Austrian motorcycle manufacturer KTM AG is seeking urgent funding upwards of 100 million euros (approx. Rs 892 crore) and is in talks with banks and shareholders. The company is mostly owned by a holding company funded by Bajaj Auto and European businessman Stefan Pierer.
KTM’s financial troubles: restructuring underway
The company said it plans to carry out "even more far-reaching operational restructuring" with a view to reducing inventories at both KTM AG and its dealers and to "significantly reduce" its operating expenses by cutting down production in Europe, KTM's holding company Pierer Mobility AG said in an investor update.
It is not clear whether Bajaj Auto will use this opportunity to increase its indirect stake in the Austrian automaker. The Indian automaker holds a 49.90 percent stake in KTM through Pierer Bajaj AG - its investment company jointly owned with Stefan Pierer, the Austrian businessman who acquired KTM in 1992 when it was facing bankruptcy and turned it into one of Europe's most prominent motorcycle manufacturers in the 2010s.
Pierer tapped Bajaj Auto as an investor and strategic partner in 2007, selling an initial stake of 14.5 percent. Subsequently, Bajaj Auto increased its stake in KTM to a higher level and entered into licensing and manufacturing agreements.
However, due to a continuing slowdown in Europe's premium motorcycle market and company-specific problems, KTM today needs urgent cash infusions to continue its operations, and is banking on the joint venture, Pierer Bajaj, to support it financially, and is also in talks with banks.
"The Executive Board is currently working on securing the financing of KTM AG, in particular on bridge financing in the three-digit million range. To this end, discussions are ongoing both with the core shareholder Pierer Bajaj AG and with existing financial creditors," it said.
"The aim is to agree a standstill agreement with the financial creditors involved for the duration of these discussions as the basis for the financial restructuring. The negotiations and discussions are currently at an early stage. It is therefore not yet possible to make any concrete statements about the outcome of the negotiations, the conditions and the size of an additional financing," it added.
It also acknowledged that its European operations are not sustainable in their current form, and need to be truncated further so that it can be put on a 'stable operational and financial basis'.
"Against the backdrop of a challenging economic environment, an even more far-reaching operational restructuring is being driven forward with the aim of reducing inventories at both KTM AG and the dealer level to an economically sustainable level by significantly reducing production volumes. Furthermore, overheads are also to be significantly reduced once again.
The aim is to stabilise costs and sales at a redimensioned level from the 2025 financial year and thus create the basis for sustainable competitiveness and profitability. Further information will be published in due course," the Austrian company said.
Times have been tough for the motorcycle industry in Europe, hit by issues including supply chain disruptions, changing consumer preferences, and the transition toward electric mobility. KTM, known for its off-road motorcycles and successful street bikes, has been a significant player in the European motorcycle market.
Amidst all this, KTM has entered the big bike market in India with four models - 890 Duke R, 890 Adventure R, 1290 Super Adventure S and 1390 Super Duke R. The company has also gotten six dirt bikes to India and to find out more about that, tap HERE.
KTM: A brief history
It was founded by Hans Trunkenpolz as Kronreif, Trunkenpolz, Mattighofen in 1934 as a metalworking shop in Mattighofen, Austria. Initially a car repair shop, it started producing motorcycles in 1954 with the R100, its first motorcycle.
Through the 1950s and 60s, KTM established itself in motorcycle racing, particularly off-road competitions. The company grew steadily, producing motorcycles and bicycles. KTM focused on off-road motorcycles, gaining recognition for its rugged design and performance in motocross and enduro events. By the 1970s, it had become known for its off-road motorcycles, winning numerous racing championships. The company expanded its portfolio to include street bikes and mopeds.
However, KTM faced severe financial difficulties in the early 1990s and declared bankruptcy in 1991. In 1992, Stefan Pierer acquired the company through his Cross Holding company (now Pierer Mobility AG). Under Pierer's leadership, KTM focused on off-road motorcycles and began its transformation into a premium motorcycle brand.
In 2007, KTM formed a strategic partnership with Bajaj Auto. This allowed KTM to develop and manufacture smaller-displacement motorcycles cost-effectively in India, leading to successful models like the sub-400cc Duke models.
KTM, under Pierer Mobility AG, acquired Swedish motorcycle brand Husqvarna Motorcycles from BMW Motorrad in 2013. This acquisition allowed KTM to leverage Husqvarna's heritage and expertise in off-road motorcycles. KTM then revitalised the brand, positioning it alongside KTM as a premium off-road and street motorcycle maker.
It also acquired a majority stake in GasGas, a Spanish manufacturer specialising in trials and enduro motorcycles, expanding its presence in niche off-road segments like trials riding. In March 2024, Pierer Mobility AG also acquired a controlling stake in ultra-premium Italian marque, MV Agusta.