PowerSports Business

August 14, 2017

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MOTORCYCLE KTM Bike Industries launches in North America BY LIZ KEENER SENIOR EDITOR Powersports dealers are used to most of the vehicles in their inventory coming with the growl of a gas-powered engine, but KTM Bike Industries North America is hoping to add a quieter line of vehicles in the mix — pedal- and electric-powered bicycles. KTM Bike Industries, which shares the same origins as the motorcycle brand, has now entered the North American market more than 50 years after its first production bikes hit the market in Europe. And it's hoping to grow in the U.S. and Canada by partnering with power- sports dealers. The brand is launching in North Amer- ica with about 40 bicycles that span across a broad range, including: mountain, race, fat tire, cyclecross, commuter, kids and e-bikes. KTM BIKE INDUSTRIES KTM Bike Industries and the KTM motorcycle brand were launched as the same company. In 1964, the company actually began building bicy- cles first before adding motorcycles to its lineup. For decades the two companies worked as one, but in the early 2000s, the two separated. While they're now two different entities, they still share the same facilities in Austria. "In that same tradition and that same qual- ity and everything that motorsports is known for, it's the same there with the cycling side. And we're in the process of bringing it here to North America and presenting it to the North American cycling market, as well as that huge, incredibly loyal fan base in motorsports," said Trevor DeRuise, CEO of KTM Bike Industries North America. While KTM's bikes have been around for more than half a century, they're just now coming to North America because, DeRuise explained, they needed to be refined for the North American market. "For the last 10 years, KTM Bike Industries in Austria has really been making an effort to refine and develop the performance side of the bike because that is what the American market is based around. They have a great line of com- muters and in-town bikes, things like that, but they see that in order to be successful in North America, these performance bikes need to be there, the racing bikes need to be there because that's what our market is begging for, and over the last 10 years, they've made incredible strides," he said. KTM has seen marked success in Euro- pean and world racing series, and at the 2016 Olympics, KTM rider Jhonnatan Botero earned a fifth-place finish in a cross-country mountain bike race. Now ready to embrace the North American market, KTM Bike Industries has opened a North American office in Westlake Village, Cal- ifornia, just north of Los Angeles. The company also has a distribution warehouse in Florida. "We're in the process right now of really building out and developing our team here as far as our sales guys, our marketing guys," DeRuise said. "Everything from sales to mar- keting to web development, everything takes place here under our roof in Westlake." DeRuise has led KTM Bike Industries North America since November 2015. He has raced bicycles professionally for KTM Austria since 2013. POWERSPORTS DEALERS SOUGHT As KTM Bike Industries makes its first push in North America, the company is looking to KTM dealers to sell the bikes, as they're familiar with the brand's heritage and loyal fans. "The number one selling point with these bicycles is that quality and the same charac- teristics that everybody loves about motor- sports, and nobody understands that better than somebody that is currently selling KTM motorcycles," DeRuise explained. To that end, KTM Bikes has hired Mike Shell to develop a powersports program. Shell, national powersports manager, has been work- ing in the powersports industry for three decades, from the dealership level and beyond. Shell and DeRuise spent mid-July in some of the largest volume powersports dealerships in Southern California, talking about the KTM bikes, and they were pleased with the reception the bikes received. "Everybody had an ear-to-ear smile, when they saw the technology on the bikes," Shell reported. "I brought about 10 models, and the questions and the smiles and the 'yes, yes, yesses' were everywhere. It was just a great experience to see everybody recognize the bike as exactly the same concept and idealism as the motorsports side." Through research and dealership visits, Shell and DeRuise have found that a majority of the staff at many powersports dealerships either currently ride bicycles or have so in the past. "The crossover is incredible between cycling and motorsports. We all kind of know that from an individual standpoint. I come from motorsports, and I've always enjoyed rid- ing bicycles," DeRuise said. He added, "What we've seen just going into some of these key players here in Southern California is the staff at these big motorcycle dealerships, they're all cyclists, and when you bring a bicycle in there, their inner cyclist comes out." That enthusiasm is what makes the KTM Bikes team confident in selling its lineup through powersports dealerships. "The salespeople, the employees, they sell things that they like, and when everybody likes it, and they've got an ear-to-ear smile, that transfers down to the customers that walk through the door, and that transfers into more sales," Shell said. "I think this new revenue source for these powersports dealers is just a win-win for the whole industry." What KTM Bikes is hoping to bring to pow- ersports dealers is a new revenue stream and the opportunity to attract different customers into their stores. "The demographics on the KTM bicycle buyer, the household income is real high, and the education's real high, which gives them good qualifications to make a sale for the sales team. It's going to drive in a new, fresh, diversi- fied customer," Shell said. Bicycle customer demographics are about 51 percent male and 49 percent female with $150,000 in household income, Shell reports. And the $6 billion bicycle industry is growing at 50 percent per year. "Even more than just buying a bicycle from the shops, they're bringing in these new people that ultimately could buy a motorcycle because they cross over. That KTM buyer is a cyclist; they're the same demographic," DeRuise said. POWERSPORTS PROGRAM The powersports dealer program offered by KTM Bike Industries is new. Five dealers signed on previously, but KTM Bikes has since added more opportunities and a more robust package for dealers. Since this new program launched in July, one dealer has signed on, and Shell is confident more will soon follow. KTM Bike Industries offers three packages for dealers to get started with the line; the programs began at a $20,000 investment in bicycles, parts and apparel. An additional discount and the number of KTM bicycle stands increases at each level, and each offers free shipping. KTM Bikes also recently introduced a revolving credit program from Synchrony Financial, a closed-in program from Freedom- Road Financial and floorplan financing from Wells Fargo Commercial Distribution Finance. The margins on the bikes, Shell reported, are double that of a powersports vehicle, and the bikes take up less space on a showroom floor. KTM Bikes is also offering factory sup- port for sales, service and warranty, and KTM dealers can now go take a bike 28 • August 14, 2017 • Powersports Business www.PowersportsBusiness.com See KTM Bikes, Page 32 Bicycles from a variety of segments, from kids' bikes to e-bikes to mountain bikes and more, can be found in the KTM Bikes lineup. Mike Shell, left, national powersports manager, and Trevor DeRuise, CEO, of KTM Bike Industries North America, are hoping to bring bicycles into powersports dealerships.

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