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Takeover details: Restructuring proceedings and cash injection
The takeover was prompted by the financial difficulties KTM AG found itself in at the end of 2024. As part of restructuring proceedings, creditors agreed to a repayment of only 30 percent of the original debt of around 1.6 billion euros (approx. 1.7 billion US dollars). Bajaj provided a large part of the necessary funds with a total financing package of around €800 million (approximately US$870 million). Bajaj gained decisive control through a call option that allows the previous minority shareholder to acquire a majority stake in KTM’s parent company, Pierer Mobility. According to the takeover commission, this does not require a mandatory offer to the remaining shareholders – a step made possible by an exception in restructuring law.
Drastic cost-cutting measures: Administration and development particularly affected
Rajiv Bajaj, CEO of Bajaj Auto, has already announced significant cost-cutting measures. According to this, overhead costs – i.e., administration, marketing, and development – are to be reduced by more than 50 percent. Particularly critical: of the approximately 4,000 KTM employees, around 3,000 work in the office and only around 1,000 are directly involved in production. Bajaj described this ratio as “perplexing.” He announced plans to “rationalize” the structures in Mattighofen. Bajaj said, “There are too many managers at KTM who manage managers.”
Behind this “efficiency increase” lies above all job cuts, which are to take place in the areas of research, development, and product strategy – precisely where KTM has traditionally been considered innovative. For many employees, the changes mean uncertainty and the threat of massive job losses. The administration at the Mattighofen site is to be significantly reduced. The plan is to save up to 300 million euros (approx. 327 million US dollars) here.
Location policy: Production in Europe under pressure
Another key aspect of the new strategy concerns production. Bajaj makes no secret of the fact that cost pressure and global supply chains are set to play an even greater role in the future. Rajiv Bajaj’s statement that “European manufacturing is dead” suggests that the shift of production volumes abroad could be further accelerated. Although production in Austria is to be maintained according to current statements, in the medium term a reduction in location loyalty in favor of economic efficiency is likely.
As part of this process, production of the KTM-owned GasGas brand has already been relocated from Girona in Spain to Mattighofen. Motorcycles for the KTM, Husqvarna, and GasGas brands will therefore be manufactured at the central location in Austria in the future. For the approximately 20 employees of the former GasGas production facility in Spain, this means the loss of their jobs. However, there are no plans to hire new staff in Mattighofen or Munderfing – the existing workforce is expected to absorb the additional workload.
Analysis: Between rationalization and loss of identity
Bajaj justifies the cuts as a necessary restructuring measure, citing mistakes made by the previous management and identifying “three forms of greed” as the cause of the crisis at KTM: overproduction, misguided expansion into the bicycle market, and a lack of control in management. Now that it has taken over, Bajaj sees it as its responsibility to fundamentally reform the structures and focus on profitability.
However, this entails risks. In particular, the planned staff cuts in research and development could weaken the company’s expertise and innovative strength. KTM’s identity as a synonym for European engineering and racing passion faces an uncertain future.
While Bajaj is pursuing the goal of reducing costs and making the brand more profitable, the question arises as to how this can be reconciled with the company’s previous philosophy and the high demands of its international clientele.
Outlook: New management structure, uncertain future
With the installation of a new management team consisting of experienced and new personnel, Bajaj is focusing on both continuity and change. The most important challenges now lie in restructuring the supply chain, reducing administrative costs, and restoring confidence in the KTM brand. Motorcycle production will continue to take place in Austria, but it remains to be seen how the cost-cutting measures will affect KTM’s workforce, product range, and market position.
The future of the Austrian motorcycle icon now depends largely on how skillfully it manages the balancing act between increasing efficiency and preserving its identity and innovative strength.
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