KTM: Ready to Race toward market share growth

September 6, 2016 • Volume 9, Number 12 • $3.99
INSPIRING SUCCESS THROUGH MARKET INTELLIGENCE
www.powersportsbusiness.com
PSB: FOCUS SNOW
SEE PAGE 16
Yamaha rides fresh wave
Good Vibes
Arctiva unveils its newest Vibe apparel line.
SEE PAGE 17
50 years
of snow
PSB sister publication,
Snow Goer,
celebrates 50 years
of snowmobiling
and its history.
SEE PAGE 26
READ THE STORY ON PAGE 12.
KTM: Ready to Race toward market share growth
Austrian brand has taken
share each year since 2009
BY LIZ KEENER
MANAGING EDITOR
Maverick debuts
Can-Am Maverick X3 revealed at annual BRP
dealer meeting in Orlando, Fla.
SEE PAGE 28
In just eight years, KTM has seen its U.S. market
share more than triple. From 1995-2009, KTM
had seen it share grow from 1.5 to 2.1 percent of
the motorcycle market. Fast forward to 2016, and
that U.S. motorcycle market share number has
grown to 6.5 percent midway through 2016.
But none of that success came easy. KTM
North America staff worked hard to obtain that
market share increase, and they’re continue to
grind in order to push that number higher.
KTM North America president Jon-Erik
Burleson talks to dealers at the KTM
dealer meeting in June in Montreal.
READY TO RACE
NEWS:
Vandiver joins Hisun. . . . . . . . . . . . . . . . . . . PAGE 3
FINANCE:
Arctic Cat sees Q1 loss . . . . . . . . . . . . . . . . PAGE 8
CYCLE:
Guest Column: Statistically Speaking . . . . PAGE 39
POWER 50:
Southern Honda stays engaged . . . . . . . . . PAGE 46
The work to improve market share began in
earnest in 2008. When the U.S. market crashed,
and KTM was only taking about 1.5 percent of
the market share, KTM North America president
Jon-Erik Burleson knew a plan needed to be
developed to increase that share and, therefore,
sales for the brand.
After KTM North America moved to its current Murrieta, California, headquarters, Burleson and others at the company mapped out the
first Ready to Race plan. “Ready to Race” has
been the company’s public motto since then, but
it’s also the behind-the-scenes strategic plan for
increasing share.
“Since that time, when we really focused on
our plan for success — it starts with the brand
— that’s when we started to see the uptick in our
market share results,” Burleson told Powersports
Business during a recent visit to KTM North
America headquarters.
Market share improvements started in 2009,
and they continued to grow. As market share
has increased, sales have also improved. May
represented the 66th month in a row that KTM
reported month-over-month sales growth.
And the OEM has no plans to slow down, with
the aim to double its current market share by 2021.
“Our goal is to grow with market share,”
Burleson explained. “We try and learn from the
lessons of racing. One of the things you’ll hear a
lot is, ‘Focus on what you can control.’ In racing,
if you look at a rut and say, ‘Don’t go in that rut,’
well, probably you’re going to end up in that rut,
so you have to look forward to where you want to
go, as opposed to the negative, which is focusing
on where you don’t want to go. So we’ve really
tried hard to focus on where we want to go.”
He added, “What we can control is what
we do, how we approach the business. We can
control how we approach the industry, how we
approach our dealers, and that focus tells us that
See KTM, Page 6
HOTNEWS
Veracka family adds
6th dealership to group
The Veracka family has purchased Harley-Davidson of Palm Beach in Florida.
The acquisition gives the Veracka family
ownership of five of the top 10 performing Harley-Davidson stores in the U.S.,
p01x07-16PSB12-News.indd 1
according to the new owners.
While there are many changes
ahead, including the new name, Palm
Beach Harley-Davidson, the legacy
of offering great bikes and great dealership events will remain, the new
owners report.
“Harley-Davidson of Palm Beach
owner Mike Lehman has done a great
job for many years building both a
community of Harley lovers as well as
a great business that we will continue
to build into the future for many years
to come. Our company was founded
by riders, built for riders, and we are
See Hot News, Page 3
8/24/16 9:45 AM
34 • September 6, 2016 • Powersports Business
MOTORCYCLE
www.PowersportsBusiness.com
TCX Boots eyes growth potential in U.S.
Dealers can capitalize
on low initial buy-in,
40 percent margins
TCX Boots is making a strong push in the
U.S. motorcycle marketplace, battling brands
such as Alpinestars and Sidi for boot share. In
fact, TCX boasts the top-selling boot lineup
in Europe and is aiming to take more share
in the U.S.
TCX’s approach took a major step forward
during the 2016 Monster Energy AMA Supercross season, when 450 class racer Broc Tickle
of RCH/Soaring Eagle/Jimmy John’s/Suzuki
Factory Racing opted to wear the all-new TCX
COMP EVO MICHELIN product.
