KTM AG faces financial restructuring and leadership shifts, with a €1-2 billion funding need. Bajaj Auto remains supportive, as exports are impacted. A revival package is in progress, with a February 25 deadline for resolution.
28 Jan 2025 | 4302 Views | By Darshan Nakhwa and Ketan Thakkar
KTM AG, a leading player in the adventure and sports motorcycle segment, is navigating a challenging phase marked by financial restructuring and leadership changes. With Stefan Pierer stepping down as the Chief Executive Officer and the company undergoing a court-supervised revival process, questions about its future have arisen. The Austrian ...
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KTM AG, a leading player in the adventure and sports motorcycle segment, is navigating a challenging phase marked by financial restructuring and leadership changes. With Stefan Pierer stepping down as the Chief Executive Officer and the company undergoing a court-supervised revival process, questions about its future have arisen. The Austrian bike maker may need 1-2 billion euros to come out of this tight spot. Bajaj Auto, a significant shareholder in KTM, plays a crucial role in supporting this transition.
Autocar Professional spoke with Rakesh Sharma, ED of Bajaj Auto, on the way ahead for Europe’s largest motorcycle maker.
What is the current state of affairs at KTM Global? We understand that Mr. Pierer has stepped down, there have been funding challenges, and Bajaj Auto is a significant shareholder. Could you help us understand how difficult the situation is and what impact this has on local operations?
Well, as you know, the process is self-administered and supervised by the court, and it will continue until February 25th. During this time, KTM's management must work with the four appointed officers to submit a revival notice.
On January 24th, the court conducted a review to check whether the process was being meaningfully pursued. It was satisfied that management was making all efforts to assemble a package to present to the court before February 25th. This was an important milestone, and the court approved continuing the process.
Under the leadership of Gottfried Neumeister, the new CEO, and Stephan Zöckling, the new Chairman of the supervisory board, the management team is actively engaging with various investors, including us, to finalise this package. The process will likely run until the February deadline.
How has this impacted Bajaj Auto’s operations?
There has been no impact on our domestic business. KTM products sold in India are manufactured locally in Chakan and distributed through our network of 440 dealers. In fact, KTM has had an exceptional quarter, its best ever, with the refreshed Duke 200 and Duke 250—launched in October—performing exceptionally well. Both models continue to see strong demand.
We have felt an impact on exports. Previously, we manufactured lower CC products for KTM, which KTM distributed to their international markets. This export volume has significantly decreased. Last year, it was about 6,500 units per month. In Q3, it dropped to around 3,500 monthly units, constituting approximately 6% of our exports last year. In Q3 of this year, it fell to 3%. Exports are on hold and will only resume once the situation becomes clearer after February 25th.
What are the funding requirements, and is Bajaj Auto willing to contribute?
The funding requirements are variable and depend on several factors, such as the extent of debt recalibration undertaken by creditors, the operating cash runway required for the year, and other considerations. Estimates currently range from €1 billion to €2 billion. This is a significant sum, but the exact requirement will only be determined once the final package is put together. The company will be declared insolvent if the package isn’t finalised by February 25th.
Bajaj Auto is very supportive of KTM's management in this process, which requires engagement with existing stakeholders, potential investors, creditors, and bankers. It is a complex, broad-based effort, but we are actively involved and monitoring the situation closely.
How confident are you that KTM can overcome this challenge and return to its glory days?
KTM is a powerful brand with a strong niche position in the adventure and sports motorcycle categories. Its products, brand equity, and franchise remain intact; the challenge lies solely in managing the debt. The management is working hard to address these issues, and we are confident in their efforts to put together a robust revival package.
While the funding requirement is substantial and serious, the brand’s core strengths—its products, market presence, and reputation—are solid. Once the debt management and working capital challenges are resolved, we believe KTM can emerge stronger and reclaim its leadership position in the marketing KTM debt a challenge, but hopeful of revival package.