KTM AG, the iconic Austrian motorcycle manufacturer, is filing for self-administration restructuring, marking a critical moment in its storied history. The announcement came from its parent company, Pierer Mobility, on Tuesday, citing a severe liquidity bottleneck. KTM reportedly faces a financial gap amounting to hundreds of millions of euros, with no immediate solution in sight.
The restructuring process will involve KTM AG and two key subsidiaries, KTM Components and KTM F&E. Other subsidiaries within the KTM Group are reportedly unaffected. The company has already cut 700 jobs this year, with plans to lay off an additional 300 employees by early 2025. KTM currently employs around 5,000 people in Austria.
Production has also been scaled back. No new motorcycles will be manufactured in January and February, with operations reduced to a single shift thereafter. The goal is to manage inventory levels and ensure the company’s survival.
Adding to the turmoil, KTM has informed employees that November wages and Christmas bonuses cannot be paid, according to the Upper Austrian Chamber of Labor.
The crisis comes after Pierer Mobility reported record sales for 2023. However, demand for KTM motorcycles has since plummeted in key markets like Europe and the U.S. This downturn has strained the company’s finances, leading to unsustainable inventory levels and an urgent need for restructuring.
News of KTM's financial woes caused a sharp decline in Pierer Mobility's stock, with shares falling over 45% after an earlier 19% increase amid speculation of investor interest.
Rumors circulated last week that Mark Mateschitz, heir to the Red Bull fortune, might step in as an investor. However, Pierer Mobility has denied these claims, leaving the company’s future funding uncertain.
Stefan Pierer, CEO of KTM AG and a significant figure in Austria’s business and political landscape, expressed resolve to save the company. “The KTM brand is my life’s work, and I will fight for it,” Pierer stated, likening the restructuring to a "pit stop for the future."
Pierer, known for his support of former Austrian Chancellor Sebastian Kurz, has faced criticism for KTM's reliance on substantial COVID-19 subsidies. During the pandemic, KTM AG received over €10 million in short-time work subsidies within just two months.
KTM’s restructuring marks a dramatic chapter for Europe’s largest motorcycle manufacturer. While CEO Pierer remains optimistic, the company faces significant challenges, including restoring market confidence, securing financing, and navigating a recovery in global motorcycle demand.
