KTm to raise US prices by 14%

[atadaskew]

Bad timing.  That would mean if it was $15K, they're now gonna ask $17,100.

As reported by motorcycle-usa.com
http://www.motorcycle-usa.com/285/2747/Motorcycle-Article/Euro-Gossip-March-2009.aspx

KTM has announced it has increased its global sales by 7% in the last year. However, in anticipation of a worsening market it is cutting production by 10% for the forthcoming year. These actions are not enough though to stop it announcing a 14% price increase across all its range.

[xbud]

 They might change their tune when they see sales drop by 10% or more this year

[R Doug]

So, does this increase the value of my bike if selling as used?    

[Cricket1]

So, does this increase the value of my bike if selling as used?    

Nope, it just helps to decrease their total sales.

[R Doug]

 

[Fav]

So, does this increase the value of my bike if selling as used?    

Helped me get $742 shipped for Akrapovic Slash cut CF slip-ons. I paid $800 shipped a year ago. Same site I bought them from has them for $980 now. FYI Akrapovic raised their prices too. People are still buying their pipes.

KTM might not be so lucky.....time will tell.  

[JamesG]

Total BS since the USD has gotten stronger vs. the Euro prices should be going DOWN. Energy and materials have gone down in cost.
bye bye KTM.

[desert_rider]

Keeps Taking Money

[atadaskew]

Total BS since the USD has gotten stronger vs. the Euro prices should be going DOWN. Energy and materials have gone down in cost.
bye bye KTM.

No kidding.  Same time last year the Euro bought $1.55.  Now it is about $1.30.  Prices should be coming down.
Add to the fact that their sales have dropped, they INCREASE pricing?
Good luck with that.

[R Doug]

Perhaps there's a gross misunderstanding of the basic concept of supply and demand.  As noted above, Akra did the same thing with their exhausts this year.  Lucky for me, I got a nice discount from my retailer, but Arkapoic did increase prices this year too.  There's some weird trend with these European companies.  

[R.Markus]

They will still be worth every penny, unlike that jap crap.

[Cricket1]

Perhaps there's a gross misunderstanding of the basic concept of supply and demand.  As noted above, Akra did the same thing with their exhausts this year.  Lucky for me, I got a nice discount from my retailer, but Arkapoic did increase prices this year too.  There's some weird trend with these European companies. 

Well yeah, they are European, so have a skewed view of free market economics. 

[Mr Sunshine]

Not sure why people think this is weird.  The Euro is down from the Dollar so they need to balance the cost somehow.

[DNA]

I was looking at a new 08 990A in WVA last weekend - they are offering it for ~ $11,500 - including a >$1800 package of extras with tires, Zumo 550 + mount, the KTM rally school, and a bunch of other cool stuff.  It almost came home with me.  Still might unless one of you fine folk jump on it.

It is an awesome deal - if one has ~$11K around.

[atadaskew]

Not sure why people think this is weird.  The Euro is down from the Dollar so they need to balance the cost somehow.

You have it the wrong way round.
Simple foreign exchange.
1 EU = $1.5
Therefore 10,000 EU = $15,000.

Now the $ is stronger so it buys MORE EU.
Currently 1 EU= $1.3
Therefore a 10,000 EU bike = $13,000

So as the Euro is weaker, the bikes should be cheaper in $ terms.  Not more expensive.

Or to put it in even simpler terms, a weaker currency is better for EXPORTS as goods EXPORTED will be cheaper for the importing nation.
KTMs are exported from the weakening currency, the Euro, to the strengthening currency, the $.

[AV8OR]

I was looking at a new 08 990A in WVA last weekend - they are offering it for ~ $11,500 - including a >$1800 package of extras with tires, Zumo 550 + mount, the KTM rally school, and a bunch of other cool stuff.  It almost came home with me.  Still might unless one of you fine folk jump on it.

It is an awesome deal - if one has ~$11K around.

Where in WVA and what dealer?

[DFH]

You have it the wrong way round.
Simple foreign exchange.
1 EU = $1.5
Therefore 10,000 EU = $15,000.

