logo
KTM Financial Headwinds: Can Partnership With Bajaj Auto Turn Things Around?

KTM Financial Headwinds: Can Partnership With Bajaj Auto Turn Things Around?

NDTV05-05-2025

Austrian motorcycle giant KTM, long celebrated for its aggressive styling and performance DNA, is now confronting an uncomfortable reality that includes slowing growth and severe operational headwinds. A string of financial disclosures from parent company Pierer Mobility AG has raised concerns among investors and industry observers alike. KTM's struggles became more evident after the company reported weaker-than-expected results for FY2024, with profits slipping, costs rising and inventories piling up across markets. The brand that once couldn't manufacture fast enough now finds itself with too many unsold two-wheeler units and not enough buyers.
Key Contributing Factors To KTM's Current Mess Include
Inventory Overload: KTM overestimated post-pandemic demand, resulting in overproduction and slow dealer turnover, particularly in Europe and North America.
Supply Chain Costs: Rising logistics and raw material expenses have chipped away at profit margins, even as production resumed at full capacity.
Emerging Market Dependence: Slowing demand and economic volatility in countries like India and Indonesia have added unpredictability to KTM's core strategy.
High R&D Spend: KTM's continued investment in motorsports-derived technology is laudable, but the payoff remains long-term, not immediate.
Acquiring Multiple Brands - KTM has had acquisitions, tie-ups and partnerships with multiple brands like Husqvarna, GasGas, MV Agusta and CFMoto to name a few. This hasn't always played in the interest of the company, because Pierer Mobility AG took on quite a bit of debt to finance these acquisitions. For example, the current financial mess meant the celebrated brand 'MV Agusta' was sold back to Timur Sardarov, who was the original owner of the brand before KTM acquired it.
The Bajaj Auto Angle: Crucial Ally or Strategic Fix?
Bajaj Auto, India's two-wheeler behemoth, holds nearly 49.9 per cent stake in KTM AG through Pierer Bajaj AG and is KTM's key manufacturing and development partner. KTM's small and mid-capacity bikes (like the 125, 200, and 390 series) are manufactured in Bajaj's Chakan plant near Pune and exported globally. While this partnership has helped KTM scale rapidly in emerging markets, recent dynamics have exposed some cracks.
Market Fatigue: The Indian premium motorcycle segment has become more competitive, with price-conscious consumers turning to alternatives like TVS and Royal Enfield. Products like the KTM 390 Adventure and the 390 Enduro R operate in a niche segment and are unlikely to bring in good volumes. In fact, the 250 range is the one that saw positive growth last year.
EV Shift Pressure: India's growing focus on electrification has pushed Bajaj to expedite its EV plans-through Chetak Electric and now potential KTM EVs.
Inventory Bottlenecks: Slow demand recovery in India has led to overstocking and margin stress for both KTM and Bajaj.
While parent company Bajaj Auto did infuse the ailing Pierer Bajaj AG with 50 million euros to stop it from going completely down under, the story of KTM's survival is far from over. The company sold MV Agusta back to its original owners, went into a 90-day self-administration period and laid off over 1,800 employees, to reduce its financial burden.
Despite these issues, the Bajaj-KTM partnership remains KTM's best for recovery. The Austrian brand can lean on Bajaj Auto help them to a large extent, because if KTM does go down under, then even Bajaj has quite a bit to lose, with a big chunk of Bajaj's sales coming through KTM and a 17-year-old partnership threatening to unravel. Leveraging Bajaj's cost-effective engineering can help KTM launch new models at lower development costs, crucial in a margin-conscious environment. Bajaj's vast dealership and service network in Asia and Africa could help KTM build sustainable demand and improve after-sales performance.
What Can KTM Do To Come Back
To regain traction, KTM needs a combination of operational tightening and bold innovation. Possible strategies include:
Smarter Inventory Planning: Adopt a more demand-responsive production model to avoid inventory bloating.
Focus on Profitable Models: Rationalise the product portfolio to emphasize high-margin, high-demand models.
Monetise After-Sales Services: Expand service plans, accessories, and digital features to boost recurring revenue.
Reinforce Investor Trust: Clear communication of turnaround plans, cost-cutting, and prudent capital deployment will be essential.
KTM's brand value can help Bajaj gain access to EU and other important markets. On the other hand, Bajaj currently has presence in 100 countries, which can unlock massive sales potential for KTM.
Final Word: Still A Brand Worth Betting On?
It absolutely is! KTM's situation is serious-but not hopeless. The brand retains strong recognition, loyal enthusiasts, and cutting-edge engineering capabilities. With Bajaj Auto's manufacturing backbone and emerging-market expertise, KTM has the ingredients for a robust recovery-provided it acts decisively, pivots quickly and whether the company can manage the May 23, 2025 deadline to stay afloat and make a payment of 600 million euros to the restructuring administrator.
In an interview to Moneycontrol, Rajiv Bajaj, MD, Bajaj Auto said that the top management of Bajaj has been pre-occupied with finding a long term and a sustainable solution to not only keep KTM afloat but turn it into a profitable company in the long term. Come May 23 and the uncertainty around the brand will be dealt with, one way or the other.
Interview Source: Moneycontrol