Powersports Business editor in chief Dave
McMahon got to know more about the TCX
expansion in the U.S. via a Q&A with Marco
Poloni, head of research and development for
the Italian manufacturer, and Randy George,
vice president of sales.
PSB: For folks like me, who don’t know the
history of TCX, tell us about its origins.
MARCO POLONI: We have always been in
the boot and footwear manufacturing business.
In 1989, we founded Jolly Scarpe, a company
that produced safety products (military, fire,
etc.), and this is where we gained technical
specifications based on these very technical
boots and shoes. Immediately after that, we
began cooperating with major OE brands, like
BMW, Dainese, Polo and Hein Gericke.
In 1999, after gaining so much experience
working with OEs, we decided to create our
own line and introduce our first products
at INTERMOT. It was a new brand called
OXTAR featuring a completely new technology, TCS or Torsion Control System. This
was created to avoid any ankle twisting, and
from there, we started to say that OXTAR was
“Focused On Boots,” and our goal from that
point forward was to provide maximum safety
for the consumer.
Between 2001 and 2003, we created our
distribution network. Very quickly, I must
say, because in only a few years we were
already distributed in more than 30 countries, and that really helped us to establish the
OXTAR brand name.
In 2002, we had an opportunity to capture
the GORE-TEX license. As everybody knows,
to get the GORE-TEX license is really very difficult. You need to have a very high standard of
quality and production, which continues to be
our main mission now.
PSB: What does your manufacturing process
“look like” from an overall view?
MP: For more than 20 years we’ve had our
TCX partnered with Michelin to create soles for some
of its boots.
p12x47-16PSB12-PWC-Cycle-Power50-Mkpl.indd 34
own production in Romania. This allows us to
control every phase of our production process.
First, we check all of the raw materials here
at our headquarters facility in Montebelluna,
Italy, before sending those raw materials to
Romania. They produce the boots there, perform the first quality control and then return
the finished goods here. When the boots arrive
Marco Poloni, head of
research and development for TCX Boots, is
seen in the RCH/Soaring
Eagle/Jimmy John’s/
Suzuki Factory Racing
paddock.
back to Montebelluna, we do final quality control to complete the process.
Everything (all products) is designed and
developed here in Italy. We have an R&D
department and a stitching department for
producing all of the prototypes. All of the new
products for the TCX riders — we make a
tailor-made boots for them here.
as we conducted several market studies, and no
one was confusing the name. We were probably growing too fast, so Alpinestars in a certain
way tried to slow our path to success. Anyhow,
this happened some years ago, so let’s just say
that we took this opportunity to face a new
challenge, innovating in terms of products and
rebranding the company name to TCX.
PSB: How has TCX fared as a business in
PSB: I have to say that TCX rolls off the
tongue a little better than OXTAR. Why TCX?
the last few years? I know there was a time in
the not-too-distant past when you had to overcome some hurdles.
MP: In 2006, the company was sold by
the Zanatta family (who originally founded
OXTAR and Jolly Scarpe) to an investment
group from Milan called AKSIA. In 2007,
AKSIA recognized OXTAR and Jolly as a
good investment.
In 2007, there was a legal action with Alpinestars, who claimed that OXTAR and Alpinestars were too similar, and it might confuse
consumers. This was absolutely hard to believe
MP: Because T.C.S. is “Torsion Control System,” and TCX was the torsion control system
on our MX boots, and we knew that so many
consumers saw a connection.
We rebranded our company completely to
TCX, and it has been a huge amount of work.
Right now the company is performing very
well, so even after the change of the brand, the
company turnover is around 20 million euro
($22.3 million), and our private label business
represents 10 percent of the turnover.
See TCX Boots, Page 36
8/24/16 9:51 AM
www.PowersportsBusiness.com
TCX
BOOTS
CONTINUED FROM PAGE 34
PSB: Those are some impressive numbers.
How far does the brand reach?
MP: The big thing for TCX today is distribution in 58 countries. We have three separate
agencies for dealer direct sales in France, Italy
and Spain, and we operate a wholly owned subsidiary in the United States, TCX Boots USA.
So right now the company is running very
well, and now our next challenge is really to
penetrate the U.S. market because in the rest of
the markets outside of the U.S., we already have
leadership in the mid- to high-end market. So
where we have to grow is in the U.S. We are
investing in the U.S., as we hired a marketing
agency with Scott Cox and Resmarket, Inc.,
and our hope is that within the next 3-to-5
years we can build on our status as the No. 3
moto boot brand in the U.S.
PSB: You have recently partnered with
Michelin to use its rubber on your boots. How
was that partnership forged, and why is it
important for dealers to recognize that the
partnership can help them sell more product?
