Bajaj Auto, the world's third largest motorcycle manufacturer, has gone from a partner of KTM to taking over the Austrian brand altogether. That's thanks to a €800-million (US$905-million) shot in the arm from the Indian two-wheeler giant that will enable KTM to bring its production facilities roaring back to life.
The news was confirmed in a stock exchange filing in India from Bajaj, in which the company stated it was transitioning to a majority owner in KTM through its wholly owned international subsidiary BAIHBV with a €600-million (US$678.6-million) infusion. This followed €200 million (US$226 million) in funds being supplied earlier in the year.
This signals the end of a seriously rough patch for KTM, which was on the brink of collapse for a while. We began seeing the signs of trouble last November, when layoffs hit the company's workforce in Austria and production was halted there. Overproduction and quality issues were the main culprits, and they spelled major problems for parent company Pierer Mobility AG as KTM was its biggest earner.
The following month, bankruptcy seemed imminent as KTM entered self-administration to undergo restructuring. At the time, its massive liabilities were estimated to be be in excess of €2.5 billion (US$2.64 billion).
During its 90-day self-administration procedure, it ended up selling its controlling stake in premium Italian bike brand MV Agusta in February. KTM subsequently reached a deal with creditors that month to implement in a $576-million restructuring plan and stave off closure. Bajaj Auto loaned KTM €50 million (US$52 million) at this point to kickstart production. The Austrian brand intended to rev up four production lines at full capacity – but it still needed some €800 million (US$841 million) in new funding to support manufacturing and round out its cash quota.
A few months later, here we are – KTM is fired up and ready to race again.
The company will first bring its latest smaller-capacity models – including 125cc street and Enduro bikes, and 390cc adventure bikes – to dealerships around the world.
Speaking about the future of KTM's primary factory in Austria, CEO Gottfried Neumeister said, "The existing sites - in particular our main plant in Mattighofen/Munderfing – will remain the basis for our future success. This means that we will continue to be an important employer for the entire region."
Fans will likely keep a close eye on the brand's next chapter, to see how it weathers uncertainty with money in the bank and a second shot at succeeding in a fiercely competitive market.
Source: KTM
