An Outsider's Look Inside KTM
Thu, 05 Dec 2024
The inner workings of KTM from our perspective
Recently, KTM released a video about how it invited media from around the world to its headquarters in Mattighofen, Austria to see how a motorcycle goes from a concept to a finished product, all in the span of about two to five years. Motorcycle.com was one of only four outlets in North America selected, and I got the nod to be our representative. You can see the video below.
If you watched the whole thing, you’ll see that I was interviewed along with many others in attendance. And based on what we saw, I stand by what I said. Seeing the facilities certainly was impressive. Learning about the steps to create a motorcycle was something I hadn’t seen in that kind of depth before. But with the benefit of hindsight, I can reflect on the trip from a perspective I wasn’t able to before.
For perspective, the trip happened in September. It’s now December as I’m writing this, and oh boy have KTM been in the news the past three months. KTM (specifically its parent company Pierer Mobility Group) is reeling with the news that it’s restructuring its business due to being in debt to the tune of €2.9 billion (US$3.05 billion). KTM was already in the news for a number of reasons before September, but none of us had any idea of the fallout that was about to unfold. Frankly, I’m not even sure if some of the KTM staff we were with had any idea, either.
Ostensibly, we were invited by KTM to learn about how new models come to life, to see the production facilities, and to better understand the company from the inside. Everything we’d seen was about how the company made motorcycles, all the way down to the raw materials brought in to produce frames, swingarms, and exhausts all in-house.
This is why it seemed strange for then CSO Florian Kecht to speak to the assembled media rebutting claims he saw about an impending bankruptcy and the demise of the company. These weren’t reports filed with creditors, or investigative reports from business journals – Kecht was specifically refuting Youtube videos. I, along with others in attendance, thought it was very odd for someone at the C-suite level to be addressing Youtube videos. But it was also odd considering our day was filled with KTM trying to show us its commitment to quality and to see “how the sausage is made,” so to speak. As it turns out, Kecht was indeed trying to get ahead of a potential avalanche – one that ultimately cost him his position on the board.
Of course today Youtube is filled with videos about KTM’s financial troubles, but searching back for videos posted months ago finds a few videos where the presenters are simply interpreting Pierer Mobility Group’s own financial statements, wherein the company was down 2 billion dollars, and the presenters start projecting from there. In a way, it’s textbook internet clickbait but with some legit context to back it up.
So, what did Kecht say? To his credit, he didn’t shy away from the fact KTM had a bad first half of the year, adding that changes were already being made to deal with it, like slashing the amount of shifts in half, from 12 to 6, in response to the production pause for the first few months of 2025. He noted the pause on the electric and bicycle business, too. He also wanted to reassure dealers that they were the “backbone” of the business, and of the 4,839 PMAG dealers globally (990 in North America), most of the 80 million Euros lost in the first half of 2024 went to supporting those dealers. Of course, now 80 million Euros seems like a drop in the bucket compared to the billions PMAG is in the hole.
What I Saw
Here’s what I could tell after spending two days in Mattighofen:
It was clear there was a lot of investment in growth. Originally, the production facility was built to produce 40,000 motorcycles a year. Now it can produce 100,000. There’s state-of-the art equipment everywhere, all of it either new or renovated. We even got to see construction being built on an expansion to the production facility. To be clear, there was no actual construction happening at the time, just raw materials on the ground, ready for the eventual construction to take place. If it ever does.
The obvious irony here is the fact that the actual production was only running at a fraction of its full abilities. At the time we were told this was because of a natural slow period in production. Could it be because of the really slow period in production KTM is gearing up for in the first half of 2025?
Unfortunately, our tour didn’t visit any facility related to Husqvarna or Gas Gas, nor did we get to visit any of the racing departments, so what we have is an incomplete picture. However, what I witnessed was two different halves. On the one hand, there was the core workforce of the company, doing their jobs with pride in their work. This falls on the backdrop of a now departed CSO refuting claims of bankruptcy made by Youtubers with better foresight than most of the rest of the media, including us.
It would seem as though the PMAG board made a massive error in going big on acquisitions and product on the assumption that the Covid-era spending trend would be the new norm At the time, Kecht delivering a prepared speech (and a quite passionate one, too) to squash internet rumors seemed a bit like desperation. Now it seems he and the rest of the board saw this coming. It ultimately didn’t work and doubt about KTM’s future is at an all-time high.