Bajaj saves KTM, takes majority control

That was always the most likely scenario for a positive resolution of the financial problems that parent company Pierer Mobility got into. Bajaj Auto, the huge manufacturer of two- and three-wheel vehicles in India, already owned just under 50% of the Austrian manufacturer and has now arranged to provide an additional €600 million ($684 million), beyond the €200 million it has already injected, to allow the KTM conglomerate to pay off creditors. Pending regulatory approval, "Bajaj will shift gears from hitherto being a dormant minority investor to a majority owner in the global KTM company, whilst it continues to accelerate the thriving KTM business that is run out of India under the joint development program, where it develops, makes and sells in India as well as exports to 80 countries across the KTM network," Bajaj stated in a news release. The exact percentage of the company Bajaj would own was not specified.

The cash infusion will allow Pierer Mobility to meet the terms of its financial restructuring agreement by paying its creditors 30% of the money due them. That payment is due tomorrow under the restructuring agreement. The KTM parent got into financial difficulty by continuing to pursue an aggressive growth trajectory and overproducing motorcycles after the temporary post-pandemic surge in sales softened.

So what does this mean for the future of KTM and its smaller brands? It's certainly better news for anyone who owns a KTM, Husqvarna, or GASGAS, and even more so for dealers, than the alternative, which was the company potentially being liquidated. And while Bajaj will no doubt want to maintain KTM's image as a performance brand with an "adrenaline-packed product lineup," as Bajaj describes it, there's also going to be more Indian spices in the cooking. Bajaj listed four plans:

• Revamping management and "reconstituting" the board of directors. No surprise there. New ownership means new leadership and former CEO and current co-CEO Stefan Pierer will be leaving the board in June.
• Bajaj will launch a turnaround plan "aimed at restoring momentum and competitive growth while driving the financial viability of the company."
• Bajaj will expand joint development operations between Austria and India and will be "pursuing synergistic opportunities."
• Pursue new collaborations and partnerships in the industry.

While we're naturally hearing more generalities than specifics at this point, all those are the steps you'd expect new ownership to take to turn around the ship. Bajaj stated, "the larger role of Bajaj in the future of the KTM business offers potential to unlock a triad of opportunity covering global growth, brand elevation, and technology leadership."

In any case, it beats a liquidation auction at the KTM headquarters.