KTM President/CEO Stefan Pierer Interview: Part 1

Alan Cathcart | October 18, 2019

CN’s European Editor Alan Cathcart chats in-depth with KTM president Stefan Pierer after the Austrian company set new sales records in 2018, selling more than 250,000 bikes for the first time in a single year to consolidate its status as Europe’s number one ahead of BMW. This makes Pierer the most powerful man in the European motorcycle industry. In this first of two installments, Pierer talks about, among other things, KTM’s future involvement with MotoGP, its Husqvarna brand, and the acquisition of Spanish manufacturer GasGas

When KTM President/CEO Stefan Pierer talks, people listen.
When KTM President/CEO Stefan Pierer talks, people listen.

Photography by Emanuel Tschann

KTM President/CEO Stefan Pierer remains the most significant person in European motorcycling. With an 11.7% share of the total European motorcycle market, and booming sales in emerging markets worldwide, the Austrian company—in which Bajaj Auto, India’s second-largest manufacturer, holds a 48% slice of the equity—is a global player in practically every different model sector, both on and off-road.

In 2018, the Austrian company achieved record revenues of 1.56 billion euro, up 2% on 2017, by selling 212,899 KTM motorcycles and 48,555 Husqvarnas that calendar year, an overall increase in sales of 10% over the previous 12 months as it outperformed the market in both Europe and North America. In Europe, the total market grew by about 8% over 2017, but KTM increased its registrations in the same period by 21.5%, while in an overall U.S. market declining in 2018 by 2.3%, the Austrian firm lifted sales by 8.5%, boosting its market share to 8.9% by the end of 2018. These successes came thanks to the launches of an entire new KTM middleweight range with the parallel-twin Duke 790, and the first Husqvarna street motorcycles—the 401 Svartpilen/Vitpilen and 701 Vitpilen—to be built since the company was acquired from BMW in 2012. Stefan Pierer has now publicly announced a sales target of 400,000 motorcycles by 2022

The chance to meet Stefan Pierer for yet another one-to-one in-depth interview in his office at KTM’s Mattighofen factory uncovered the background behind this roll call of success, and his plans to build on it for the future.

Stefan, KTM consolidated its position as number one in Europe in 2018, when you sold over 250,000 motorcycles for the first time in a single year. Are you satisfied with the way the company has continued to grow? And where do you see future growth coming from?

Since we now have a second on-road brand in Husqvarna, it’s clear we can accelerate the speed of our growth via them. So right now I’m very satisfied, and even more so if I look at what’s coming up next. There are a lot of good things coming to fruition, so in my opinion half a million bikes a year is not so far away—within a decade from now, for sure, and maybe sooner. Husqvarna certainly has great potential, especially in emerging markets, because we’re transferring the manufacture of the small-displacement Husqvarnas to India from December onward, so production of complete bikes will take place in Pune for the first time. So based on those lower production costs, now is the first time that we can also attack emerging markets like India, the Asian markets, and Latin America with Husqvarna.

Alan Cathcart and KTM president/CEO Stefan Pierer.
Cycle News European Editor Alan Cathcart interviews Pierer at KTM’s headquarters in Mattighofen, Austria.

I remember you telling me that Rajiv Bajaj originally didn’t want to be involved with Husqvarnas, because he didn’t think he could sell them in India.

I think there’s a certain difference in culture between India and Europe. Patience, I would say, is the strength of India, and the opposite is the strength of Europe! If you can combine the two, I think that’s the best. But it’s clear that Royal Enfield is now growing very fast, and the small-displacement Husqvarnas are perfect for countering that by targeting the premium end of the market, which is very big in India.

Rajiv also told me that he didn’t think there was a market for Street Enduros in India, and now with your forthcoming KTM 390 Adventure, which he’s manufacturing, it seems he’s changed his mind!

That came from developments in emerging markets like Latin America, as well as in India and Asian markets, but for sure it’s coming, and even Royal Enfield tried to launch such a bike.

Yes, their Himalayan Adventure tourer seems to have been a success.

