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ADV NewsPierer Mobility Cuts European Jobs And Expands Asian Operations

Pierer Mobility Cuts European Jobs And Expands Asian Operations

Job losses loom as KTM's parent company moves more production out of Europe.

Published on 12.11.2023

Pierer Mobility Group, which holds KTM, GasGas and Husqvarna as assets, has had a very successful run of late, setting sales records for 2022 while expanding its reign as one of Europe’s leading motorcycle manufacturers by adding a major stake in MV Augusta to its stable. It’s also been busy deepening ties with foreign partners CF Moto in China and Bajaj Auto of India, as well as investing further in the lucrative North American market, even unveiling a $53 million corporate headquarters in Southern California

After 12 consecutive years of sales and revenue growth, CEO Stefan Pierer has made it clear he intends to keep riding that winning line even as the manufacturing giant just announced they expect the global economic environment to be difficult in the coming year. As such, Pierer Mobility says they have made the strategic decision to move portions of production for “individual mid-range models” and certain R&D from native facilities in Austria to China (CF Moto) and India (Bajaj Auto).

In addition, the move will result in the loss of up to 300 jobs at the Austrian location, as explained by Pierer Mobility. The board of directors cites unfavorable economic conditions in Europe, which would include slowed economic growth, inflation and higher interest rates, the latter of which greatly affects dealers across the globe as they pay higher fees to maintain their inventory. 

Pierer mobility moves more production to China and India

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I can feel feathers being ruffled as I type this, but in reality, we all want the same thing: A healthy selection of competitive motorcycles that we can afford to buy. Stefan Pierer wants the same. And he’s proven that commitment over and over again since he first purchased KTM back in 1992.

The move to more of Pierer-branded parts being manufactured in China and India will cut production costs right away, but should also prove valuable financially for Pierer Mobility over the long term as it strengthens its position in the vast Asian market. What CFMoto and Bajaj Auto are after is access to technology, as well as licensing agreements, such as the rights CFMoto already has in hand to repurpose KTM’s built-in-China LC8 engine in its own line of bikes. 

To support and strengthen its vast dealer network, Pierer’s statement says that thanks to “sufficient liquidity reserves” it will offer higher discounts to dealers as well as extend payment terms, which is good news because there is currently not a shortage of consumer demand onr Pierer models. 

The announcement also states that all of these changes are “intended to exploit cost advantages in these [Asian] regions and accelerate development and industrialization processes” as the conglomerate makes a “strategic decision to focus even more strongly on the core powered two-wheelers business.”

Going forward there will also be a strong component of consolidation as Pierer sells off its Raymon and FELT bicycle brands in order to concentrate on its motorcycle holdings, including e-powered bicycles related to GasGas and Husqvarna.  

To paint a picture in numbers, KTM Group’s 2022 earnings report included a 13-percent increase in sales and a whopping 19-percent of revenue growth. For 2023, Pierer predicts sales growth to land somewhere between 7- to 9-percent with a pre-tax revenue between 5- and 7-percent. The Board of Directors attributes much of the roll back from 2022’s lofty gains and earlier 2023 predictions to the “reorientation of the bicycle business,” while benefits of transitioning partial motorcycle development and production to Chinese and Indian partners won’t hit the books until much later. 

Pierer mobility moves more production to China and India

As the guidance for the 2023 financial year is adjusted Pierer states “The associated negative impact on the company’s cash flow for the 2023 financial year is being consciously accepted.” In other words, he knows what he’s doing. The document also states the motorcycle side of business is still performing at expected levels and that the company’s shortfall this year will be due to the investment in restructuring. 

Looking even further down the road at 2024 profitability, the company expects global economic conditions to continue to be challenging. The consolidation and relocation of key practices already on deck will be “used to strengthen the core business,” while ongoing profitability will rely on “cost-cutting measures in the double-digit millions range in the 2024 financial year.”

Despite anticipating challenges in the coming year, the company’s recent moves to expand its presence in the Asian market underscore a proactive approach to maintain competitiveness. The decision to transfer production and certain R&D activities to these regions, while some may find unfortunate, aligns with a broader strategy to capitalize on cost advantages and enhance the company’s position in its core business. In the face of an ever-evolving global economic landscape, Pierer Mobility Group continues to find ways to sustain its remarkable trajectory in the motorcycle industry. We can only hope that the company’s commitment to delivering high-quality motorcycles remains as resilient.

Photos by KTM and Husqvarna

Author: Jamie Elvidge

Jamie has been a motorcycle journalist for more than 30 years, testing the entire range of bikes for the major print magazines and specializing in adventure-travel related stories. To date she’s written and supplied photography for articles describing what it’s like to ride in all 50 states and 43 foreign countries, receiving two Lowell Thomas Society of American Travel Writer’s Awards along the way. Her most-challenging adventure yet has been riding in the 2018 GS Trophy in Mongolia as Team AusAmerica’s embedded journalist.

Author: Jamie Elvidge
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Paul Tannahill
Paul Tannahill
December 11, 2023 10:52 am

Pierer would be wise to address the concern that many people have with conducting business where companies are beholden to the Chinese Communist Party.

RobertSix52
RobertSix52
December 13, 2023 1:25 pm
Reply to  Paul Tannahill

There’s a lot more to it than that. European demographics are bad and getting worse. Europeans failed to make enough babies to grow up and get jobs and pay into the system. Now they are running short of working age people as energy and material costs rise. Furthermore China has the worst demographics of any nation in all of history so you can count them out for the long run. India, Mexico and Vietnam are the new Chinas.

Roy Clendaniel
Roy Clendaniel
December 15, 2023 2:39 pm
Reply to  RobertSix52

Yes. China is way worse in that regard. The one child policy has decimated Chinese demographics. There are few 30-40 year olds in China. The population is aging out faster than most western countries.

Roy Clendaniel
Roy Clendaniel
December 15, 2023 2:36 pm

Glad my KTMs were produced in Austria. I would be very wary of Chinese versions. KTM needs to ensure quality control does not suffer one bit.

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