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The 68-year-old CEO at KTM, Stefan Pierer, took over the company in 1992, after bankruptcy with 150 employees, and pushed sales figures from 6,000 to 381,555 by 2023. However, in the course of 2023, worldwide economic conditions began to worsen. After 13 record years, sales figures climbed by only 1.6 percent, profits collapsed and, in 2024, sales and profit forecasts had to be reduced from one quarter to the next. In July, the Pierer Group announced its first cost-cutting measures, which primarily affected its motorsports involvement. At Husqvarna and GASGAS, the vast 2025 program was cut back.
More bad news followed in the fall, like that of the over 100,000 unsold motorcycles. On November 29th, KTM AG and two subsidiaries had to file for insolvency proceedings. The liabilities were estimated at 1.8 billion Euros, and KTM owes 1.3 billion Euros to the banks alone. There will, therefore, be a production stop in January and February,. The workforce will be reduced to 3,700 employees by March, After that, production will only be carried out in single shifts. KTM expects future sales of 250,000 units per year.
In the meantime, further details are coming to light, and it is becoming apparent that the KTM strategists acknowledged the gravity the situation too late, therefore, hesitating too long to apply the drastic rescue measures. KTM's huge debts to banks rose rapidly. When the insolvency was declared, it was 1.3 billion Euros. In the 2023 annual financial statements, the financial institutions still reported liabilities of around 800 million Euros. Obviously, at Pierer Mobility, they had focused too long on constant growth through acquisitions. But, during this often hasty expansion, several management errors and strategically incorrect decisions were made, for which a bitter price is now being paid.
The Bible says: "Let he who is without sin among you cast the first stone!" In any case, the development of brands, such as GASGAS, and the purchase of MV Agusta and other investments, consumed too much money, especially when interest rates, inflation, and the fear of a global recession were rising. Also, the growth in sales that was expected through the 100% takeover of the bicycle manufacturers,, FELT Bicycles (from California) and R Raymon (Germany) did not live up to expectations. In the meantime, the bicycle inventory was reduced from around 80,000 to 45,000, also thanks to high discounts.
The banks are now supposed to write off 70% of their loans as part of the insolvency proceedings. Whether the restructuring plan will be accepted and the Pierer Group can continue with KTM, Husqvarna, GASGAS and MV Agusta, will be revealed on February 25th.
The first signals from insolvency administrator Peter Vogl sound promising. If KTM goes bankrupt, that would drag an avalanche of suppliers into the abyss in the Innviertel, where Vogl is also based. In the German car industry, the factories have outsourced around 80% of the value chain to suppliers. At Audi, even the car tires are mounted on wheels by an external service provider. The fact that banks suffer losses in the corporate customer sector is part of everyday business, which is why the equity requirements for companies are higher than for private debtors. About 15 months ago, KTM still had equity of around 300 million Euros. But then sales collapsed worldwide, especially in the US market, where sales of 1 billion US dollars had been reached up until then, especially in the off-road segment. In business administration, you learn tgat the riskier a market, the higher a company's equity should be. But company heads and board members like to flirt with outside capital because it offers tax advantages. In the course of the insolvency proceedings, it will become clear whether KTM has an exemplary capital structure or whether, at a certain point, there was too much outside capital at stake.
Motorsports are part of KTM's DNA, just like Ferrari, Mercedes, Ford, VW, Porsche, Audi, Ducati, Honda, Yamaha, Aprilia and so on. KTM's success has always been based on the slogan "Ready to Race", which is why the Austrian company plans to continue KTM Factory Racing's activities in important sectors, from the Dakar Rally to the Motocross World Championship, as well as the Supercross in the US and the MotoGP (Red Bull Rookies Cup, Moto3, Moto2, and MotoGP).
The unnecessary ballast that the company was able to carry during the prosperous years is being cast off and budgets are being cut. The paradisiacal conditions, with an almost unlimited expenditure, are a thing of the past. Non-essential measures have been and are being canceled: for example, the participation of test riders Pol Espargaró and Dani Pedrosa in the Barcelona winter tests. The newly manufactured 2025 material was primarily needed for the other riders; Binder, Acosta, Viñales, and Bastianini. And, although a wind tunnel test in Cologne was canceled a week ago, a winter test with the KTM test riders will be carried out in Spain in December, as usual. For the regular drivers, however, a testing ban was set from December 1st until the Sepang test at the end of January.
It was recently reported that KTM had frozen the development of the MotoGP bikes. But work is being carried out incessantly on the KTM RC16s in Munderfing: construction is estimated at around 2.5 million Euros per unit. The findings from Barcelona are already being incorporated into the latest RC16 updated versions for the December tests.
And, since KTM Racing AG (as an independent company based in Switzerland) is not directly affected by the insolvency proceedings, the racing department in Munderfing is working daily on the program for 2025, including the Dakar Rally with three factory riders. KTM won this marathon rally for the 18th time in a row in 2019!
As far as the RC16 MotoGP factory bikes are concerned, engineers such as Kurt Trieb, Wolfgang Felber, and Sebastian Risse are continuing to do everything they can to provide the regular ricers with winning material in the garages for 2025. During the last two years, KTM has finished second in the constructors championship, but Ducati's dominance has become ever more powerful, with 19 wins in 20 MotoGP races in 2024. KTM entered the MotoGP World Championship in 2027 and celebrated 7 MotoGP triumphs between 2020 and 2022 with Brad Binder (two wins) and Miguel Oliveira (five GP wins). In the last two years, no wins was celebrated under Technical Director Fabiano Sterlacchini. This situation could change as early as 2025, thanks to the greatest commitment ever and also the technical command structure of the German-speaking engineers.
Restructuring expert, Stefan Pierer, is doing everything he can to defend the reputation of the largest motorcycle manufacturer in Europe. Twenty-two new models were presented at the EICMA motorcycle trade fair in Milan. "We've won in all series and championships in which we participated as a factory. It took seven or eight years for the Dakar and the US Supercross. We'll also have the same patience in the MotoGP," a visionary Stefan Pierer explained when he entered the MotoGP in 2017. "But we're not here because of the Olympic spirit. We also want to fight for the title in the premier class." Tens of thousands of KTM fans worldwide, dozens of team members, GP organizers and, last but not least, Dorna organizers, and even the competitors are hoping that the Austrians will continue racing. No one can imagine an Austrian GP in Spielberg without the KTM grandstand, which will accommodate up to 12,000 visitors dressed entirely in orange.
In the meantime, things are getting serious at KTM racing. The flights and hotels for the Sepang test (February 5th to 7th), and the first Grand Prix in Buriram (Thailand) on March 2nd, have already been booked and paid. On January 9th, all four MotoGP factory riders will come to Austria for a Red Bull-KTM photo session. "We 'll race," KTM Tech3 team owner, Hervé Poncharal - who will be competing with Bastianini and Viñales - said with conviction.