It’s not a success, although the product from a distance looks good, but for sure it’s – look, an Adventure bike is a bike for riding long distances, and to create such a bike is the most difficult task you can set yourself. It’s very easy to make a Naked bike compared to a long-distance, dual-purpose Street Enduro. We learned that 20 years ago when we started with the 950 Adventure—that taught me a lesson!

So will the future growth of Husqvarna be mainly on-road rather than off-road?

In off-road, I think we have a huge market share, and this market will remain more or less stable at the present size. So the big growth will come from on-road, from street bikes, both small displacement and midsize, and in the midterm, we are also launching the Husqvarna twin-cylinder range as a 2022 model, with the new 890 parallel-twin engine which will be unveiled at EICMA this year.

Stefan Pierer has built KTM into the number-one motorcycle manufacturer in Europe, surpassing even BMW.
Pierer has built KTM into the number-one motorcycle manufacturer in Europe, surpassing even BMW.

So will this be a KTM generated re-run of the 900 Nuda from the BMW era?

I didn’t look back, because as a racer you can’t do that or you’ll start losing—you must always keep looking ahead! No, it’s clear—what we are doing is basically very similar to the car industry. The engine platform is the most expensive part of development, especially in motorcycling. You have to create such platforms then share them among your different brands; otherwise, you’ll run out of money. I’ve learned that from the car industry, where they’re doing it perfectly. Look at VW, Audi, Skoda, and SEAT—it works, it’s a proven strategy. When we took over Husqvarna nobody expected it, I took it over with a 6,000 annual production, and now we have 50,000, so that’s now established as an on-road brand. But it’s also a big help to have two brands in a family which contrast with one another because KTM is a very sharply positioned brand—it’s ready to race, it’s always trying to be in pole position on the starting grid. If you show up with a KTM, everybody’s expecting a good hard motorcycle, and especially for beginners, it’s not that easy. But Husqvarna is more accessible, a little bit softer, a cool-riding brand—I know it sounds crazy, but I think Husqvarna has to go up against Honda, whereas for KTM to me the real serious competitor, who I like very much, by the way, is Yamaha. So it’s as simple as that.

The way the public views the new Husqvarna street bikes is that they seem to either love them or hate their styling. Do you think you need something with a broader appeal to a wider spread of customers?

For sure, it’s a learning curve, because when we announced we’d go on-road with KTM in the end of the ’90s, it took us 10 years to get the right reputation, the right product line and especially the right distribution network for us to be perceived as a serious on-road brand. It won’t take 10 years for Husqvarna—but a couple more years, for sure.

Is the fact that until recently, Husqvarna dealers were heavily off-road-focused an issue?

For sure, you have to attract on-road dealers, and there are a lot of them there, but you must accept that they need a certain product range that they can earn money selling—not just a 400cc bike in a couple of different styles. I think it’s clear, they need bigger-displacement models like a twin-cylinder Husqvarna range, and we’re going to give it to them. Even the 1300 V-twin could maybe have a Husqvarna name on the side in the future—it’s not impossible.

KTM’s headquarters in Mattighofen.
KTM’s headquarters in Mattighofen.

So there could be a Super Duke version of the Husqvarna?

A Husqvarna re-interpretation of the KTM model, yes.

Ducati only made V-twins for the street until last year, and now after going racing with a V4 in MotoGP, they have a V4 street bike range. KTM has a V4 MotoGP racer—will there ever be a V4 KTM street bike?

No. Our V4 is focused entirely on closed course high-end competition, namely MotoGP.

But when you decided to go into MotoGP the second time around in 2016, you told me that the ultimate aim of this program was to develop a customer track-day bike, because you didn’t believe that high-performance superbikes like the RC8 belonged on the street. Are you still going to make an RC16 for the customer?

It’s not out of the question, but I think for the next three years, we will clearly focus on MotoGP. We want to win! That’s the reason why we go racing—it’s not about just taking part, like in the Olympic Games. At the end of the day, we want to win. Keep it simple!

So that’s why you have two MotoGP teams, not just one?

Exactly so—that’s a big help because you’re getting more data. One of the big problems for us at the beginning in MotoGP was lacking data the others had because they had the advantage of a couple of years on us. So at every racetrack, they already had all the data to set the bike up. Our first year, we just collected the data, the second year we made comparisons, and now the third year, we can finally deal with the data.

