KTM on the Verge of Bankruptcy; Enters 90-Day Self-Administration

The tough time continues for the Austrian motorcycle marque KTM. Though everything looks good from the exterior, things are actually pretty bad financially for KTM.

It looks like the company is on the verge of going bankrupt. In an attempt to protect itself from going bankrupt, the company has decided to enter 90-day self-administration.

Most motorcycle enthusiasts, including KTM fans, may not be familiar at all with the financial struggles the company is going through. We believe no one is ready for one of their favorite motorcycle brands to go bankrupt.

Without a doubt, everybody loves those special orange-colored naked ADV bikes. The Duke's naked bikes are among the most established and popular naked bikes worldwide.

KTM motorcycles are among the most fun bikes, specially built for thrill and adventure seekers. We all hope the Austrian brand successfully emerges from this financial distress.

Despite the serious financial trouble KTM is currently facing, why did it seem good from the outside? These are the questions that someone from the company must answer. It was not until recently that we learned about the deep financial troubles at KTM.

Nobody knows why KTM kept it a secret. Nevertheless, suddenly, we all learned about how bad the situation was.

You will be astonished to know the drastic steps the parent company, Perrier Mobility Group, has taken to ease some of the financial burden.

• KTM has undergone a significant downsizing in the past few months.

• In October 2024, the board of directors was cut short from 6 to only 2 board members.

• The KTM’s production plant at Mattighofen, Austria, has stopped working for an unknown duration.

• Hundreds of employees were laid off as a result of the cost-cutting strategy.

• The company’s liabilities have reached a value of $2.64 billion.

It is not KTM alone that is facing the financial burden. The remaining motorcycle brands, including Husqvarna, Gas Gas, and MV Agusta, owned by Pierer Mobility Group, will also face the consequences.

KTM is getting more in trouble with net debt, which is increasing rapidly. The debt figure was estimated at the end of June 2024 to be somewhere around $1.541 billion. On top of these severe financial burdens, the Austrian motorcycle marque failed to raise interim financing and investment to continue its operation.

The Chief Executive Officer (CEO) of KTM AG, Stefan Pierer, doesn’t want to let go of the motorcycle brand and wants to fight till the end.

The company filed for self-administration on November 29, 2024. KTM will undergo a restructuring and reorganizing phase for a set duration of 90 days.

Self-administration in business is a process adopted by a company facing extreme financial distress to reorganize and restructure itself under the supervision of a trustee or court-appointed arbitrator.

The role of the court-appointed arbitrator is to safeguard the creditors’ interests. He also takes care of the employees’ interest so they get paid as per the insolvency law.

It allows the company to continue operating and managing its operations without giving the hold to an external party. It is the best possible solution for a nearly bankrupt company to regain its worth and financial stature while maintaining control.

Considering the financial situation of KTM AG, it may look extremely difficult to regain its financial assets. However, there is still hope. It mostly depends on the coming 90 days and what actions the company takes.

It is good to see the employees haven’t given up either. They are completely dedicated and passionate about facing the company's challenges.

If you want to know where the downfall started for KTM, check the share price graph below. It tells how bad the last 12 months have been for the Austrian motorcycle manufacturer.

The above graph shows the KTM’s share price development for the past 12 months, from November 2023 to October 2024. You will be surprised to know that before November 2023, KTM was actually going well financially.

According to the official sources, the company secured a revenue of around $2.783 billion at the end of March 2023. KTM showed remarkable growth in the first half of the 2023 fiscal year.

Let’s have a look at some of the statistics that show how well KTM did in the year 2023:

• Number of new employees hired: 4,884.

• Number of new engineers hired for research & development: 1,300.

• Total number of motorcycle units sold: 381,555.

• Total number of e-bikes and bicycles sold: 157,358.

It is disappointing to learn, as a KTM fan, how fast time has changed. It was the time when the Austrian motorcycle brand was celebrating its success and expansion. The company made a lot of deals and built partnerships with other giant motorcycle manufacturers worldwide.

The partnership with CFMoto was a major step to double its capacity and reach. KTM was also planning to invest in MV Agusta.

The financial problems were expected by the company only to a certain extent. However, the extent to which the inflation and economic distress have affected the KTM ’s share price and financial condition has surprised everybody.

We are unsure, but most probably, the recent partnerships, ventures, and strategies by KTM haven’t worked for the company. Maybe it should have continued to do what it was doing without having to expand itself.

Sales in the U.S. fell badly in the year 2024, mainly due to the higher interest rates. Even in the local market, KTM failed to secure its sales figures.

KTM was on a streak of three successful years in a row. The growth was very evident until the drop that happened this year. The expected sales declined by almost 15%.

The growth and development by all the Pierer Mobility Group motorcycle divisions, particularly KTM, throughout the beginning was amazing.

Considering the rise throughout KTM’s journey as a popular global motorcycle brand, the 2024 downfall doesn’t seem real. However, it is true.

KTM’s Motorcycle Unit Sales So Far Before 2024

There have been many reasons why KTM is getting into the self-administration phase, such as financial burdens. However, the one very prominent is the major reliability concern by users. The parent company has also hinted towards it.

The company doesn’t overlook or disagree with the reliability concerns KTM is currently facing. The models powered by the new LC8c parallel-twin engine reportedly have early camshaft wear issues.

KTM has also pointed out its response to the post-covid time. As the motorcycle demand decreased, like in any other business, in the post-COVID era, KTM had an excessive inventory due to overproduction, resulting in a huge loss.

It is too early to say what the future holds for KTM. We still expect and hope that the company survives these tough financial times. Things will be clearer as the 90-day self-administration duration ends at the end of February 2025.

From the outlook, we can expect that KTM will either buy more time to get stable or will have to file for bankruptcy.