A distinctive color can be a key part of a brand’s marketing strategy, and it’s no different when it comes to the auto industry. Ferrari Red might be the most notable example, but for fans of European motorcycles, there’s no substitute for KTM Orange. The Austrian motorcycle brand has become a powerhouse in the market, but the iconic motorcycle manufacturer is now facing an uncertain future after racking up $3 billion in debt.
KTM enjoyed a banner year in 2023, but poor management and an unfortunately timed mechanical issue saw the Austrian motorcycle brand land itself in insolvency court in late 2024. Saddled with billions in debt and a backlog of more than 250,000 units, KTM and parent company Pierer Mobility entered a period of self-administered debt restructuring that could bring some major changes to the beloved manufacturer.
While things might be dire, KTM is currently benefiting from the “too big to fail” mindset. The company occupies a significant place in Austria’s economic landscape, with over 6,000 employees on the books. This means bankruptcy simply isn’t an option, leading the Austrian government, along with creditors and stakeholders, to step in and promote a restructuring plan that could save the beleaguered brand. From layoffs and executive dismissals to selling its stake in MV Agusta and withdrawing from MotoGP, nothing is off the table. So, where did KTM go wrong? Let’s examine KTM’s recent struggles and see what it’ll take to get Big Orange back into the black.
Riding Too Close to the Sun
Since the early 1990s, the Austrian brand has grown into a two-wheeled powerhouse with thousands of employees capable of producing as many as 1,000 bikes per day. As recently as 2023, the company was logging record sales, but that success led to some fateful missteps that have brought KTM to the brink of destruction—or at least insolvency. The brand’s bullish 2023 performance inspired CEO Stefan Pierer to maintain high levels of production even while sales began to falter. That decision caught up with KTM in a big way, leading to a backstock of more than 250,000 units and threatening the company’s very future.
KTM might have been able to weather its overambitious output, but the company’s woes were compounded in mid-2024 when word of a serious production flaw began to emerge. Excessive camshaft wear on the LC8c twin-cylinder engine forced KTM to invest in an expensive repair program for all affected bikes. The issue was largely limited to the brand’s 790 Duke and 790 Adventure models sold between 2018 and 2020. KTM has offered to fix all affected bikes regardless of warranty coverage, but the resulting headlines seem to have dented consumer confidence at a particularly inopportune time for the brand. Segment sales had already been faltering due to rising insurance rates, cost of living, and other socio-economic factors, and the camshaft-related worries might have just catalyzed the predicament.
The current restructuring plan includes mass layoffs, divestment, and even possibly shuttering KTM’s motorsport division, with no options left off the table as the brand seeks to cut its operating costs. Parent company Pierer Mobility has already laid off workers, culled its executive board, and planned a 25 percent drop in production, but these changes might just represent the beginning of a long and difficult journey. While there might be plenty of turmoil at the company’s Austrian HQ, the company insists that KTM fans will be insulated on their end. “Nothing will change for our customers. Of course, we guarantee that we will continue to deliver motorcycles, spare parts, and accessories under the usual conditions. There will be no irregularities—neither in the flow of goods nor in customer service,” said a statement from KTM.
Goodbye MotoGP?
What does all of this mean for KTM’s participation in the world’s preeminent motorcycle road racing series? It all depends on who you ask. The motorcycle brand has been a fixture in MotoGP since first entering the series on a full-time basis in 2017, notching two second-place Constructors Championships over the last two years. KTM-backed teams now make up nearly 20 percent of the MotoGP paddock, but that could soon change if the company’s creditors have their way.
In mid-December, Austria’s Alpine Creditors Association (AKV) announced that KTM planned to withdraw from MotoGP, Moto2, and Moto3 as one of the six key points of reorganization that would help see the brand through its current financial crisis. While AKV didn’t provide a specific timeline for withdrawal, KTM was quick to refute the idea that the reorganization plan threatened its participation in the 2025 season. “It is no secret that KTM AG is navigating a shifting economic landscape,” said KTM in a recent statement. “However, as our READY TO RACE mantra suggests, we are embracing this moment to realign, refuel, and reinvigorate. KTM stands firmly committed to motorsport. We repeat our statement for 2025: we will continue to race in MotoGP.”
