Component shortage prompts new three-month stoppage
Despite clearing the hurdle of gaining creditor agreement to its proposed reorganisation plan in February, KTM’s problems aren’t entirely behind it, as questions remain over whether the company will meet its court-imposed deadline of paying creditors a 30% quota of the money they’re owed by 23rd May – and now another spanner has been thrown in the works, as the company has stopped production in Austria once again.
KTM’s lines were silent from December last year until March, as the company battled to clear overstocks of unsold bikes, but just weeks after restarting, they’ve been forced to shut down again, this time with component shortages to blame.
The explanation is that because KTM was given only three months to make a payment of around €600 million (around $1 billion AUD) to cover the 30% quota owed to creditors, it’s been impossible to secure short-term, 90-day parts supply contracts from its suppliers – many of whom are likely to already be on that list of creditors – between the February agreement and the May payment deadline. KTM had enough parts in stock to make 4200 bikes, but now it’s run out, so production has been halted until the end of July, when it’s hoped that the firm’s problems will be behind it and new deals for components will have been struck.
During that time, according to the Austrian mainstream press, KTM’s employees have been asked to cut their hours to a 30-hour week, with a pro-rata pay reduction to match. While office workers will be expected to work those 30 hours, production line employees will stay at home.
To reduce the impact, KTM is bringing forward the normal company-wide holiday from August to July.
The announcement of the production stoppage came just as KTM’s parent company, Pierer Mobility, first postponed its annual financial report and then released a provisional set of figures. The postponement of the report came due to the situation at KTM: Pierer Mobility had anticipated that it would have confirmed financing for the payment of KTM’s debts by the end of April, but that has not happened – with a knock-on effect on Pierer Mobility’s ability to publish its accounts.
Provisional figures show that Pierer Mobility made a loss of around €1.2 billion in 2024, and that between January 2024 and the end of March 2025, the company has cut 1850 jobs, with the workforce – which stood at 6184 at the start of 2024 – expected to decline by another 220 when the sale of Pierer’s majority stake in MV Agusta is completed.
The 23rd May deadline for the 30% quota payment to be made to KTM’s creditors is the next key point in the saga. While there has been a lot of confidence that new investors can be found, and there’s no doubting the fact that KTM has been a huge success story over the last three decades since Pierer took control, there’s still uncertainty about what form that investment will take.
Several names have been mentioned over the months of KTM’s problems, with the company’s existing Indian part-owner Bajaj and Chinese partner CFMOTO both often mentioned, but more recent rumours in Austria have suggested that Canada’s Bombardier – parent to the Rotax brand that long supplied KTM with engines – could also be a contender to take a stake in the company.
