Friday, November 1

KTM & CFMOTO IN JOINT VENTURE


KTM's first presence in China: its stand at CIMAMotor 2013 in Chongqing.  
(Photo: Rhein Wang).

by MICHAEL ESDAILE in Chongqing 

ENCOURAGED by its success in India, Austrian manufacturer KTM-Sportmotorcycle AG has decided to enter the huge Chinese motorcycle market – through a partnership with Hangzhou-based CFMOTO.

The cooperation between the two companies was announced at the 12th International China International Motorcycle Trade Exhibition (CIMAMotor) in Chongqing on October 17.

The deal will see CFMOTO assembling the KTM 200 Duke as well as the 390 Duke at its Hangzhou plant and the two companies will jointly market the Austrian machines through a network of new dealerships, the first two of which have already been opened in Beijing and Shanghai.

CFMOTO and KTMR2R have jointly opened KTM dealerships in China.  Here at the opening of the Beijing outlet are (left to right): Mr Peter Perberschlager (KTM Asian area manager), Mr.Peter Stuhlberger (KTM Business Development manager), Mr.Zhu Xiangyang (General Manager, CFMOTO) and Mr.Lu Fei (Beijing dealer principal).


Commenting on the joint marketing venture, Mr Harald Plöckinger, Member of the Executive Board of KTM AG and KTM-Sportmotorcycle AG, said “going into 2014 we will continuously expand the dealer network in China.  In order to offer a competitive price to customers here, CFMOTO will import the 200 and 390 Duke on a CKD (completely knocked down) basis.”

Mr Plöckinger is responsible for logistics, business development, production and procurement as well as KTM’s business interface with Bajaj Auto, the Indian manufacturer which owns 47 per cent KTM AG and manufactures several KTM models in India.

FIRST PRESENCE IN CHINA
The press conference at CIMAMotor 2013 was the first KTM activity in China and its large stand at CIMAmOTOR 2013 attracted lots of attention from Chinese enthusiasts.

According to KTM’s financial statements, in the first half of 2013, Bajaj Auto sold 3392 more 125cc and 200cc Dukes in India the six months ended June 30 than in the corresponding period in 2012.

“KTM is experiencing greater success in emerging markets than we thought was possible,” said KTM’s Chief Sales Officer Mr Hubert Trunkenpolz at CIMAMotor.

Mr Trunkenppolz is the grandson of KTM founder Hans Trunkenpolz and son of Eric Trunkenpolz.

“Considering the current economic development of China and how the motorcycle market is maturing here, we feel that this move fits our globalisation strategy right now,” he added.

ROAD BIKE SALES UP
Since diversifying back into the street bike market, KTM has steadily increased its sales in that arena.  In fact, in the first six months of 2013, to June 30, its global sales were up almost 10 per cent, to 55,144 units.  Of these, 20,461 were dirt bikes (down 1087 units on 2012) while road bike sales were 27,552 (up 6142 units on 2012).  The other segment showing growth was the sport mini-cycle market where KTM posted a 1956 unit increase in sales.

The Bajaj Pulsar 200SN which uses 
the KTM single cylinder engine
from the 200 Duke.

If KTM does as well in China as it already has in India, then the first half of 2014 should see another boost in KTM sales, with associated benefits for CFMOTO.  In India, as well as making the KTM 125 and 200 Dukes, Bajaj Auto uses the 200cc single cylinder KTM engine in its Pulsar 200NS model, which is fitted with triple spark plugs in the combustion chamber.

Could CFMOTO's 150cc V-Knight be upgraded 
with a KTM engine in the future?

Whether a similar model from CFMOTO will be forthcoming has not been mentioned, but the Chinese manufacturer does have a svelte-looking 150cc water-cooled four-stroke single in its range.  This is the V Knight which uses a twin beam frame.  It is not beyond the realms of possibility that this could be upgraded to a 200 with the KTM engine.

However, first CFMOTO has to dedicate one of its six assembly lines in its Hangzhou factory to assembling the 200 and 390 Dukes.




GOOD ‘FIT’
One of the smaller, and perhaps more flexible players in the motorcycle manufacturing business in China, CFMOTO is seen by KTM to be a good ‘fit.’

“Both CFMOTO and KTM emphasise high-end performance motorcycles that form part of the rider’s lifestyle.  Based on this shared philosophy, KTM and CFMOTO will co-operate to promote the orange brand in China,” said Mr Lai Guogui, the CFMOTO President.

CFMOTO is a joint stock company with external shareholding but the majority stock is held by the Lai family through its ChunFeng Holding Group Co. Ltd., a private holding company founded in 1989.

The group now has eight wholly-owned subsidiary companies.  One of these is Zhejiang CFMOTO Power CO. LTD. (formerly Hangzhou Motorcycles Manufacturing Co. Ltd. founded in 2003 in Yuhang Economic Development Zone, Hangzhou, China).  The bikes it builds are made with the brand name, CFMOTO (ChunFeng Moto) and the factory covers an area of more than 200,000 square metres (50 acres).

CFMOTO's 800cc V-twin ATV engine.
The factory produces 800,000 engines a year, ranging from 125, 150 and 250cc single cylinder and 650cc twin motorcycle engines to 250, 500 and 600cc single cylinder and 800cc V-twin ATV engines – as well as a 1500cc in-line three cylinder marine engine which can be mated to either a stern-drive unit or a water-jet thruster, which CFMOTO also manufactures.


SIMILAR COMPANY STRUCTURES
In terms of company structure, CFMOTO is similar to KTM-Sportmotorcycle AG.

KTM-Sportmotorcycle AG is a 100 per cent owned subsidiary of KTM AG, which is in turn owned 51.69 per cent by CROSS KraftFahrZeug Holding GmbH and 47 per cent by Bajaj Auto. 

CROSS KraftFahrZeug Holding Gmbh is in turn is owned by CROSS Industries AG which on June 14, 2012 came under the indirect control of Pierer GmbH, a company controlled by Stefan Pierer, who is also the CEO of KTM-Sportmotorcycle AG.

LIFESTYLE

Commenting on the KTM-CFMOTO partnership in China, Mr Li Bin, Secretary General of the China Association of Automobile Manufacturers' motorcycle section, said, “the Chinese motorcycle market is going through a structural adjustment and the products on offer are being updated as a result.  The rise of the motorcycle as a lifestyle is upon us, which highlights the potential need for companies such as KTM and CFMOTO.  So personally I have a lot of confidence in this cooperation between CFMOTO and KTM.  One is an internationally famous brand, the other is a local firm that insists on a differentiated development strategy.  I believe this cooperation will be a breath of fresh air in the Chinese motorcycle market and provide Chinese customers a higher quality product and service.”

While the 200 and 390 Duke models assembled in the CFMOTO factory will be the first KTMs available in China, the two companies registered demand for the entire range of Austrian machines at CIMAMotor so fully imported models will be available as well. 



Will Chinese consumers take to the KTM range with the same enthusiasm that Indians have?  KTM and CFMOTO are betting they will.