Motorbike manufacturer KTM recently acquired rival brand Husqvarna from German luxury auto giant BMW, in a consolidation move that is expected to help the companies to slash costs as manufacturers in Europe are still facing a slump.
Stefan Pierer, the chief executive officer of KTM and who also holds a majority stake in motorbike manufacturer, said that he was taking a page out of Volkswagen’s book by acquiring company, whose enduros and motocross bikes are called “Huskies.”
In a telephone interview, Pierer stressed that the motorbike business is a niche business that poses the same problems as in the car industry. Speaking about the deal, he added, “Development costs for modern, sporty motorcycles are so high – especially for engines – that a small brand (like Husqvarna) can no longer shoulder them on its own.”
He further said that his immediate focus would be on invigorating the ageing line-up of offroad models, and that he wanted to see Husqvarna sales to double in the next five years to 20,000 motorbikes.
KTM is also the owner of Swedish brand Husaberg, which was founded by two engineers in the year 1988, after operations of Husqvarna were moved from its Scandinavian home to Italy.
In place of completely combining both companies, KTM and Husqvarna will be managed separately. This will make the management easier, while allowing the owners to reap the benefits of using common elements. Last year, Husqvarna generated revenue of 65 million euros by selling around 10,000 bikes, while KTM rolled out 107,000 motorcycles generating revenue of 612 million euros.
Entrepreneur Stefan Pierer, who holds a major equity stake in KTM, stated, “Around 10 years ago we commenced a small podium approach just like what Volkswagen does on a far larger stage.”
With the acquisition of Husqvarna, along with the Swedish brand Husaberg under its belt, KTM and Husqvarna is now aiming to sell more than 120,000 units by the end of this year. They are also expecting bigger number of sales in emerging markets, such as India, particularly as the company has already enjoyed a great success from the Duke 200.