Austrian motorcycle giant and maker of the X-Bow sports car KTM is on the verge of bankruptcy and will begin a “self-administration” restructuring process to avoid dissolution. A big part of the company’s big money-saving efforts will see the MotoGP effort on the chopping block. KTM, which also owns motorcycle manufacturer Husqvarna and has a majority share ownership in MV Agusta and GasGas, says it will continue to race in MotoGP in 2025, simply tightening the purse strings and pausing race bike development, though there are concerns within the MotoGP paddock that the four-bike team will not show up next season.
Owing three billion dollars is a big hurdle to overcome for the motorcycle manufacturer and race team. How did it come to this? Well, across the first half of 2024 the company saw a huge 27 percent dip in sales and revenue. It does not seem that sales have improved for the brand over the second half of 2024, still in progress.
“Over the past three decades, we have grown to become Europe’s largest motorcycle manufacturer. We inspire millions of motorcycle riders around the world with our products,” says Stefan Pierer, chief executive officer of KTM AG. “Now we are taking a pit stop for the future. The KTM brand is my life’s work, and I will fight for it.”
“The enthusiasm of our employees is our most important competitive advantage,” says Gottfried Neumeister, co-CEO. “Their passion is the reason why KTM is globally synonymous with peak performance. We build our motorcycles reliably and robustly for every race, for every terrain. Now it’s about making the company robust. Robust for the future. So that we can quickly focus again on what we do best: building the coolest motorcycles in the world.”
KTM posted record sales and profits across 2023, shifting 381,555 units worldwide and grossing $2.73B. The company had just signed a historic distribution and manufacturing deal with China’s CFMoto, and purchased most of MV Agusta. KTM expected continued growth in 2024, but interest rates remained higher than expected for longer than expected resulting in huge sales drops across the U.S. and Europe. Dealer inventory stacked up as KTM’s huge growth plan imploded around it, resulting in big discounts and longer payment terms driving down revenue. KTM’s sales decline is expected to continue while operating costs continue to rise.
Pierer Mobility, KTM’s parent company, has begun implementing a plan for the motorcycle and bicycle brands to continue without bankruptcy. By Austrian law the company has 90 days from the moment of announcement to come to an agreement with its lenders or face a forced restructuring. There are four key things KTM can act upon between now and February to keep itself in business: lay off a bunch of employees, reduce production by 25 percent to clear dealer inventory, streamline motorcycle R&D, and re-evaluate its bicycle division.
It isn’t just KTM’s racing efforts under the microscope, of course. Spanish brand GasGas is ending its MXGP, MX2, and MotoGP factory programs, and both GasGas and Husqvarna are pulling out of cross-country rally racing. KTM’s racing program, supported by Red Bull, will allegedly continue to exist, but for how long, and at what level?