Now the $ is stronger so it buys MORE EU.
Currently 1 EU= $1.3
Therefore a 10,000 EU bike = $13,000

So as the Euro is weaker, the bikes should be cheaper in $ terms.  Not more expensive.

Or to put it in even simpler terms, a weaker currency is better for EXPORTS as goods EXPORTED will be cheaper for the importing nation.
KTMs are exported from the weakening currency, the Euro, to the strengthening currency, the $.

Its the old security guard syndrome... a little knowledge is dangerous.

Firstly if the Euro is weakening against the world basket of currencies then the cost of building the bikes in Euro's will increase- especially if part of KTM's finance was raised in US $. If the cost per unit rises higher than the differential change between the bikes native currency and your currency then in fact the favourable exchange rates just hide the true extent of the unit cost rise.

Secondly if KTM anticipate a decline in production of 10%, their standing costs remain the same but with less bikes to spread those costs over then unit cost will rise by at least 10%. KTM are not alone in cutting production... have a look at Yamaha news in the same quoted article

Thirdly the retail cost of new bikes in the US against the world average has been held artificially low for many years, aided no doubt by the often unrealised promise of high volumes. With the current global financial crisis (precipitated by the mindlessly unregulated US financial system chocking on its own vomit) the idea that that the US market is high volume heaven is having a rest...

KTM will not be a lone voice in the wilderness... expect similar price rises from all bike importers. If you can afford it, buy new now. Motorcyclists will never get so much for so little ever again.

DFH

[DNA]

Where in WVA and what dealer?

Good folks - we have bought a bunch of bikes from them (1 last week end) - an 2 of Pops perfectly restored huskies are hanging from their ceiling.

RIDERSVILLE CYCLE
75 GOODTIMES DRIVE
25411 BERKELEY SPRINGS (WV)

[DNA]

Its the old security guard syndrome... a little knowledge is dangerous.

Firstly if the Euro is weakening against the world basket of currencies then the cost of building the bikes in Euro's will increase- especially if part of KTM's finance was raised in US $. If the cost per unit rises higher than the differential change between the bikes native currency and your currency then in fact the favourable exchange rates just hide the true extent of the unit cost rise.

Secondly if KTM anticipate a decline in production of 10%, their standing costs remain the same but with less bikes to spread those costs over then unit cost will rise by at least 10%. KTM are not alone in cutting production... have a look at Yamaha news in the same quoted article

Thirdly the retail cost of new bikes in the US against the world average has been held artificially low for many years, aided no doubt by the often unrealised promise of high volumes. With the current global financial crisis (precipitated by the mindlessly unregulated US financial system chocking on its own vomit) the idea that that the US market is high volume heaven is having a rest...

KTM will not be a lone voice in the wilderness... expect similar price rises from all bike importers. If you can afford it, buy new now. Motorcyclists will never get so much for so little ever again.

DFH

Not to disagree with you completely, but I do business in over 30 countries and the vast majority of the currency and exchange issues I have are with customers in Oz.  The consumers there seem to be inordinately sensitized to this issue to a degree not reflected in any other country. Regarding our mangled financial institutions, it is possible your banks could seize this opportunity to become the next world financial power - if it were possible for any foreign depositor to every get their money out again intact.

That said - a stronger $ means imported products into the US will be less expensive in relative terms for us to buy - thus increasing the demand for imports and potentially hurting out export business.

I believe your second point is right on though - the lowered demand will cause a raise in price especially as the fixed costs will not move, and variable costs are not that much on these type of goods. The lower demand will cause the majority of the raise in price.

As for point 3, I believe our prices are not subsidized, our volumes are high and economies of scale (combined with a mostly favorable import tariff system today).  Companies that do not make money here do not stay doing business here for long.  

As this administration really gets rolling with the Socialist States of America - look for more protectionism entering our marketplaces.  That will destroy the motorcycle industry in the USA.  Even Buell has lots of imported parts - so watch out and buy now, and a spare if you can.

[Cricket1]

 
As this administration really gets rolling with the Socialist States of America - look for more protectionism entering our marketplaces.  That will destroy the motorcycle industry in the USA.  Even Buell has lots of imported parts - so watch out and buy now, and a spare if you can.

