Bajaj Auto’s Austrian partner KTM AG firms up ASEAN market penetration strategy with all-new CKD assembly plant in the Philippines, set up under a local joint venture.
16 Jun 2017 | 15408 Views | By Amit Panday
Austrian motorcycle major KTM AG has set up an all-new plant in the Philippines under KTM Asia Motorcycle Manufacturing Inc.
KTM Asia Motorcycle Manufacturing Inc is a joint venture partnership between KTM AG, now Europe’s largest bike maker with a roughly 10 percent market share, and Adventure Cycle Philippines ...
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Austrian motorcycle major KTM AG has set up an all-new plant in the Philippines under KTM Asia Motorcycle Manufacturing Inc.
KTM Asia Motorcycle Manufacturing Inc is a joint venture partnership between KTM AG, now Europe’s largest bike maker with a roughly 10 percent market share, and Adventure Cycle Philippines Inc, which is owned by AC Industrial Technology Holdings Inc. The latter is a member company of the Philippines-based Ayala Group, which has diversified interests across real estate, infrastructure, manufacturing, telecom and other sectors.
The all-new facility in Philippines, a key ASEAN market that is heavily dominated by the Japanese two-wheeler manufacturers, will have an annual production capacity of up to 10,000 units.
According to the company, it plans to roll out four key models from the line-up – the entry level KTM 200 Duke, RC 200, 390 Duke and RC 390. An official KTM release says, “The new (Philippines-based plant) site and advanced technology for production will initially start with a 6,000 run to supply the market in the region before moving up to five figures.”
In CY2016, KTM’s (2016) annual report had quoted, “Cooperation with our Philippine partner Ayala Corporation, the KTM and Husqvarna importer in the Philippines, is progressing in a very positive way, such that the planned assembly of models from the KTM Duke and the RC families up to 400cc will start as scheduled in the first quarter of 2017 and open up new distribution opportunities in the ASEAN region.”
The entry-level Duke and RC models planned to be sold in the Philippines market are also currently manufactured by Bajaj Auto at its Chakan plant, near Pune. These four entry-level KTM models have helped Bajaj Auto gain a sizeable foothold in the domestic motorcycle market with bikes in Rs 100,000-plus price range.
Global expansion
The manufacturing expansion to the Philippines is understood to be a part of KTM’s global expansion strategy, which includes the ASEAN region as one of the key two-wheeler markets. Besides catering to the local market, KTM is also eyeing demand for its performance bikes in other Asian markets including China, the world’s largest two-wheeler market.
“It seems like a frequent message from us but the opening of this new plant at Laguna and in the Philippines is another fantastic example of how we are managing to take the KTM brand to new corners of the world and touch fresh markets and riders. It’s a really exciting time of progression for the company,” said KTM AG chief sales officer Hubert Trunkenpolz, who is known for driving KTM’s global expansion plans.
“We want to thank the efforts of KTM Asia Motorcycle Manufacturing Inc. for this latest chapter in our story and it is important for us that we have the right – and best – presence in a part of the world where the motorcycle is such a prominent feature of everyday life. We’re very keen to see how the facility will develop.”
Dino Santos, president and COO, KTM Asia Motorcycle Manufacturing Inc, who spoke about the new facility, said, “This investment is part of our belief that manufacturing should be a key driver of our country’s growth going forward. It provides jobs, supply chain opportunities, and helps put the country in the map as a center for innovation and industrialisation.”
According to the company, its ASEAN expansion strategy entails widening the dealer network up to 30 dealerships including sales and aftersales support in 2017.
KTM and the Indonesian market
In April last year, KTM reached an agreement with Bajaj Auto, which has a 48 percent stake in the Austrian bike maker, to foray into the Indonesian market through setting up a distribution channel to be managed by the Indian partner. This arrangement also gave Bajaj Auto an all-new market to sell KTM motorcycles manufactured in its home turf. The arrangement, however, is restricted till sub-400cc motorcycles.
“The decision to emphasise our sales activities in the South-East Asian distribution network is the logical next step in our long-term-oriented strategy. It supports our presence in the price sensitive Indonesian market by using synergies from our strong alliance with Bajaj,” Trunkenpolz was quoted then.
It is understood that the company has fared well in Indonesia in terms of sales of KTM bikes in the past 12 months.