KTM Hits a Roadblock

KTM is in financial strife, and is planning to halt production in Austria temporarily, resulting in around 300 layoffs.

Pierer Mobility-owned KTM has had a good run, with over a decade of record growth. However, that came to a grinding halt this year, and now the company requires a significant cash input to keep the wheels turning. 

KTM blames its woes on overproduction and quality issues. However, a debt mountain isn’t helping. For it bought Gas Gas, Husqvarna and 51 per cent of MV Agusta in the recent past. And they’re contributing only a tiny amount of revenue currently. Harley purchased MV Agusta a little over a decade ago for a substantial amount and sold it two years later for a single Euro. The hit seriously hurt the American company which was forced to offload Buell at the same time. Now KTM seems in a similar position, with mounting debts and slowing sales. 

A production halt and staff layoffs are serious but temporary interventions. KTM is in talks with investors in the hope of sorting its financial issues. Bajaj is likely to be key here, given it owns around three-quarters of Pierer Mobility. 

KTM was hoping that relocating manufacture of its midrange models to China and India would surmount its problems but evidently the fiscal crisis is more severe than expected. And that’s on top of a global financial downturn and high interest rates which has resulted in lower demand for its bikes. 

The group has watched conditions deteriorate throughout 2024, lowering profit projections midyear. It announced losses of €172 million in August. Pierer Mobility AG’s share price plummeted thereafter. Then came the announcement that it needs a serious injection of liquidity just to survive.

“We damaged the KTM brand with overproduction and quality problems and now we have to iron that out,” said Hubert Trunkenpolz, a Pierer Mobility board member trying to maintain a sense of calm decorum. 

COVID was partly to blame, the pandemic leading to huge demand for motorcycles. By the time KTM had increased production to catch up, the demand had declined sharply as the global economy softened.

Amid this bad news, there were reports of mechanical failures in its early LC8c parallel-twin engines. KTM went about repairing all affected bikes.

Pierer Mobility Group now has a serious cashflow problem. Both Husqvarna and GasGas will miss the 2025 Dakar rally as a result, and KTM’s team will be pared back. 

Moreover, KTM confirmed that the new 1390 Adventure line-up is behind schedule. It was meant to launch in North America next year but now 2026 is more likely because of production issues.

Essentially, much of the trouble appears the result of supply chain issues and poor quality control. A production decrease will help to clear dealer stock, as will a restructuring plan. There’s a new co-CEO in place too.

“The primary objective is to align costs and sales by the 2025 financial year” says KTM. Hopefully that doesn’t mean a withdrawal from MotoGP involvement, especially following the signing of rising star Pedro Acosta. It would be a great loss to see the ‘Ready to Race’ team unable to race, or worse.