Iconic Brands Could Face The Axe As Pierer Mobility Runs Into Financial Trouble
- LJ Motors
- Sep 7, 2024
- 3 min read
Over the past decade or so, KTM’s parent company Pierer Mobility has become a household name for all the wrong reasons. Seemingly on a mission to swallow up every struggling European brand under the sun, they now seem to have taken it one step too far.
Share prices have plummeted a whopping 65% year-on-year. Even to the uninformed, a company losing more than half its value simply can’t be good, and the effects of this have already been seen in Europe. KTM recently laid off more than 100 workers in Austria, and have publicly stated that they will be shifting more production to India and China.
What is far more concerning though is the state of the other, recently acquired brands that could all fall on their respective swords to save KTM. Iconic brands like MV Agusta, Gas Gas and Husqvarna are all suddenly in serious danger of going extinct if things don’t improve for KTM AG soon.
Restructuring Already Underway
After the mass lay-off back in March KTM made their intentions pretty clear that they would be making a move towards Asia. With motorcycles already getting built in India, China and the Philippines. Over time production may move to these countries in its entirety for their road and adventure bikes.
Financially this makes sense, and investors will love the sound of “better profit margins” and “scaling up production” but in reality, quality will suffer. The proof of this is very much out there for everyone to see, and KTM can’t just wish the problem away. Early Duke 390 models made by Bajaj had a myriad of “teething issues” and while these were duly rectified, shipping out production to China hasn’t exactly solved anyones quality control issues in the past.
Early 790 engines were plagued with issues, not least of which cam followers that simply dissolved over time. After publicly stating this was not a widespread problem, they then later on off-handedly stated the problem only affected certain older models. Hello, no recall? Nope, as a gesture of “goodwill” they offered to repair certain models, but only if all the service work has been done by authorised dealers.
China Beckons
China is a double edged sword, and to say they do business a little differently there is a big understatement. Quality concerns are one thing, but the real concern is without any doubt ethical in nature.
We now know for a fact that forced labor still exists in China. However unlikely it is that any of that will happen in the world class CFMoto factory, it is still quite possible for them to outsource certain parts of the production process to “the lowest bidder.” That lowest bidder is invariably using some form of government approved forced labor. Not something any consumer looking for the best deal will care about, but something immensely important to be aware of for discerning buyers.
It is very, very easy to justify buying a Chinese product while we don’t know anything about the manufacturing process, but while these things are going on we can’t put blinkers on. Until the Chinese government at least “frowns upon” these practices, we have to accept that anything could be tainted by it.
More Not Always More
Consistently buying other brands in an effort to “diversify a portfolio” may not be the wisest move when your sales are down. Surely KTM must have at some point said “hang on we are not really making ends meet…” but still they acquired MV Agusta.
You can bet your house on the fact that those ex-KTM employees in Austria would have preferred to have had those funds invested elsewhere, because for some, it cost them theirs. Thousands of customers are also losing faith in the company too, and as more and more 790/890 cams fail without any action from KTM, a class action lawsuit has to be considered. Something like that could cost Pierer Mobility dearly.
If things don’t improve dramatically, some of these recently acquired brands face a deeply uncertain future. Pierer Mobility already proved that when the going gets tough, KTM will survive at all costs. GasGas, MV Agusta and even Husqvarna all face an uncertain future under a parent company that could easily make a “financial decision” if they don’t turn a profit in short order.
