Ktm Case Report

Introduction

In the past couple years we have been seeing a substantial decreases in the growth of our sales numbers. These decreases expand over all product lines and most predominately the off-road motorcycle products. Looking for new growth opportunities we are regarding entering the ATV industry, this report outlines three alternative options to entering the ATV market.

Issues and Problem Identification

The main concern for KTM at this point is a slowdown of growth for our whole product line. (Exhibit I) The slowdown in sales are due to the European market become relatively stagnant, and the over saturation of our main product the off-road motorcycles in Western Europe. High costs of transport and fluctuations in currency exchange have made sales to the U.S. a risky and costly.

Analysis of Issues

Slowdown in Product Line Growth

In the last four years all product lines have experienced less and less growth in both European and North American Markets. The greatest source of revenue for KTM is its off-road line of motorcycles. Between 2001 and 2002 the off-road motorcycle sales increased by 24% between 2003 and 2004 the growth rate for sales had decreased to 3% going from sales of €253.2 million to €261.3 million. The decrease in growth numbers is caused by market saturation in off-road motorcycles for Western Europe.

The off-road motorcycle product line is not the only segment to see decreases in sales growth, but all segments report a slowdown in growth. (Exhibit I) There has been a slowdown in sales for all products sold to Europe. From 2001 to 2002 sales in Europe grew 34%. Between 2003 and 2004 that number had decreased to only 8% sales growth in Europe. (Exhibit II)

Decrease in North American Sales

In the past couple of years KTM has been experiencing decreasing sales numbers in North America. In fact sales in North America for KTM had decreased by 8% (exhibit II). This is a significant issue for KTM because the United States is the largest...