Times are tough for KTM, which is going through a major financial crisis after years of record growth. Pierer Mobility AG, the parent company of KTM, Husqvarna, GasGas, and MV Agusta, recently released its financial report for the first half of 2024, revealing a loss of €172 million, a 27% drop in motorcycle sales, and net debt that has climbed 89% to €1,4 billion…
How KTM has come to this? Hubert Trunkenpolz, member of the board of directors of Pierer Mobility AG, explains on Motorcycle online that excessive demand due to the COVID-19 pandemic has caused supply chain issues. When consumers stopped spending on travel and entertainment during the pandemic, they bought motorcycles, but the disrupted supply chain led to skyrocketing costs and overproduction. As a result, inventories became unmanageable when demand dropped after the pandemic, forcing KTM to reduce production by 25% in the second half of 2024.
KTM also had to cut 373 jobs in the first half of the year, and 200 more jobs to be cut in September. However, Trunkenpolz claims that the restructuring will be complete by the end of September, with a workforce of 5 employees.
To rectify the situation, KTM va abruptly reduce production to rebalance supply and demand. Deep discounts, which harm the brand, will also be reduced to protect margins. Despite these drastic measures, KTM is optimistic and hopes to recover by the end of the year.
Hubert Trunkenpolz offers unprecedented insight into the challenges faced by KTM and Pierer Mobility AG
Customers and dealers have also complained about quality issues, due to overproduction during the pandemic. KTM acknowledged that removing incomplete motorcycles from assembly lines to finish them later has significantly increased defects. Now that production has returned to normal levels (160 to 000 motorcycles per year), KTM strives to restore its quality standards.
Regarding cooperation with CFMoto, Trunkenpolz considers this partnership with the Chinese manufacturer as a necessity to face the rise of Chinese competition. CFMoto, which manufactures engines for KTM in China, is now a strategic partner to conquer the European market.
The mark of Matthighofen also took a majority stake in MV Agusta in March 2024. Trunkenpolz assures that, despite the timing of the acquisition, the progress made with MV Agusta exceeded expectations. Quality issues were brought under control and production was stabilized.
KTM et MV Agusta have ambitions to return to MotoGP, probably in 2027, when the regulation changes. However, KTM will not build two different engines for the two brands, as it would be too expensive. Trunkenpolz also criticizes the domination of Ducati in MotoGP, with eight bikes on the grid, hoping that Liberty Medium, the new MotoGP rights holder, will re-establish a more balanced championship between the manufacturers.
KTM is going through an unprecedented period of crisis, but the brand is determined to turn things around. With a restructuring drastic, a reduction in production, and strategic collaborations with partners like CFMoto, KTM hopes to get out of the red by the end of the year. As for the future, the brand maintains big ambitions, including a return to MotoGP with MV Agusta.