DNA;

I think you are exactly right on all of your points.

Tsk, tsk on that last one about the current administration!

Got your flame suit on??  The Obama disciples will be along shortly to chastise you. 

[DNA]

Got your flame suit on??  The Obama disciples will be along shortly to chastise you. 

  I actually expect them to raise a cheer!  They knew what they wanted and went out and executed a great plan to get it.  Now they can truly live their dreams.  The celebrations continue in all the unemployment offices.

As for KTM - more volume will help

[DFH]

Not to disagree with you completely, but I do business in over 30 countries and the vast majority of the currency and exchange issues I have are with customers in Oz.  The consumers there seem to be inordinately sensitized to this issue to a degree not reflected in any other country.

I agree totally. Here is a personal example why.

In the last year I bought some professional camera gear from the US. When I ordered the Au$ was @ roughly .79 US$. By the time it was shipped the Au$ was @ parity with the US$ so I was a happy chappie... except that they did not ship the central & most expensive part as they were willing to take orders for a product they could not yet build . When it was finally shipped the Au$ was @ .65US$ and I got shafted again because import duty is rated on the landed cost on the day of arrival, not the day of ordering

I run a small business so I am very sensitive to the currency issue.

Regarding our mangled financial institutions, it is possible your banks could seize this opportunity to become the next world financial power - if it were possible for any foreign depositor to every get their money out again intact.

Trust be it does not come easy to defend Banks of any ilk or nationality ( I should be doing my accounts now so I have just been cursing my interest & charges for the month), but firstly we have an open banking market so getting your money out is no problem - unlike trying to get money back from US banks @ the moment- and secondly world domination is a peculiarly American desire. I couldn't give a stuff who runs the system as long as the job is done competently, which has obviously not been the case for the last 15 to 20 years.....

That said - a stronger $ means imported products into the US will be less expensive in relative terms for us to buy - thus increasing the demand for imports and potentially hurting out export business.

Demand is a more complex animal than that. You can lower the landed price all you want, but if the consumer cannot or is unwilling to find the money to pay then its academic.

As for point 3, I believe our prices are not subsidized, our volumes are high and economies of scale (combined with a mostly favorable import tariff system today).  Companies that do not make money here do not stay doing business here for long.  

That is simply not true. Compare the US prices for the big four supersport 600's & 1000's with prices in the worlds largest market, the EU. Yes the real on the road cost of a bike is often disguised in the US with the proliferation of state & local taxes. And yes some EU countries like Norway have huge import taxes but at the wholesale level the big selling Japanese bikes are and have always been significantly cheaper. You may may not believe the world markets subsidise your prices, but they do.... read this sidebar from Motorcycle.com review of the Triumph Street Triple R.

Quit yer blubberin’, mate!

If you’re a little chafed by the R’s U.S. retail being identical to that of the Daytona, a bike with more bodywork (at a minimum), understand that the R is one of, if not the first, ’09 model(s) to be unveiled in full by Triumph, so we can expect that the Daytona will likely go up in 2009. Also note that late spring of this year saw a price increase of $300 for the standard Street, a reflection of rising production costs due to a rise in raw materials costs. According to Warburton, Triumph suffered about a 7% increase in overall production costs, but he quickly explained that only a small percentage of that rise gets passed on to the customer in terms of bike prices.

I got something of an education on bike prices in terms of U.S. versus Europe figures when I chatted with some Triumph staff over a hearty meal of lamb shank and a pint of OKells Bitter at the famous Creg Ny Baa. It seems my lamenting these past few months of the closeness in prices between the Street models and the Daytona from which those machines are derived is justified whining, or not, depending on how you look at it. I told the Triumph lads how hard it was for me to swallow the cost of a Street Triple 675 compared to the Daytona (only $700 less), and in some respects, I think I’m right to whinge, especially when considering all the extra bodywork, windscreen, better brakes and suspenders, etc on the Daytona.

