KTM Faces Financial Trouble; Seeks Funding Of 100 Million Euros

KTM may have just launched its big bike range in India, but the company, owned by Bajaj Auto and Pierer Mobility AG, seems to be going through a major financial crisis. KTM is urgently seeking funding of over 100 million Euros (around ₹ 890 crore under current exchange rates) to cover KTM AG’s short-term debts. The company is in talks with banks and shareholders, to get "bridge financing” liquidity infusion to tide over the financial turmoil it finds itself in.

KTM AG is facing financial trouble with the company announcing production cuts and reduction in personnel.

According to reports, KTM’s net debt has increased from 300 million Euros at the end of 2022 to as high as 1.5 billion Euros in mid-2024. In the first half of 2024, KTM’s sales dropped by 27 per cent, and the company foresees a decline in the global motorcycle market with slowdown in both North America and in Europe. It is in this backdrop that KTM has now decided to bring its big bike range to India, launching the KTM 890 Duke R, 890 Adventure R, KTM 1290 Super Adventure S, and the KTM 1390 Super Duke R EVO. KTM has also launched a range of dirt bikes and enduro bikes in India, a market where the brand has so far been focussed on sub-500 cc, made-in-India models.

Also Read: KTM 890 Adventure R, KTM 1290 Super Adventure S In Pictures

One of KTM India's most anticipated models will be the new KTM 390 Adventure.

KTM India also plans a range of new models, beginning with the new KTM 390 Adventure range, as well as the KTM 390 SMC R and the off-road ready KTM 390 Enduro R. India's Bajaj Auto manufactures sub-500 cc KTM bikes in India which are exported to overseas markets as well. But so far, KTM India has chosen to focus on a sub-500 cc product strategy for the Indian market, and the 200 cc, 250 cc and sub-400 cc segments are still likely to grow, at least in India over the next decade or so.

Earlier on November 14, 2024, KTM India announced the launch of a range of premium bikes, almost a first for the Indian market, with the exception of the brief introduction of the KTM 790 Duke.

It’s still not clear how KTM AG plans to raise the funding required to stay afloat, while a company statement does hint that it will approach existing core shareholders as well as banks to secure the funding. KTM’s financial troubles have been apparent over the past few months with the company releasing alarming mid-year financial results and also announcing production cuts and reduction in hundreds of personnel in Europe.

Also Read: Bajaj Auto Swaps Stake In KTM, Gets Share In Pierer Mobility

How KTM AG manages to raise the funds needed to rescue the company out of spiralling debt and financial trouble still remains to be seen, but one possibility could be to approach one of its main shareholders, Bajaj Auto, India’s largest exporter of motorcycles, for a potential rescue. The current equity stake of various entities of KTM, Pierer Mobility and Bajaj Auto is a little confusing. After yet another equity restructuring a couple of years ago, Bajaj Auto currently holds a non-controlling 49.9 per cent stake of PTW Holding, and PTW Holding is the majority stakeholder in KTM’s parent company, Pierer Mobility AG, with 78.16 per cent stake.

So, indirectly, Bajaj Auto is still a majority shareholder in KTM AG. How KTM’s financial crisis pans out will not just be important to Pierer Mobility, but equally important for Bajaj Auto. It’s still not clear what and how Bajaj Auto plans to address the growing crisis faced by KTM AG. One tactic seems to be to move at least some of KTM’s current products (including many big bike models) to still growing markets like India, where KTM has had no presence so far, barring the KTM 790 Duke briefly. More importantly, it will be an opportunity for Bajaj Auto to acquire controlling stake in not just KTM, but a bouquet of other motorcycle brands, including Husqvarna, GasGas and MV Agusta, which is also now owned by KTM.