Strategic control, brand loyalty, and Indian ingenuity power a bold revival plan for the Austrian icon
31 May 2025 | 7821 Views | By Ketan Thakkar and Darshan Nakhwa
The sleek, orange-hued machines of KTM—long synonymous with "Ready to Race" performance—faced their most formidable challenge yet, not on a dirt track or MotoGP circuit, but in the unforgiving arena of global finance.
After a near brush with insolvency, KTM is now on the road to revival—powered by Bajaj ...
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The sleek, orange-hued machines of KTM—long synonymous with "Ready to Race" performance—faced their most formidable challenge yet, not on a dirt track or MotoGP circuit, but in the unforgiving arena of global finance.
After a near brush with insolvency, KTM is now on the road to revival—powered by Bajaj Auto’s decisive financial intervention and a transformative plan to take full control of KTM’s holding company. More than a bailout, this is a bold strategic reimagination. Bajaj aims to lead KTM into its next chapter by overhauling governance, optimizing sourcing, expanding product development to larger-capacity motorcycles, and forming long-term global partnerships. Calendar Year 2025 will focus on restoring continuity, while 2026 is set to mark the first visible results of the reset—ushering in a new era for KTM under Indian leadership.
“We have decided that we will take charge, and that is the message that we sent out… looking at control of the enterprise very clearly,” said Bajaj Auto CFO Dinesh Thapar.
The Fall and the Foundation
KTM's troubles had been building for months. After a period of severe liquidity crisis that brought the Austrian motorcycle giant to “near insolvency,” as Rakesh Sharma, Executive Director of Bajaj Auto, candidly stated, the wheels are now firmly back on the ground—thanks to its long-standing Indian partner.
“The unfortunate developments of 2024 onwards had their genesis in the downturn of the e-bike business, the sharp rise and fall of demand for extreme sports during and post-COVID, the failure to read the demand volatility, leading to increase in stocks and debt, and then the increase in interest costs,” Sharma told analysts, describing a brutal 12–18 months for the brand.
Yet, amid the turbulence, one pillar held strong: KTM’s deeply loyal customer base.
“Even in this extremely stressful period, the customer franchise has not eroded due to its deep and niche positioning, and it is ready to be restored.”
A Long Partnership Built for Resilience
The Bajaj-KTM alliance, formed in October 2007, has quietly evolved into one of the most successful cross-border collaborations in the automotive industry. KTM motorcycles manufactured in India have been exported to over 60 countries since 2011, and a co-developed product range launched in 2012 now forms a “substantial franchise,” as Sharma describes.
A major milestone came in 2023 with the production of the millionth KTM bike at Bajaj’s Chakan plant—cementing India’s role in KTM’s global footprint. During this partnership, KTM AG’s revenues and profits quadrupled, ending 2023 with €2.6 billion in revenue and €160 million in EBIT.
A Rescue Mission, a Strategic Play
Faced with mounting financial stress, Bajaj Auto stepped in with a rescue plan through its Netherlands subsidiary, Bajaj Auto International Holdings BV (BAHBV). The subsidiary arranged an €800 million debt package that enabled KTM to meet the conditions of a February 2025 creditor restructuring plan—chief among them, paying 30% of claims by May 23.
Of this, €200 million was infused to maintain operations, and €600 million was used to settle creditor claims and associated liabilities. With the deadline met, KTM’s auditors cleared up the company’s financials, which were later published by PMEG.
On May 22, BAHBV signed a call option agreement with Pierer Industries, giving it the right—either directly or via a nominee—to acquire Pierer’s 50.1% stake in Pierer Bajaj AG (PBAG), KTM’s parent entity. The option, valid until May 31, 2026, caps the transaction at €50.65 million.
“Recognize that Pierer Industries holds 50.1% in Pierer Bajaj, and so we have now entered into a call option agreement that allows us to exercise an option to purchase these shares and therefore take control in Pierer Bajaj AG,” Thapar explained.
Subject to regulatory approvals—expected within 2–3 months—the move will see Bajaj shift from a minority investor to a controlling shareholder in PBAG.
“Our strategic intent is to take charge of rebuilding the KTM business and realizing the synergies that we have with us,” he added.
The Bajaj Blueprint: Control and Collaboration
The revival plan isn’t just about capital—it’s about capability. Once approvals are secured from regulatory bodies such as the Takeover Commission, Investment Authority, and merger regulators across jurisdictions, Bajaj Auto will begin implementing a multi-pronged strategy to rebuild KTM.
Key elements of the plan include:
“Looking for synergies in procurement and component sourcing in production” is a priority, said Thapar.
Expanded Product Development: Currently limited to sub-400cc motorcycles, Bajaj and KTM will now expand joint product development into higher-displacement segments.
“There is clearly an opportunity to be able to expand that all the way up to, let us say, the 990cc in the immediate term horizon,” he noted.
Strategic Collaborations: Bajaj is also exploring alliances that will enhance long-term value creation and sustain KTM’s premium positioning globally.
Restoring Continuity in 2025, Delivering Growth in 2026
While regulatory clearance is still pending, Bajaj has begun preparing for operational normalization in 2025.
“Calendar Year 2025 will be about restoring continuity,” said Thapar. “Production was halted in December, briefly resumed, and then stopped again. The focus is now on reestablishing customer relationships, reinvigorating our partnership with the broader ecosystem, and resuming normal operations. Once approvals are secured, we aim to adopt a more collaborative approach and usher in a new way of working.”
The first visible impact of these changes is expected in 2026.
“Much of this year will be gone, but it will have at least started the process, and we should start to see the first set of those results reflect in possibly calendar 26,” Thapar told investors.
From Crisis to Catalyst
As Bajaj prepares to take full control of KTM’s holding company, the road ahead is as much about integration as it is about innovation. The alliance has delivered strong results in the past, but transforming that into sustained success under a single controlling shareholder will require more than financial discipline.
Bajaj will need to carefully align its cost-efficient, frugal engineering mindset with KTM’s high-performance, premium positioning and European work culture. The challenge lies in harmonizing these distinct operating philosophies while navigating regulatory approvals, operational resets, and shifting global market dynamics. The blueprint is bold, but its success will depend on how sensitively and systematically Bajaj can embed itself into KTM’s DNA without diluting what made the brand distinctive in the first place.