GOOD NEWS! KTM Lives To Fight Another Day

Looks like KTM is finally seeing the light at the end of the tunnel as the brand’s proposed restructuring plans have been accepted by its creditors in a court hearing in Austria on February 25. As per the plan, a one-off cash quota of 30% of the creditors’ claims will have to be paid by KTM AG, which amounts to 548 million Euros (around Rs 5,017 crore). This amount will have to be paid by May 23, 2025. 

The restructuring proceedings will end once it becomes legally binding after the court confirms the restructuring plan in June 2025. All this means that the brand will continue to stay afloat and will not be sold to any third party companies (sorry BMW Motorrad). Production in Austria will also be ramped up gradually from mid-March 2025. To this end, Bajaj Auto has transferred the first 50 million Euros (around Rs 455.5 crore) out of the 150 million Euros (about Rs 1,364 crore) pledged. 

 

 

 

 

 

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In totality, KTM needs 800 million Euros to finance the cash quota as well as production. Capital market company Citigroup Global Markets Europe AG has been commissioned to enable this investment. 

If you must know the technicals of the Indian investment, the 50 million Euros has been transferred to Pierer Bajaj AG, in which a 49.9% stake is held by Netherlands-based Bajaj Auto International Holdings BV, a wholly-owned subsidiary of Bajaj Auto.

Gottfried Neumeister, the recently-appointed CEO of Pierer Mobility AG said, "I am grateful and happy today. KTM is back on track. Our employees have done everything over the last three months to ensure that the race can continue. We have closed an important chapter today. But a single chapter never tells the whole story. Now we can continue the great story of KTM. We do it for the millions of KTM fans worldwide, to whom we are grateful every day. For our racers, of whom we are damn proud. And for our Austrian location, to which we are deeply attached in our hearts. KTM remains one of the top employers in the Upper Austrian industry."

Our opinion on the impact of KTM’s restructuring:

At the moment, KTM has a really large product portfolio in its European market with multiple offerings at different displacement classes. KTM will now have to carefully assess the demand and make only what’s necessary to gain sales, and by extension, profits. 

It was reported in December 2024 that KTM already had a year’s worth of inventory (around 2.65 lakh units) unsold, a massive oversight on product strategy. KTM will have to devise ways to clear out the older stocks first, and then look into new bike sales. To ease out quality issues, the brand also announced a free four-year warranty programme for its Street and Travel motorcycle lineup (read Dukes and Adventures) valid for all new 2023, 2024 and 2025 model year products, purchased from February 3, 2025. This applies to the 790, 890, 1290 and 1390 range.

To give you a clearer picture of KTM’s sales history in Europe and North America, it witnessed a year-on-year growth of a massive 40% and 21% respectively in the two continents in H1 2023. However, in H1 2024, the figures went down by 24% and 36% respectively. 

KTM’s overall global sales in H1 2024 went down to 108,536 units, a 25% drop when compared to H1 2023. Do note that these are wholesale numbers sold to the dealer network and importers.

There has been no announcement of Bajaj’s stake increase in KTM, at least not at the moment. However, it is likely that Bajaj will have a greater say in new product development going forward as it has helped the brand by pledging funds that are not small by any means.

Renewed Focus On The 390 Range:

KTM has gotten the basics absolutely right for the 390 range. It also has varied products catering to the streetfighter, supersport, dualsport, adventure and even supermoto categories. Summer season is just about to begin, and that means more customers will be looking to get into riding with learner-friendly motorcycles. This is exactly where KTM has the distinct advantage with its 390 lineup as their power output is within the 47PS-limit mandated in A2 licensing norms. Labour cost is high in developed markets, so with a single-cylinder layout, the 390 lineup is easier and cheaper to maintain. 

Moreover, 390s, 250s as well as the 200s and 125 lineup are made in India by Bajaj. This arrangement ensures the production costs are optimised for KTM as Bajaj has a very well-established supply chain and cost-efficient manufacturing processes in place. While exports were so far stifled due to the brand’s uncertain future, expect Bajaj to bring the pace of shipping bikes back up. 

In addition to all these, KTM will also have to tighten quality control at its China facilities, which are handled by CFMoto. This will help mitigate the reliability woes that KTM faces for some of its middleweight bikes. KTM earlier had the electric Duke in the pipeline, but expect that project to be delayed as EVs are still generally not profitable. Moreover, making a performance-packed electric motorcycle will come at a cost of range and/or pricing. While nothing has been announced officially, we will know more about the brand’s situation in the coming months.