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Stefan Pierer, CEO of Pierer Mobility AG, and KTM AG - with the brands KTM, Husqvarna, GASGAS, and MV Agusta Motor - began his entrepreneurial career as a restructuring expert by buying up ailing companies, restructuring them, sometimes splitting them up into single business units, and then selling them again. He took over the KTM motorcycle factory in 1992, after bankruptcy, for a reported price tag of 3.5 million Euros and, in the first year, around 6,000 motorcycles were produced by 150 employees. The Pierer Group soon grew to having 6,000 employees through powerful a expansion and acquisitions, becoming the largest motorcycle manufacturer in Europe. Approximately 382,000 motorcycles were sold in the 2023 financial year.
However, due to the difficult worldwide economic conditions (inflation, high interest rates, rising wages, and production costs), its growth had already slowed down in the previous year. Sales and turnover collapsed while, at the same time, inventories increased, since production had probably continued unabated for too long. Payment terms for dealers had to then be extended and costs continued to rise. There is now talk of 348 million Euros in outstanding receivables from the company's own dealers and trading partners.
Stefan Pierer took over KTM in 1992 with his Vorarlberg partner, Rudolf Knünz, and has experienced some difficult times since then. After almost 13 years of growth, and some brilliantly mastered challenges, such as the global banking crisis in 2008 and the Covid-19 crisis, the company, which was profiled for global expansion, was inadequately prepared for the economic downturn of 2023 and 2024.
In 2008, KTM was only able to reimburse a bond that had expired thanks to a guarantee from the local government of Upper Austria. At that time, KTM withdrew from motorcycle road racing in the 125 cc and 250 cc GP classes for three years and, after a consolidation phase, only returned to the cadet class in 2012, with a total of nine KTM riders and a Moto3 work team. The new Moto3 category was contested for the first time in 2012 with 250 cc single-cylinder four-stroke engines.
The Pierer Group has won a total of 7 out of 13 Moto3 World Championship titles in the Moto3 with KTM, GASGAS, and CFMOTO. With the slogan “Ready To Race”, KTM has been rushing to victories and championship titles in numerous different series and sports for many years. KTM has already won a total of 448 Wworld Championship titles, compared to the 79 it had in 2004 when it debuted in the World Championship. During the 2024 season, KTM clinched 13 more world titles.
However, since the spring of 2024, Pierer Mobility and KTM AG have had to regularly decrease their business forecasts for the current financial year. The full extent of the damage is only now becoming apparent. The Group's net debt increased by 89% in the first half of 2024. It now amounts to 1.5 billion Euros. In 2022, its net debt was still at 300 million Euros.
The workforce has already had to be downsized several times in 2024, with a total of approximately 1,000 jobs being cut in stages and an additional 300 of the current 4,500 jobs to be lost. After the latest wave of redundancies, approximately 1,000 workers and 3,000 employees will remain in Austria. Production in Austria will be shut down in January and February 2025, and a bridge loan in the three-digit million Euros range will be required in order to continue operations and ensure a serious liquidity plann.
In the meantime, Stefan Pierer, like many of his compatriots, regularly complains about high corporate taxes, immense energy and ancillary wage costs ,and the bureaucracy in Austria. This is why the price-sensitive models up to 400 cc have long been manufactured in India by core Pierer Mobility shareholder Bajaj and by partner CFMOTO in China. It is not only in the automotive industry that a number of companies have been gradually migrating to Eastern Europe or Asia. Now it is also becoming increasingly difficult for motorcycle factories in Central Europe to remain competitive against the competition from Asia. As a result of this dilemma, the Pierer Group has slipped into a severe liquidity problem.
“Personnel costs in Austria have risen by 25 percent in three years,” Stefan Pierer stated in an interview with the Oberösterreichische Nachrichten newspaper. “With an export share of 95 percent, this becomes difficult in international business.” However, as a trained restructuring expert, Stefan Pierer has a lot of practice in revising certain wrong decisions. This is why the bicycle business has now been extremely resized. The shares in brands such as FELT and R Raymon have been sold or significantly reduced.
The politicians in Upper Austria may have rescued KTM once in 2008, but Pierer is still on a confrontational course with the authorities and politicians in Austria. At the same time, he needs to secure the cash required, which is a figure in the hundreds of millions of euros. This is why talks are being held with banks and shareholders, such as Bajaj in India, in order to implement the restructuring plans.
Stefan Pierer, who turns 68 on November 25th, is withdrawing GASGAS and Husqvarna from road racing and other racing series for 2025. Despite the strong headwinds, the CEO from Styria, is demonstrating a respectable fighting spirit. In Mattighofen, there are also repeated assurances that all planned GP teams in the three classes will continue to be supported as before and that the MotoGP commitment is also not at risk. Six months ago, even a MotoGP comeback with MV Agusta in 2027 was discussed. In 2023, Pierer Mobility estimated the costs of GP racing at around 70 million Euros. However, a considerable proportion is being contributed by sponsors, such as Red Bull, Mobil-1, Motul, Motorex, and Dorna.
“We are not the only ones struggling with problems,” Stefan Pierer explained in an interview with ÖON. “We have to become faster and leaner and take more risks again as entrepreneurs.” The battle-hardened Stefan Pierer then added: “I am certainly not giving up on my life's work. I am lucky that we can defend our home base with the support of our locations in China and India.”
In Austria, there is talk that, after the numerous bad news stories, positive news in connection with the Pierer Group will soon be making the headlines again. Details are not being disclosed. And where news is missing, rumors grow. The fact is that Stefan Pierer founded PiMa Beteiligungsverwaltung GmbH, along with Red Bull heir Mark Mateschitz in June 2024, in order to acquire a major stake in the globally active Austrian firefighting equipment supplier, Rosenbauer, and, along with other investors, to get it back on track with an urgently needed capital increase.
It was also rumored in the MotoGP paddock in 2020 and 2021 that Red Bull boss, Didi Mateschitz, had rescued the protective-clothing company, Alpinestars, from a financial bottleneck with a loan in the double-digit million euros range because sales and turnover had temporarily fallen sharply due to the lockdown and the Coronavirus pandemic. The assumption that Mark Mateschitz (who owns 49% of Red Bull) could become an investor in the battered global brand KTM seems anything but far-fetched. The wealthy Energy Drink giant could, therefore, help to steer the struggling motorcycle company back into calmer waters after this turbulent phase.
