KTM’s financial troubles are much worse than many suspected. The company has entered self-administration to undergo a restructuring process in an attempt to stave off bankruptcy. Is a total collapse of one of the world’s leading motorcycle manufacturers near?
It was only a week ago that I covered the financial insecurities surrounding KTM and its parent company Perier Mobility but things have already deteriorated further as KTM takes drastic measures to stay afloat.
Back in October, KTM’s board of directors was cut from six to two members, hundreds of employees were laid off and a planned production halt was announced at KTM’s Mattighofen plant in Austria. As the brand’s money problems are laid bare, its liabilities are though to be in excess of €2.5 billion (US$2.64 billion)!
Nobody really knew the true extent of the KTM’s troubles until very recently. Cornelia Wesenauer, insolvency expert for the Alpine Creditors Association (AKV), states in her report, “It was clear that the liabilities of the KTM companies would reach a high level. Nevertheless, we are surprised that the liabilities are so high. After all, at first glance, we expect liabilities of €2.5 to €3 billion. That is now clear. This is the largest insolvency procedure in Austria this year.”
Apparently, around 3,700 employees will be affected by the insolvency. In addition to this, Upper Austrian officials anticipate that jobs at numerous suppliers in the area will also be in jeopardy. At KTM, the Insolvency Wage Fund will have to pay for Christmas bonuses and November settlements.
AKV estimates that there are approximately 2,500 creditors. Of the total debt, KTM AG owes around €1.3 billion (US$1.37 billion) to banks, €365 million (US$386 million) to suppliers, and €40 million (US$42.3 million) in employee salaries.
There are, however, assurances for KTM’s customers. “Nothing will change for our customers,” said KTM’s official statement on November 27th. “We guarantee that we will continue to deliver motorcycles, spare parts, and accessories under the usual conditions. There will be no irregularities – neither in the flow of goods nor in customer service.”
KTM’s "self-administering" period started on November 29, 2024, with a debt restructuring plan set to last 90 days, as per the statement released by CEO Stefan Pierer and his new co-CEO, financial specialist Gottfried Neumeister. This should give the company some time to negotiate new debt financing conditions with creditors at this phase of prospective insolvency.
As of June 30, its net debt had increased by 89% to €1.4 billion (US$1.48 billion). An additional €136 million (US$143.8 million) in debt is scheduled to mature in 2025. Red Bull, another Austrian behemoth that has frequently endorsed KTM in its motorsports pursuits, was also said to be interested in providing a financial boost, but Pierer earlier stated that was not the case.
In a follow-up statement for the North American media, KTM North America added that "North America and all other KTM subsidiaries are not included" in legal restructuring and that the legal reorganization process solely applies to KTM AG. While this may offer some comfort to KTM’s American workforce, it seems likely that the whole company will suffer some consequences from Perieir Mobility’s plight.
Stefan Pierer is steadfast in his ambitions for KTM and the other brands he owns, including MV Agusta, Husqvarna, and GasGas. In the official release, Pierer stated, "We have expanded to become Europe's largest motorcycle manufacturer over the past three decades. We inspire millions of motorcycle riders around the world with our products. Now we are taking a pit stop for the future."
KTM loyalists have been vocal for a long time regarding the brand’s dwindling reliability. The infamous camshaft issues, huge inventory, declining sales, and a lack of design innovation have all contributed to the brand’s fate.
By the end of February 2025, KTM will either file for bankruptcy and lose its assets, or it’ll buy itself some more time to take small steps back from the edge. Only time will tell.
Source: KTM
