Pierer Mobility AG, which owns the KTM and Husqvarna brands, has announced that it would partially relocate production and R&D activities from Austria to China (CFMOTO) and India (Bajaj Auto).
Bajaj Auto is part-owner of the company, which both manufactures and sells the KTM and Husqvarna brands.
Unfavourable economic conditions in Europe prompted the decision to relocate, the company said.
“Among other things, this (decision) is intended to exploit cost advantages in these regions and accelerate development and industrialisation processes,” the company said. This decision would lead to a reduction in staff of up to 300 employees at the Austrian locations in 2024.
The company expects the global economic environment to be difficult in FY24.
“For the PIERER Mobility Group, 2024 will be a year of consolidation, which will be used to strengthen the core business. To secure the group’s profitability, the management will implement cost-cutting measures in the double-digit million range in the 2024 financial year,” the company said about this restructuring.
PIERRE Mobility AG is the holding company of two-wheeler manufacturing companies, producing a range of premium brands like KTM, GASGAS and Husqvarna motorcycles. Around 74.2% of PIERER Mobility AG is owned by Pierer Bajaj AG. The Bajaj Group holds a 49.9% stake in Pierer Bajaj AG.
The Bajaj Auto-KTM partnership is 16 years old. Bajaj manufactures KTM and Husqvarna motorcycles in the 125 to 390 cc range at the Chakan plant and rolled out the one millionth KTM motorcycle manufactured from its plant in India in January this year. The Bajaj investment in the company and sales in India helped KTM become the world’s largest premium bike maker (by volume), with India among its largest markets.
Bajaj Auto manufactures around 1.5 lakh units of the KTMs (125 to 390 cc), with around 30-40% of the volume going to export markets. Rajiv Bajaj, managing director of Bajaj, had said that they were ready to move to higher capacity bikes targeting both Indian and export markets. Their factory was ready to assemble big bikes, Bajaj said. “KTM had taken 12 years to reach the one million mark, but the next million would come in the next five to six years,” Stefan Pierer, CEO, Pierer Mobility had said.
Pierer sold 3,75,000 units of the KTM, Husqvarna and Gasgas brands and 1,18,465 e-bicycles in 2022, with a record turnover of € 2,345.2. The first half year 2023 saw the company selling 1,90,293 motorcycles, 71,401 e-bicycles and bicycles. In the window, revenues grew by 20% to € 1,387.6 million and the Ebita was €96.9 million. The board has guided for a 2023 sales growth of 7 % to 9 % with an Ebita margin of between 5 % and 7 %.
The Pierer Mobility board has also taken the strategic decision to focus more strongly on the core two-wheeler business and concentrate on premium brands such as KTM, GASGAS, Husqvarna and MVAgusta. The company had divested the Raymon and FELT brands and the non-e-bicycle division. The company has created a new E-Mobility division that will include all electrically powered two-wheelers such as e-motorcycles, e-minis and stand-up scooters.