MP: The Michelin partnership started two
years ago, and it was something completely
new. I met with their representative, who
explained that they are part of a big group
called JV International, whose ownership is a
huge Chinese entrepreneur with a $32 billion
annual turnover. They have the international
license to use the Michelin brand in all the
technical soles, and at the time, they had
something in mind to develop a sole initially
for motorcycles, cycling and so on. They currently have expanded into hiking, trekking
and other activities.
So when they explained their background
to me, I thought that this could be a good
opportunity for us to associate TCX with
Michelin. I said, “Why not?” and we started
with two products, the Infinity EVO GORETEX and the X-CUBE EVO WATERPROOF
that is an urban product. We started the production, entering the market very successfully.
People did appreciate that we have this important partnership, and we have now expanded
the partnership to other products in our range.
One of the main projects has been the Michelin
sole for our new COMP EVO MICHELIN,
and all of the feedback that we have had from
this sole are really very positive. I think this is
something that will work very, very well. Of
course, the partnership is not finished, but of
course, we have other products that we cannot
mention right at this time.
PSB: Why is it important for TCX to put such
an emphasis on new technology that offers riders the best in safety and comfort?
MP: At TCX, we believe motorcycle boots
and footwear should advance the same as
motorcycle technology advances each year.
The entire TCX line is CE rated, which we
know from our own research is increasingly
important to U.S. dealers and customers.
We know other brands sell boots that look
like they provide premium protection —
like the CE standard — but they do not. We
believe our customers want the best in all
aspects of their motorcycling. Best bikes, best
helmets, riding apparel and the best boots.
When a customer buys a new Husqvarna or
Ducati or Honda, he wants the best boots,
and for this reason, TCX is truly focused on
boots, and we want to create the best in the
world. We’re proud that the Husqvarna Factory WEC world enduro championship team
wears TCX!
p12x47-16PSB12-PWC-Cycle-Power50-Mkpl.indd 36
PSB: If dealers are not currently selling TCX
boots, what are some of the key reasons why
they should be, considering your latest models
and the technology involved with them.
MP: Regarding the integrity of our product
line, TCX offers a wide range of boots and
footwear — perhaps beyond the other brands
— with options for every type of rider and
condition: touring and adventure, off-road,
road racing, sport, cruiser and casual. Our
range of women’s boots and footwear is larger
than any other brand and uniquely designed
for women — not just scaled-down versions of
our men’s line.
Our selection of raw materials, along with
the TCX design and manufacturing processes,
are approached at a much higher level than
most any other brand.
PSB: Who are some of your sponsored racers, and how have those partnerships benefitted the brand?
MP: Racing is important to TCX, and we
are proud of the relationships we’ve had
with many of the top motorcycle athletes.
Today we’re sponsoring RCH Suzuki No. 20
Broc Tickle in AMA 450cc Motocross and
Supercross. He debuted the COMP EVO
Michelin boot last fall at the Genoa Supercross and again at the opening Supercross
round at Anaheim. Broc has become a big
fan of our boots, and he especially appreciates the performance of the Michelin MX
Hybrid sole.
TCX has also had a multi-year relationship with Graves Yamaha road racing champ
Josh Hayes, who has raced in premium racing boots like the TCX RS2 EVO for many
seasons. This year, the top riders in flat track,
including Kenny Coolbeth, Sammy Halbert
and Briar Bauman, are also wearing TCX. And
Jared Mees, the AMA’s four-time flat track
champion, has worn TCX throughout his
professional career. It was fantastic to see him
take the X Games gold medal at Austin earlier
this year! Rally fans will be familiar with Cyril
Despres, who competed for many years in
TCX, winning the Dakar Rally five times in
our boots.
PSB: What about the casual or leisure
boots, the stuff you can go out riding with,
then walk into a restaurant wearing them?
How has that market or rider changed in
recent years, and how does TCX styling
accommodate that rider?
MP: One of our newer casual and leisure
footwear initiatives, the 24/7 All Around Collection, was introduced at AIMExpo 2015. The
line was inspired by office workers, students
and everyday riders with a need for both protection and all-day comfort. I believe we met
both of those goals successfully. Every piece in
the line is CE-certified and constructed of the
highest quality materials.
PSB: I’m a dealer, and I want to add TCX
Boots to my inventory. What are some of the
initial points of entry? What kind of margins
are we looking at?
RANDY GEORGE: New dealer stocking
requirement starts as low as $1,000. Our goal
is to be a “natural dealer partner,” so we offer
a stock rotation program, low free shipping
threshold, as well as drop ship options. A
dealer can realistically earn 40 percent-plus
margins selling TCX, which is at the top of
all the major boot brands in the U.S. today.
We also are a full MAP brand, which means
we try and maintain a fair playing field for all
of our dealers in regards to maintaining TCX
brand integrity. PSB
8/24/16 9:51 AM