On the other hand, consider this: They informed me that price gap is roughly three grand less (their best guess at the time over dinner) for them because the Daytona, and all supersports for that matter, are substantially costlier than they are in the U.S. A 2008 Street Triple 675 runs 5,720 GBP, or about $10,300. A 2008 Daytona 675 in the U.K. retails at 7,320 GBP “out the door,” or around $13K U.S. Oi!

When I told them that the Daytona 675, at $8999, was the least expensive of the major brand middleweights, they nearly choked with envy on their lamb.

Cheers DFH
 

[DNA]

Very interesting.

How about we both get a quote for a common bike - Speed trip if you like - and see what it costs to get it home in the garage and then convert it to a common commodity from our local currency - say barrels of oil, bars of silver or bushels of wheet.

I expect there will be transportation and local tax issues, but it would be interesting ot see what they are around the world.

if, as you say, there is a significant difference - significantly greater than the transportation and importation costs, then we have a classic arbitrage opportunity.

I suspect there is not that much difference in the end - that it is mostly shipping (you got it bad on that front as my 6 boxes of product on dry ice every week can demonstrate), taxes (VAT?) and protectionist practices by local governments.  

You cannot buy a Fiat or Peugeot new any more in the USA.  Why? Dunno - I guess they found it unprofitable.

As for Bankers - I think as good colonists, we should both just blame the Brits for setting up the systems in the first place and and agree they are one (small) step above lawyers and politicians.

[DFH]

Very interesting.

How about we both get a quote for a common bike - Speed trip if you like - and see what it costs to get it home in the garage and then convert it to a common commodity from our local currency - say barrels of oil, bars of silver or bushels of wheet.

I expect there will be transportation and local tax issues, but it would be interesting ot see what they are around the world.

Yes finding a common measure of value can be tough. This one has both merit & humour http://en.wikipedia.org/wiki/Big_Mac_Index & the iPod index is in the same vein. Barrels of oil is not so useful, our oil price may expressed in US$ but its priced on the Singapore market so has different price than yours.

As a guide using the price of the 2009 Triumph Daytona 675 in my neck of the woods & comparing it to the prices listed in the quote I pasted previously.

2009 Daytona 675 Australia RRP = Au$14890.oo + dealer del + statutory taxes & charges= $16490 ride away cost.

In US$ that is 10,889. In Sterling that is 7,750. The prices in the quoted in my last post are are 6 months old & for the '08 bike but WTF

The bottom line is that the a British made bike is cheaper in Oz than the UK by a small margin, & and significantly in the USA than either here or in the UK.

As for Bankers - I think as good colonists, we should both just blame the Brits for setting up the systems in the first place and and agree they are one (small) step above lawyers and politicians.

Personally the tail has been wagging the dog for too long... the financial system has completely forgotten it exists at the acquiescence of society, not the other way around.

DFH
 



 
 

[Shaggy-R6]

You've got to keep in mind that motorcycles prices (among other items) in the USA are very low when compared globally.  Compare USA price and Canadian prices... the USA has the lower cost.  I've heard the reasoning behind this is due to the sales volume in the USA.  So, if KTM noticed that USA sales were on the decline, then why not increase sell prices to the level that everyone else is paying and take a hit when the economy is bad anyway.  Then, when the economy is back on track, there pricing is more in line with the global pricing structure and they will be making more $$.

[DNA]

As a guide using the price of the 2009 Triumph Daytona 675 in my neck of the woods & comparing it to the prices listed in the quote I pasted previously.

2009 Daytona 675 Australia RRP = Au$14890.oo + dealer del + statutory taxes & charges= $16490 ride away cost.

In US$ that is 10,889. In Sterling that is 7,750. The prices in the quoted in my last post are are 6 months old & for the '08 bike but WTF

The bottom line is that the a British made bike is cheaper in Oz than the UK by a small margin, & and significantly in the USA than either here or in the UK.

http://www.motorcycle.com/specs/triumph/sport/2009/daytona/675.html
The MSRP out the door price here is for an 09 675:
 MSRP= $9,799.00 + $500 set up *1.039% tax= $10,700 + ~$75 in various other crappy fees.

Call it $10.8K and you will be close.