But for that, don’t you need a really experienced rider? Okay, you’ve got Pol Espargarò, but you’ve released Johann Zarco.

Yes, but fortunately, one of the biggest and best decisions we’ve made was to sign Dani Pedrosa as our test rider, because he was the guy who really did that for Honda, and he’s a truly excellent technical guy! A big portion of the progress you’ve seen us make over the last couple of months is thanks to Dani. Because he has such a strong reputation, if Dani is saying it’s like that, then there’s a certain respect, especially from the young guys. So I am now very happy about the progress of our GP program!

KTM’s engine factory in Munderfing, Austria.
KTM’s engine factory in Munderfing, Austria.

But it’s costing you quite a lot of money, and the kind of budget that you have to spend to compete in MotoGP, let alone be successful, is significant for a relatively small company like KTM against the three Japanese manufacturers.

Since the beginning, we have always spent around 3% of our sales volume on factory racing, in all the different categories from rally to supercross, from motocross to MotoGP.

Can you quantify that for me last year, how much was that altogether?

3% of 1.5 billion euro is 45 million, so that’s the net exposure, and it’s always been like that. But this year for the first time we’re spending a little bit less than the year before, because we’ve done the hard work on MotoGP development, and now we’re doing what I would call fine-tuning, and this is not that costly compared to developing a concept bike and collecting all the right people together. And I think this is the most important thing—to have the right team, the right skilled people. They’re our basis for success. Money—okay, it’s a platform, but even if you put in another 10 million euro, there’s no big acceleration. I think what we did right was to make our own in-house concept bike, created right here close to the factory, with the whole team here at the heart of KTM Racing, and now it’s payback time. But I had a lesson this year—I hoped that if I got a second top rider, it would push us on towards the front, but unfortunately, it didn’t work out because it seems he’s skilled at riding a different type of engine concept. Still, I think Pol did a great job, and he’s our leading guy, with our young gun Miguel [Oliveira] learning very quickly—he’s a very clever rider. And next year, with Brad [Binder] joining this team, they know each other well, and I’m very happy about it.

Why will KTM exit Moto2 next season? Don’t you need to have a feeder class producing the likes of Oliveira and Binder?

Look, we’re still there with Aki [Ajo] doing our team, but without a KTM-designed bike—I think he’ll use Kalex again. But the team will still be named the KTM GP Academy, so our best young riders still get to ride in that class—just that KTM won’t develop the concept bike. This allows us to focus better on MotoGP.

Stefan Pierer plans to make GasGas a household name in motocross while adding trials bikes to the company's off-road lineup.
Pierer plans to make GasGas a household name in motocross while adding trials bikes to the company’s off-road lineup.

Do you have any financial connection with Kalex—have you bought part of the company?

No, Aki already has a good connection with them, and we think it doesn’t make sense to make this any closer; otherwise, all we do is accelerate the costs. I think Kalex is doing a great job, and so is Speed Up—let’s keep them there as well.

But in Moto3, next year you’re going to have a Husqvarna team. Will there also be a KTM factory Moto3 team as well?

For sure. We have to. We’ll be doing like in MotoGP, with two teams and four riders. Peter Őttl is running the Husqvarna team.

Where do you think Honda has taken the lead over you in Moto3? In the engine, in the chassis—what is it that KTM is lacking to turn the tables on them?

I don’t like that situation. It’s because we were focused on MotoGP, so we collected all the good people there, and didn’t have the best people in Moto3—that’s it. That’s another reason for leaving Moto2—we decided, let’s focus on the small class, where we came in almost 10 years ago and won straight away, and while MotoGP is still the priority, you can expect something very special in Moto 3 from next year onwards, trust me. Moto3 is the collecting platform for future talents, Moto2 needs just one highly professional team with Aki to bring those young talents through, and MotoGP is the pinnacle.

Why go Moto3 racing with Husqvarna—to establish it as a street brand?

Yes, to help the public get the perception of Husqvarna as a street brand, Honda is also racing there, so why not Husqvarna?

I understand you’ve sold the rights of a specific KTM engine to your partners in China, CFMoto. What are they going to do with it?

