KTM is building motorcycles again: Back, but not yet out of the danger zone

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On March 17, the Austrian motorcycle manufacturer KTM resumed production in Mattighofen. A day of hope. On November 29, 2024, the brand had filed for insolvency under its management, and things did not look good for the future for quite some time. KTM had run into excessive overproduction, with around 235,000 motorcycles unsold in stockpiles worldwide. By 2024, the company had accumulated around 1.5 billion euros in new debt and had to lay off hundreds of employees. To the relief of all employees, the creditors agreed with KTM in court on February 25 on a quota of 30 percent of the debt, which they must repay. In addition, company patriarch and previous KTM CEO Stefan Pierer vacated his chair in January 2025 in favor of Gottfried Neumeister, who was only brought to KTM as CFO in September 2024.

Still many hurdles

But there are still many hurdles to overcome before KTM's existence is secured. Nevertheless, after 14  weeks of wage and salary cuts, the production stop at the plant in Mattighofen came to an end. The first of four production lines started up in single-shift operation on March 17. However, after the long shutdown, a lot needs to be done before the production lines can run smoothly again. Among other things, the global supply chains need to be activated, pre-assembly is required, and the goods need to be both delivered and inspected. KTM expects the first motorcycles to be completed from March 20. However, full capacity utilization of the plant will not be reached for at least a few months.

600 million euros due by the end of May

Above all, however, KTM still has to transfer a lot of money. 600 million euros are due to creditors by the end of May. The money is to come from investors. The management is confident that it will find the money. It is no secret that Bajaj has so far injected 50 million euros. The Indian motorcycle group holds a 49.9 percent stake in Pierer Bajaj AG, to which KTM belongs. Other well-known companies are said to be interested in acquiring a stake in KTM, but it is not certain that BMW was among them. The involvement of Stephan Zöchling, co-owner of the exhaust manufacturer Remus and recently a member of the supervisory board of KTM's parent company Pierer Mobility, is also uncertain.

Many interested parties

For April and May, KTM needs a further 100  million euros to keep operations in Mattighofen running. Citibank, which is leading the restructuring process, has announced that there is “great interest” in investing in KTM. Names have not yet been mentioned. However, whoever is involved will still have to wait for antitrust approval. The matter is therefore far from being a done deal, even though the Austrian Minister of Economic Affairs, Wolfgang Hattmannsdorfer, expressed cautious optimism about the start of production at KTM, saying that “the aim now is to create a stable investor situation”. At the same time, however, he expressed concern about the upheavals facing the Austrian economy in terms of competitiveness.

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KTM ist noch zu retten (7 Bilder)

Relocation abroad?

He was alluding to the fear that production could be increasingly outsourced to India in the long term, where Bajaj has been manufacturing the small KTM-Duke series from 125 to 390 cm³ for years. KTM also has its 790cc two-cylinder models built by CFMoto in China. Labor costs in Austria are considerably higher than in Asia. The jobs in Mattighofen therefore only appear to be secure for now, as it remains to be seen how the balance of power in the KTM Group could shift in the future. If the new investors insist on a relocation of production for cost reasons, the KTM management would have a difficult time.

Large stocks

But there are other problems too. Even if motorcycle production at the plant is running at full capacity again, there are still well over 100,000 unsold bikes from previous model years. Since November 2024, many KTM, Husqvarna and Gasgas – brands belonging to KTM – have been pushed onto the market with huge discounts and one-day registrations. As a result, KTM customers are currently showing little interest in paying the full list price for newly produced 2025 models. As a result, KTM dealers will be forced to offer the new motorcycles at a big discount – - a vicious circle.

Quality problems

If you take a look at the relevant KTM customer forums, you will find a striking number of complaints about serious quality issues, even with new models. These include major engine and gearbox damage, as well as electrical failures. The former member of the management board, Hubert Trunkenpolz, had already publicly acknowledged the quality issues in the summer of 2024, which led to a noticeable reluctance for buyers. This has now prompted KTM to extend its free warranty to four years. Good for buyers, but it could cost the company dearly in the future, especially in its precarious financial situation.

Hope for the future

There is justified hope that the situation in Mattighofen will return to normal from 25 May, when the 600  million euros are due to creditors. However, it is not yet certain what the long-term future will look like, only that it will continue, as the (still) largest European motorcycle manufacturer is considered “too big to fail”. The KTM Group (including Husqvarna and Gasgas) is still the global market leader in the off-road segment (sports enduros and motocrossers) and the sales figures for the small Duke series also remain promising. The great interest shown by many investors shows that KTM's substance still has great potential.

(fpi)