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Crippled by Op Sindoor strikes, Pak eyeing Germany for air defence upgrades
Crippled by Op Sindoor strikes, Pak eyeing Germany for air defence upgrades

India Today

time34 minutes ago

  • India Today

Crippled by Op Sindoor strikes, Pak eyeing Germany for air defence upgrades

Rattled by the devastating impact of BrahMos missile strikes during India's Operation Sindoor, Pakistan is now exploring the procurement of a new air defence system to counter future to sources, Islamabad is actively considering the purchase of the IRIS-T SLM air defence system from Germany in a bid to strengthen its aerial shield against India's supersonic cruise missiles, particularly the move comes after Pakistan's existing Chinese-origin air defence systems, including the HQ-9 and HQ-16, failed to detect or intercept Indian missile attacks during the operation. In contrast, the IRIS-T SLM system has demonstrated significant effectiveness in recent combat situations. In Ukraine, where several units were redirected from Egypt due to the ongoing war, the German-made system has reportedly shot down over 60 aerial targets since its deployment last it was said to have successfully intercepted Russian Oniks missiles, which are similar in profile to India's by Diehl Defence, the IRIS-T SLM is known for its modular and compact architecture. Each unit, estimated to cost around USD 200 million, includes radar, an operations centre, and launchers, all mounted on a 20-foot interest in the system highlights its urgent push to rebuild and upgrade its air defence network, particularly after key air bases were damaged by Indian missiles during Operation grappling with a severe economic crisis, Pakistan has raised its defence budget by 18 per cent this year while simultaneously scrapping domestic development projects valued at 1,000 billion Pakistani the past month, the country has secured financial assistance totalling USD 1.8 billion from the International Monetary Fund (IMF) and the Asian Development Bank (ADB) to address its fiscal Germany's Diehl Defence, the maker of the IRIS-T SLM, is also involved in a major Indian defence initiative. The company is collaborating with Thyssenkrupp Marine Systems on Project 75I, a Rs 70,000 crore programme to build six submarines for the Indian Indian-German collaboration also includes the development of the Interactive Defence and Attack System (IDAS), which will be integrated into the India's Reliance Defence has announced a partnership to manufacture Vulcano 155mm precision-guided artillery shells domestically. The initiative is expected to generate revenues of approximately Rs 10,000 crore, with over 50 per cent of the components to be produced indigenously.

India Won Operation Sindoor – But What Does The Army Want Next, And Who Poses The Greatest Threat?
India Won Operation Sindoor – But What Does The Army Want Next, And Who Poses The Greatest Threat?

India.com

time38 minutes ago

  • India.com

India Won Operation Sindoor – But What Does The Army Want Next, And Who Poses The Greatest Threat?