My point is there is not a very big difference.  $10.9 vs 10.8?  +/-$100 depending on the SD of the exchange rate of that particular day?

On the right day you will be less expensive in $ terms.  In Big macs - I's guess there is not much difference either.  In the end, I find the true differences to be negligible and depend on day to day variation, but people like to think we get a better deal.  

I heard there was a different way of doing insurance as well.  Some vehicles have insurance included in their costs or registration?  If you can elaborate please do.  It would cost me somewhere between $500-$1000/ year to insure this bike - which would be extra.

I strongly believe in this global economy, the vast majority of pricing discrepancies in various countries is due to local tax and safety policies, and transportation costs.  

It must be so, otherwise why does every Canadian not buy a bike in the US and ride it over? Importation tax(es) and regulations will make that money machine not turn.

If there is a profitable way to sell US bikes in CA - let me know - I can bring a truck load over tomorrow from the show room floors.

[DFH]

http://www.motorcycle.com/specs/triumph/sport/2009/daytona/675.html
The MSRP out the door price here is for an 09 675:
 MSRP= $9,799.00 + $500 set up *1.039% tax= $10,700 + ~$75 in various other crappy fees.

Call it $10.8K and you will be close.

My point is there is not a very big difference.  $10.9 vs 10.8?  +/-$100 depending on the SD of the exchange rate of that particular day?

On the right day you will be less expensive in $ terms.  In Big macs - I's guess there is not much difference either.  In the end, I find the true differences to be negligible and depend on day to day variation, but people like to think we get a better deal.  

I heard there was a different way of doing insurance as well.  Some vehicles have insurance included in their costs or registration?  If you can elaborate please do.  It would cost me somewhere between $500-$1000/ year to insure this bike - which would be extra.

I'm bit confused because the Motorcycle-USA.com article quoted $8999. That's a difference of US$800 before tax.

Not that I have any doubt on the accuracy of your quote. It may well point to the fact that Triumph has raised its US prices in the the 2009 season without telling anyone... so that's a plus mark for KTM for being upfront with its pricing policy. So in a nod to the original subject of the thread I still 'recon folks have been unnecessarily vicious regarding KTMs announcement

What is interesting is that the 10.8 to 10.9 US$ difference between our Oz & US out the door prices is minimal, but according to Motorcycle-USA.com the price 6 months ago for the  UK market 2008 model D675 was US$3000 more than our 2009 model US or Oz prices.... that's a lot. BTW the UK is one of the cheaper EU markets. The US market is subsidised by the EU market...and it seems that we here in Oz share that largess.  

Regarding insurance the Australian OTR price includes compulsory third-party-personal insurance. That is if your vehicle injures or kills someone then all their medical is covered but no property cover is included. All our states mandate third part personal as a condition of annual registration. Some States do this by a monoply run by a state owned insurance company, some allow free market competition. Having moved from a "free market" state to a "monoply" state I can tell you that my third party personal insurance cost reduced by 40% for my bikes. No surprises there

Third party property (as the name implies this covers damage my vehicle caused to other peoples property) is about $150. Full comprehensive is widely variable depending on personal circumstances & is mandatory for bikes bought on credit.

Hope this helps

DFH    
  

[Shaggy-R6]

I strongly believe in this global economy, the vast majority of pricing discrepancies in various countries is due to local tax and safety policies, and transportation costs.  

It must be so, otherwise why does every Canadian not buy a bike in the US and ride it over? Importation tax(es) and regulations will make that money machine not turn.

If there is a profitable way to sell US bikes in CA - let me know - I can bring a truck load over tomorrow from the show room floors.

Actually, it IS profitable, depending on which bike.  Some are closer in price than others.  BMW and HD's are pretty close in price once you factor in exchange.  However, all Japanese bikes are thousands cheaper in the USA than in Canada.  The main reason we don't buy NEW bikes from the US and bring them over is because the warranty becomes null and void.  However, it is very advantageous to buy USED bikes from the USA and bring them over.  A buddy of mine has purchased three USA bikes (all ZX-10's) and imported them with no problem and minimal additional cost.