Pierer Mobility AG, which has become Europe's largest motorcycle manufacturer with the KTM, Husqvarna Motorcycles, and GASGAS brands, has been waging a stubborn fight for survival that past several weeks. In 2023, they had already had to accept. A drop in profits had to be accepted as early as 2023 and, in the 2024 financial year, the estimates and revenues fell much more sharply than expected. The first drastic cost-cutting measures were, therefore, announced in July, but these were not drastic enough, especially since production continued to run at full speed. On November 29th, insolvency proceedings had to be filed at the regional court in Ried im Innkreis. A rigorous restructuring program has now been initiated, in order to be able to start production again from March 1st, with a reduced workforce of 750 or 800, despite their high liabilities of around 1.8 billion Euros.
The global crisis in the automotive industry is not only affecting several motorcycle manufacturers. Hardly any car manufacturer is currently looking at positive business figures. Volkswagen wants to close three plants in Germany and cut around 35,000 jobs by 2030. In technical development alone, 4,000 jobs will be eliminated in the main plant in Wolfsburg, and production capacity at the German sites will be reduced by more than 700,000 vehicles. Europe's largest car manufacturer is, therefore, reducing excess capacity at its German sites, reducing labor costs, and bringing development costs to a competitive level. Overall, these measures are expected to save them 4 billion Euros, annually.
In Japan, a merger is taking place between Honda and Nissan, the country's second and third largest car manufacturers. The first rumors about a possible merger between the two Japanese rivals and giants emerged last summer. On December 18th, Reuters announced that Honda and Nissan are talking about further developing ties, including a possible merger, the clearest sign of how Japan's once seemingly unbeatable auto industry is being reshaped by competitors such as Tesla and Chinese rivals like BYD, SAIC, Chery, BAIC, Geely, Great Wall Motor, NIO, Dongfeng, and others.
"If Honda's hybrid cars are supplied to Nissan and Mitsubishi Motors, and if they can sell them, the three companies would all be better off, since that would expand the sales channels,"Tang Jin, Senior Researcher for Mizuho Bank, announced in Tokyo five days ago. "The holding company's scheme, rather than a merger, appears to be the key, since they can minimize risks while reaping the benefits of integration. The question now is what will happen to Renault's 15% stake in Nissan. Renault may completely part ways with Nissan through selling tis shares." The Renault-Nissan-Mitsubishi Alliance is an alliance of the three automobile manufacturers Renault, Nissan, and Mitsubishi Motors.
This deal appears to be more about bailing out Nissan, but Honda is also facing problems. Honda’s cash flow is set to deteriorate next year, and its Electric Vehicles (EVs) haven’t been selling as well as expected. That is why Honda needs to change, drastically. It may even need to spin off its motorcycle business and create a solid financial base from combustion engine cars, like media outlets such as Reuter and CNBC reported during the week. Maybe Honda Motor will set up a holding company with Nissan included in this project.
In Japan, fears are growing that the systemically important car business could be dominated by the Chinese and US EV car manufacturer Tesla in the future. There is no time left to wait patiently. The Japanese have already wasted too much time and have even fallen behind in terms of technology compared to the South Korean brands, KIA and Hyundai. "If their thinking is no more than 'we can manage this by coming together', I don’t think the Japanese brands can survive any longer. The speed of Chinese automakers is totally different. We’re no longer in the age where car makers would join together, churn out profits through economies of scale, and then reinvest them in a five-year restructuring plan. They have no time for that," said Tang Jin said.
No details have yet been given about what the aforementioned spin off of the motorcycle division at Honda Motor would mean and how such a spin off could be designed. Honda has a unique culture, centered on technology with strong points in their engines, while its long-time competitor, Nissan, is now faltering. They might only survive if the merger with Honda is successfully completed. Honda faces a major challenge of how it can accelerate its shift towards electrification by making money from hybrids and motorcycles. Honda sold around 18.7 million motorcycles worldwide in fiscal year 2024. This is a year-on-year rise of 0.3% compared to the company's 2023 sales volume. Honda's motorcycle sales declined for the first time in five years in 2020, after demonstrating an upward trend between 2016 and 2019.
The US automobile group, Ford, is cutting a massive number of jobs in Germany. By the end of 2027, a total of approximately 4,000 jobs are going to be cut in Europe, with 2,900 cuts in Germany, most from the Cologne plant. The global Stellantis Group, with brands such as Peugeot, Citroën, Opel, Fiat, Abarth, Jeep, Lancia, DS Automobiles, Alfa Romeo, Maserati, Chrysler, Vauxhall, Dodge, and RAM also had to recently report a 27% drop in sales and turnover compared to 2023. CEO Carlos Tavares resigned on December 1s, 2024. But the electric vehicles sector is not going as planned for luxury car brands either. Porsche has to reduce production at the German Taycan plant from two shifts to one.
In the next ten years, the motorcycle industry will also be confronted with cost-intensive EV technology developments. Plus, there is not yet enough space in motorized two-wheel vehicles for energy storage that could provide the horsepower generated by combustion engines.
The battery of the fully electric VW ID.3 weighs 500 kg and increases the total vehicle weight to about 1.9 tons, with an output of 204 Hp. With the largest battery available (77 kWh), approximately 400 km are achieved with cautious driving. In sub-zero temperatures, you have to be prepared for less than 300 km.
In the MotoGP World Championship, combustion engines will initially be mandatory until the end of 2031, with a new 850 cc and the use of 100% synthetic fuel. The manufacturers would like to be able to compete with combustion engines for another five years until the end of 2036. What happens then remains to be seen. Some KTM race engineers have calculated that, in order to achieve the energy efficiency of today's 1000 cc V4 MotoGP engine with a fully electric transmission, a battery weight of 500 kg would be necessary. Instead, today's MotoGP bikes have a minimum weight of 157 kg.