New Delhi: India crushed Pakistan's assault during Operation Sindoor. But after the dust settled, something more alarming came into view. China was not sitting on the sidelines. It was pulling strings from behind the curtain. Indian radars picked up Chinese-made jets in Pakistani skies. Chinese missiles were used to target Indian bases. Beijing was deeply involved. That means India was not fighting just Pakistan. India was up against two enemies at once. Military officers have sounded the alarm. They want India's defence budget raised to 2.5% of the Gross Domestic Product (GDP). Right now, the defence allocation stands at just 1.9%. A huge portion of that money goes into salaries and pensions. Only a quarter of it helps modernise the military. This cannot continue. Not when two hostile neighbours are preparing for something bigger. China has been pumping weapons into Pakistan. In the May 7-10 clashes, Pakistan deployed Chinese J-10 jets and HQ-9 missile systems. Beijing has promised to send more – stealth fighters, long-range air defence weapons and new-generation drones. China is flooding Pakistan with cutting-edge military tools. Pakistan's economy is in crisis. But even then, Islamabad raised its defence budget by 20%. It cut development. It ignored debt. It focused on weapons. India must respond, believe experts, arguing that it is time for total self-reliance in defence production. India must build fighter jets, drones, loitering munitions and missiles on its own. The private sector must step in. Half-measures will not do. Half-prepared armies lose wars. India's Advanced Medium Combat Aircraft (AMCA) project has started moving. But it must move faster. Tejas took decades. The same mistake cannot happen again. The Indian Air Force is short on fighter squadrons. It has just 30. The target is 42.5. Drones are the new face of war. Swarm drones. FPV kamikaze drones. Loitering drones. India needs all of these, and it needs them in bulk. No country will come to India's rescue in a full-scale war. India must stand on its own. During Operation Sindoor, India used Russian S-400s, Israeli Barak-8s and its own Akash missiles. These systems intercepted and neautralised many Pakistani drone and missile attacks. But more layers are needed. DRDO must now accelerate two things – short-range air defence systems and long-range strike missiles like Project Kusha. Military reform is also crucial. India has a huge army. It must cut unnecessary spending. It must remove red tape from weapons procurement. And it must create joint theatre commands that allow the Army, Navy and Air Force to fight as one. A senior military commander put it bluntly. India is now staring at a superpower that is feeding a hostile neighbour. Pakistan may fire the bullets. But China is loading the gun. India cannot look away anymore. The next battle may not wait for long.

Financial sector regulators to work on universal KYC
Financial sector regulators to work on universal KYC

Time of India

time42 minutes ago

  • Time of India

Financial sector regulators to work on universal KYC

Financial sector regulators, led by the RBI, are developing a universal KYC framework with the CKYCR to streamline verification processes. Nirmala Sitharaman urged regulators to ensure seamless KYC experiences for citizens and expedite refunds of unclaimed amounts through district-level camps. The FSDC also discussed strengthening cybersecurity and implementing budget announcements related to KYC simplification for NRIs, PIOs, and OCIs. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: Financial sector regulators, including the Reserve Bank of India , will look at a universal know your customer (KYC) framework and develop systems with the Central Know Your Customer Registry (CKYCR) to promote the inter-usability of records and avoid multiple minister Nirmala Sitharaman in a meeting of the Financial Stability and Development Council (FSDC) in Mumbai on Tuesday urged the financial sector regulators to take proactive steps to ensure that citizens have a seamless experience with the KYC processes across the financial a statement, the finance ministry said the FSDC also considered strengthening the cyber resilience framework of the Indian financial sector through a financial sector-specific cybersecurity FSDC also discussed issues relating to formulating a strategy for implementing the past decisions and the budget announcements, which included prescribing common KYC norms, simplification and digitalisation of the KYC process, including digital onboarding for non-resident Indians (NRIs), PIOs and OCIs in the Indian securities FSDC has representation from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (Irdai), the Securities and Exchange Board of India (Sebi), the Pension Fund Regulatory and Development Authority (PFRDA) and officials from the finance and corporate affairs urged the regulators and departments to expedite the process of refund to rightful owners of unclaimed amounts by holding special district-level also emphasised that interest of common citizens be kept in mind and therefore expeditiously refund the claims of the rightful claimants, the statement unclaimed amounts comprise deposits in banks, unclaimed shares and dividends managed by IEPFA and unclaimed insurance and pension funds with Irdai and PFRDA, drive is to be conducted in coordination with RBI, Sebi, MCA, PFRDA and Irdai along with banks, pension agencies and insurance finance ministry statement noted that the FSDC also deliberated on the emerging trends from the domestic and global macro-financial situation and stressed the need to be vigilant."The council recognised the need for proactive efforts to mitigate potential risks to financial stability while adopting adequate safeguards for the financial system's resilience," it said.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store