Austrian motorcycle giant KTM, long celebrated for its aggressive styling and performance DNA, is now confronting an uncomfortable reality that includes slowing growth and severe operational headwinds. A string of financial disclosures from parent company Pierer Mobility AG has raised concerns among investors and industry observers alike. KTM’s struggles became more evident after the company reported weaker-than-expected results for FY2024, with profits slipping, costs rising and inventories piling up across markets. The brand that once couldn’t manufacture fast enough now finds itself with too many unsold two-wheeler units and not enough buyers.
Also Read: KTM Halts Production In Austria Again
Key Contributing Factors To KTM’s Current Mess Include
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Inventory Overload: KTM overestimated post-pandemic demand, resulting in overproduction and slow dealer turnover, particularly in Europe and North America.
- Supply Chain Costs: Rising logistics and raw material expenses have chipped away at profit margins, even as production resumed at full capacity.
- Emerging Market Dependence: Slowing demand and economic volatility in countries like India and Indonesia have added unpredictability to KTM’s core strategy.
- High R&D Spend: KTM’s continued investment in motorsports-derived technology is laudable, but the payoff remains long-term, not immediate.
- Acquiring Multiple Brands – KTM has had acquisitions, tie-ups and partnerships with multiple brands like Husqvarna, GasGas, MV Agusta and CFMoto to name a few. This hasn’t always played in the interest of the company, because Pierer Mobility AG took on quite a bit of debt to finance these acquisitions. For example, the current financial mess meant the celebrated brand ‘MV Agusta’ was sold back to Timur Sardarov, who was the original owner of the brand before KTM acquired it.
Also Read: KTM Will Not Sell CFMoto Two-Wheelers In Europe Anymore, Here’s Why
The Bajaj Auto Angle: Crucial Ally or Strategic Fix?
Bajaj Auto, India’s two-wheeler behemoth, holds nearly 49.9 per cent stake in KTM AG through Pierer Bajaj AG and is KTM’s key manufacturing and development partner. KTM’s small and mid-capacity bikes (like the 125, 200, and 390 series) are manufactured in Bajaj’s Chakan plant near Pune and exported globally. While this partnership has helped KTM scale rapidly in emerging markets, recent dynamics have exposed some cracks.
- Market Fatigue: The Indian premium motorcycle segment has become more competitive, with price-conscious consumers turning to alternatives like TVS and Royal Enfield. Products like the KTM 390 Adventure and the 390 Enduro R operate in a niche segment and are unlikely to bring in good volumes. In fact, the 250 range is the one that saw positive growth last year.
- EV Shift Pressure: India’s growing focus on electrification has pushed Bajaj to expedite its EV plans-through Chetak Electric and now potential KTM EVs.
- Inventory Bottlenecks: Slow demand recovery in India has led to overstocking and margin stress for both KTM and Bajaj.
Also Read: KTM Seeks 100 Million Euros To Stay Afloat
While parent company Bajaj Auto did infuse the ailing Pierer Bajaj AG with 50 million euros to stop it from going completely down under, the story of KTM’s survival is far from over. The company sold MV Agusta back to its original owners, went into a 90-day self-administration period and laid off over 1,800 employees, to reduce its financial burden.
Despite these issues, the Bajaj-KTM partnership remains KTM’s best for recovery. The Austrian brand can lean on Bajaj Auto help them to a large extent, because if KTM does go down under, then even Bajaj has quite a bit to lose, with a big chunk of Bajaj’s sales coming through KTM and a 17-year-old partnership threatening to unravel. Leveraging Bajaj’s cost-effective engineering can help KTM launch new models at lower development costs, crucial in a margin-conscious environment. Bajaj’s vast dealership and service network in Asia and Africa could help KTM build sustainable demand and improve after-sales performance.
What Can KTM Do To Come Back
To regain traction, KTM needs a combination of operational tightening and bold innovation. Possible strategies include:
- Smarter Inventory Planning: Adopt a more demand-responsive production model to avoid inventory bloating.
- Focus on Profitable Models: Rationalise the product portfolio to emphasize high-margin, high-demand models.
- Monetise After-Sales Services: Expand service plans, accessories, and digital features to boost recurring revenue.
- Reinforce Investor Trust: Clear communication of turnaround plans, cost-cutting, and prudent capital deployment will be essential.
- KTM’s brand value can help Bajaj gain access to EU and other important markets. On the other hand, Bajaj currently has presence in 100 countries, which can unlock massive sales potential for KTM.
Final Word: Still A Brand Worth Betting On?
It absolutely is! KTM’s situation is serious-but not hopeless. The brand retains strong recognition, loyal enthusiasts, and cutting-edge engineering capabilities. With Bajaj Auto’s manufacturing backbone and emerging-market expertise, KTM has the ingredients for a robust recovery-provided it acts decisively, pivots quickly and whether the company can manage the May 23, 2025 deadline to stay afloat and make a payment of 600 million euros to the restructuring administrator.
In an interview to Moneycontrol, Rajiv Bajaj, MD, Bajaj Auto said that the top management of Bajaj has been pre-occupied with finding a long term and a sustainable solution to not only keep KTM afloat but turn it into a profitable company in the long term. Come May 23 and the uncertainty around the brand will be dealt with, one way or the other.
Interview Source: Moneycontrol