While cutting the company’s motorsport program might seem like an obvious way to reduce overhead, MotoGP does serve an important role in marketing the brand’s products. The racing series drew millions of viewers in 2024 alone and has seen a notable bump in attendance in recent years. With such an excess of inventory clogging up the works, a little publicity—and a lot of eyes—might be just what KTM needs to dig itself out of its current financial predicament. “Racing is where we show our brand, our engineering, and our passion for the chase,” KTM said in December.
Pulling Up Stakes
If KTM is looking for a quick infusion of cash, the answer might come down to a little divestment. In 2024, KTM acquired a 50.1 percent stake in Italian motorcycle manufacturer MV Agusta after initially purchasing 25.1 percent of the company in 2022. As KTM battles to get out of the red, the Varese-based brand represents an obvious bargaining chip. In a recent meeting with the Italian enterprise federation Confindustria Varese, KTM reps confirmed that MV Agusta is “no longer considered a strategic asset.” Sources say the sale could be completed as early as March 2025 and suggest that former owner Timur Sardarov might be interested in buying back his controlling stake.
While KTM’s fortunes have faltered, MV Agusta has actually represented a bright spot in the company’s portfolio. The Italian company reports a 116 percent increase in sales over the last year, with 4,000 units moved in 2024, though local news website Varese News suggests that the company could be sitting on as many as 2,000 unsold bikes. The Italian manufacturer claims to have retained over 60 percent of its management and even added new specialists and assorted staff to the mix. “This strategy has made MV Agusta completely independent in all its operations,” said the company in a recent statement.
MV Agusta says it has continued to design, prototype, and produce its bikes at the company’s Varese facility since the 2022 acquisition, so the impending sale wouldn’t see much of a change in terms of the company’s day-to-day operations. KTM, for its part, says it plans to sell off its existing stock of MV Agusta models and will honor a 13-month salary agreement for MV Agusta employees.
The Road Ahead
The sale of KTM’s stake in MV Agusta could provide a quick buck, but it’s certainly not going to solve the company’s current predicament. With nearly $3 billion in debt, even $100 million isn’t going to make that much of a difference in the long run. So what is KTM to do? One solution could lie in another buyout, this one courtesy of India’s Bajaj Group. The Indian multinational conglomerate is a force to be reckoned with in the automotive world, with flagship brand Bajaj Auto representing the world’s fourth-largest manufacturer of two-wheel and three-wheel vehicles. The Baja Group already owns 49.9 percent of KTM, so it’s easy to see the Indian company making a further investment in order to keep the company afloat.
Ensuring KTM’s future could mean an uncomfortable present with the company eyeing mass layoffs and a two-month production halt in order to sell off some of its current inventory. That said, the cuts might not hit as deeply as initially feared. While KTM initially announced that it might part ways with as many as 500 employees, that number has since been revised down to 300. The company has also found a way to free up a little money that will see employees receive their December salaries and Christmas bonuses, though payment could be delayed until January.
In the long term, KTM will look to cost savings—including reduced direct material costs and overhead costs—to put the company on a firmer financial footing. Keeping inventory flowing, whether it be parts or motorcycles, will be key to bridging the gap and keeping KTM in business. “Our goal over the next 90 days is to stabilize the business while setting the foundation for sustained growth and success,” reads a statement from KTM. “Throughout this period, KTM guarantees the continuation of motorcycles being delivered through our Authorized KTM Dealer network. The same goes for our spare parts, technical accessories, customer service support, and warranties, which remain unchanged, ensuring ongoing and unwavering support throughout this period.”
A Comeback Could Be in the Cards
One thing seems all but assured: no matter what the future might hold for KTM, Pierer Mobility CEO Stefan Pierer probably won’t be involved. The CEO’s ill-advised decision to maintain high production and let the company’s debt balloon to almost $3 billion has put KTM in a tough spot and all but guaranteed Pierer’s departure. Gottfried Neumeister has already been tapped to serve as co-CEO during the restructuring and will likely replace Pierer in the future. Only time will tell if KTM can bounce back from this historic low point, but aside from the camshaft issue that emerged in mid-2024, the company’s reputation seems to remain fairly intact. There’s certainly no understating the company’s strong showing in the recent MotoGP Constructors Championship or the company’s impressive sales record up until the recent rough patch in 2024. As cutthroat as the industry can be, everyone loves a good comeback story. If the Austrian company can manage to weather its current hardships and find some sustainable financial footing, KTM Orange should continue to brighten the automotive rainbow for years to come.
