that the roadmap [for moving forward] rests fundamentally on these two thoughts: first, we have to restore the brand… the second thing we have to do is reset the cost.”

Moving production out of Europe is part of the answer to that second goal, says Bajaj. He points out that “while KTM struggles in Europe” its models made and exported from India deliver an EBITDA (Earnings before interest, depreciation and amortization) margin of “over 30 per cent.”

“The main reason for that is the great cost competitiveness that India and the Indian supply chain offer,” Bajaj says.

Turning to the first goal of restoring the KTM brand, Bajaj says that in the run-up to its spectacular downfall KTM had lost its way.

“As - unfortunately - sometimes happens with success, you tend to diffuse the brand by extending it into too many categories, too many segments.”

He told CNBC TV18 that he feels KTM needs to "restore the brand to its core” and shake off the “complexity” caused by too many products.

Unfortunately, the otherwise refreshingly straight-talking Bajaj doesn’t offer clarity on exactly what he means here. Which products should KTM keep? Which should it jettison? If we look at very recent history, we can see that KTM has rolled out a number of enduro models, and it appears to be developing a 490 Adventure (to presumably replace the 390 Adventure), but it’s pushed back the production of big-gun, big-ticket items such as the 1390 Super Duke GT as far as 2027.

One would think that a brand seeking to re-establish itself as a premium offering would be doing things the other way ‘round. 

Whatever the case, it points to the fact that although KTM is making progress, it is still far from being out of the woods.

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