Jakarta – KTM, the Austrian automotive distributor, is in a dire situation with a debt burden of €2.9 billion, or approximately IDR 48 trillion. If KTM does not improve its finances by the end of February 2025, the company will be forced to sell its assets to satisfy creditors.
According to Forbes, KTM’s financial troubles are due to a 27% decline in sales compared to the first half of 2023. Additionally, there has been controversy surrounding the decline in manufacturing quality, particularly due to issues with the camshaft, as well as a general drop in sales across the entire industry.
Furthermore, the stock price of Pierer Mobility AG has fallen from €89.60 in September 2021 to €9.50 in the most recent trading day, causing its market capitalization to plummet to €345 million. Its debt stands at €1.4 billion, with €136 million more due in 2025.
As a result, the company has laid off nearly 600 workers in two rounds this year and halted production while searching for a way out of the crisis.
KTM is now undergoing a legal restructuring process known as “self-administration.” The goal is to reorganize the company’s finances.
“KTM has now entered ‘self-administration,’ a European market procedure that allows a 90-day effort to restructure and secure financing to continue operations before the company faces bankruptcy,” said KTM CEO Stefan Pierer, quoted from KTM’s YouTube account, Wednesday (December 4, 2024).
KTM is also seeking to strengthen its involvement with long-time partner Bajaj Auto to secure investments, but these efforts have yet to come to fruition as expected.
Additionally, KTM has long been in partnership with energy drink company and extreme sports sponsor Red Bull. However, this $20 billion beverage company seems unwilling to invest in or directly acquire KTM.