We have transferred our 790 parallel-twin to the joint venture we have with them, so instead of putting in money, we handed over our intellectual property. And based on that engine platform, we helped them source everything in China to create an almost identical engine, but with reduced tolerances and some detail differences, the performance is a little bit less than we have here in Europe.

And this is for only the Chinese market?

It’s mainly for the Chinese market, but also we’re talking with CFMoto about how to distribute their motorcycles outside China. They have some nice products which [KTM designer] Gerald Kiska has played a part in creating, and we’re very satisfied with our cooperation with them. The size of the company fits well with KTM, and we have a good relationship, so now, let’s see what’s coming out. But their 790 engine is already on the test bench, and in a year’s time, they’ll start production of their own 2021 models, with the MT800 or suchlike up first. And we’re already talking internally about which brand we should put in on that bike.

So you would adopt it as a KTM product?

No, not as a KTM, but perhaps as a Husqvarna, or maybe for a third brand, which would then allow us to enter a developing market with a relatively sophisticated, high performance. I didn’t expect such a positive development because to deal with China, you always have to be very careful—but I’m very happy working with the Lai family, which is different from most other typical Chinese entrepreneurs. It’s a real trustworthy family, and I appreciate that.

You spoke about a third brand. Can you reveal what this will be?

Basically, we’ve agreed to acquire a controlling interest in GasGas in Spain, where we’ve set up a new company in which we have the majority stake. We’ve signed an agreement. But what we’re doing with GasGas is clear, because we are still missing the last product in the off-road world, which is a trials bike, and GasGas has been a leading brand in that sector for many, many years. Secondly, for sure, we will follow a similar strategy to Husqvarna, so we will use KTM’s platforms to create a new GasGas Enduro range, and what I can reveal to your readers now is that we will also enter motocross with GasGas, too, in all classes. Then we will have three different brands to beat the Japanese with‑that’s very cool!

Will these bikes have KTM engines?

The engine platform will be KTM, with small modifications like in the car industry—just as we discussed earlier.

Will you keep production of GasGas in Spain, or will you transfer it to KTM in Austria as you did with Husqvarna?

We’ll keep it in Spain, because it’s a real joint venture, not a takeover, and because Spain is a very important motorcycle market. Anyway, you must remember that we already have an R&D hub of almost 50 people in downtown Barcelona, which we plan to enlarge to up to 100 strong. And Girona, where the GasGas factory is, is not that far away, so it’s a perfect fit for us. Anyway, we like visiting Spain!

KTM 790 Dukes fresh off the assembly line in India.
KTM 790 Dukes fresh off the assembly line in India.

Barcelona is the number-one motorcycle city in Spain, but it’s also very electro-centric. Will you continue the production of GasGas electric bikes under their Torrot parent company’s brand?

Yes for sure—I’m convinced that in the next couple of years trials will be the first off-road segment which adopts electric almost 100%, because the electric motor is the perfect fit for that, where mileage is not that big an issue, and we want to be environmentally friendly—it’s perfect. Also, for kids’ bikes, electric is important; for sure, Barcelona will become a strong R&D hub for electro-mobility.

But will there also be electric GasGas street bikes as well as trials bikes?

No, not yet. Maybe there’s a future there for GasGas in on-road, but for the next three years, I’m going to focus on GasGas as a Spanish origin brand in off-road competition, from trials to motocross.

Will there be a GasGas Rally team for the African rallies and the Dakar??

It could happen. Remember we have a very famous Spanish woman rider, Laia Sanz. Hmm, Laia on a GasGas would be very nice!

How does this affect your relationship with Beta, which is, after all, also a major trials brand?

We don’t have any relationship with Beta anymore or its owner. I had a relationship with his late father, but unfortunately, the next generation didn’t work out.

Will there be any GasGas models made in India in the future?

Before you decide that you have to make a strategic decision—is GasGas going on-road? So far, that’s a big question mark—but as the main title in all the famous James Bond movies goes, never say never!

Continued next week.CN

Cycle News interview with KTM President/CEO Stefan Pierer.

 

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Alan Cathcart | European Editor Cathcart has ridden practically every road racer and streetbike ever built and written about them in Cycle News. They don’t call him Sir Alan for nothing.

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