February 7, 2011-A notable model year for KTM

OEM discusses its recent market share gains and a new, bold move for its on-road product
MURRIETA, Calif. — It has been at least four years since KTM North America President Jon-Erik Burleson can remember associating the words “complete sellout” with a model-year lineup.
But in fact the Austrian manufacturer achieved that in North America on a wholesale level with its 2011 lineup, Burleson told Powersports Business.
“The turn on our 2011 stuff is excellent,” he said. “I would say we have less than four months of inventory in our dealer pipeline and our pipeline combined.”
Burleson, speaking from KTM’s North American headquarters in Murrieta, Calif., also discussed the company’s plans for 2011 — including an aggressive change for its on-road sector — as well its successes in 2010.
“This is the first year I can recall that every single segment that we actively participate in we were better than the performance of that market segment,” Burleson said of the company’s 2010 performance, which resulted in market share gains in each of its segments.
The performance, of course, varied by sector, with KTM at times performing better than the industry as a whole in segments that overall were down vs. 2009. KTM, however, did see year-over-year sale increases in certain segments.
“That’s something our sales team is proud of, our marketing team is proud of and our dealers should be proud of,” Burleson said.
The retail sales performance, both for 2011 and noncurrent models, means inventory is in much better shape.
“The amount of noncurrent product that we had one year ago vs. now is literally cut in half,” Burleson said, noting 2008 models and older are now completely gone at the factory level.
“We definitely wanted to gain back control of our inventory, both at our level and at the dealer level. If your sales are slowing down, then you have to slow down your production even more in order to get that back under control.”
That’s what KTM did with its 2009 and 2010 model year builds before slightly increasing production again for its most recent model year.
Burleson notes KTM put together a strong flooring program that allowed its dealers to sell noncurrent inventory without drastic markdowns.
“The discounting we see with the other brands is something we want to stay completely away from because one of the key positions of our brand is being a premium brand and you can’t runaround and just discount everything,” he said.
The flooring program for dealers started in 2009 and increased last year. Burleson notes the program is now the subsidiary’s single biggest line-item expense, eclipsing marketing and racing.
“We realized the only way through the (market downturn) was to take the dealers’ interest burden off,” Burleson said, “and we put programs together really starting with model ’09 product and continued that last year in a much bigger way. “If the dealer supported us and really wanted to participate in our full programs, they had the opportunity to cover ’10s, ’09s and even ’08s in their inventory for up to nine months.
“(New unit) ordering is a little wholesaler push and dealer excitement pull and you have to balance that.”
Burleson notes even with the improved performance for its 2011 model year, KTM’s flooring program remains available to dealers.
“We don’t have a plan to forever cover the dealers’ interest bill,” he said. “But we needed to step in and help absorb that.”
A model year after making significant changes to its motocross lineup, KTM now is eyeing its on-road products and distribution.
The Austrian manufacturer is scheduled to announce a price change to its 1190 RC8 R.
“We’re still a premium brand so we don’t tend to come all the way down to become a value-driven, price-driven brand, but we wanted to be inside the range,” Burleson said.
KTM also wants to ensure more of the North American public has access to its on-road models and is actively looking for new dealers. In fact, Burleson said the OEM is attending Dealer Expo in Indianapolis for the first time in his 15 years with the company in order to speak with dealers.
“We’re not talking about massive wholesale numbers of dealers,” he said. “We’re not trying to over-dealer. But one of the issues we have from a consumer perspective is just covering the geographic map.
“A lot of studies show consumers will drive an hour max to go look a motorcycle, to go do a test ride, to get serviced.”
Key focus area
Besides making strides in its on-road sector, Burleson also notes the company continues to make demo rides a key focus area. Burleson said between both on-road and off-road efforts last year the company did about 16,000 demo rides.
That effort will be expanded on this year as KTM will offer a three-stop race track demo tour in Florida, Texas and California. “Dealers can bring their staff and their VIP guests to the track to ride 2011 RC8s and see the improvements we’ve made,” he said.
The company also will continue to do demo rides at major consumer events, like at the Vintage Motorcycle Days. PSB

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