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In KTM's case, selling more units for less is the only option. To be honest, moving volume is more important to dealers than the profit portion. Because the profit will come with the mass volume.
Exactly. More transactions means more customers in the business office.
Quick primer before Friday's hearing
https://m.gpone.com/en/2025/01/21/motogp/light-at-the-end-of-the-tunnel…
PMG are selling their bicycles brands Felt and R Raymon bicycles, also looking to sell their Xbow car brand and MV Agusta shares.
They're cautiously optimistic to be able to raise up to 900 M. The objective for 2025 would be to reduce production to 250 000 bikes and workforce to about 4000.
Then Extraordinary General Assembly will happen on Monday, to vote on new shares structure, elect a new supervisory board (likely to bring investors on board) and so on.
Last hearing will be February 25th.
250,000 still sounds like a lot of bikes to produce given their backlog of inventory, doesn't it?
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"Then Extraordinary General Assembly will happen on Monday, to vote on new shares structure, elect a new supervisory board (likely to bring investors on board) and so on."
Big deal. Pierer and Baja own 75% of the shares.
True but that would still be 130 000 less than this past couple of years production. Now where have I seen this 130 000 figure before? 🙃
It would mean reducing production by a third. Keep in mind they're already planning to lay off a third of their workers, further reduction in production would likely mean laying off even more people.
Until then. That's kinda what the deal is all about.
There wiil have to be major concessions by all parties.......this is a negotiation.......
Yeah, the old phony step-down. Who would have thunk it?
Serious question. Did Pierer bang your old lady or something? You’ve got a really unhealthy obsession with the guy.
NO but maybe I banger yours. I did a lot of ridge running in PA.
If you stop the assembly line completely, you lose talent to your competitors, and the right talent may not be available when you're ready to ramp up again.
If I were at the helm, I would leverage KTM's assembly, engineering, and manufacturing capacity, and offer services to larger, non-competing companies, such as auto manufacturers. This would keep the talent at KTM instead of their competitors, and continue to employ the majority of staff. It would also allow the company to reduce production until excess inventory is sold, all the while being able to ramp back up at their own pace when the time is right.
You have to wonder what direction KTM will go with different people in charge. Different money sometimes want different things. Hopefully it’s just a smaller racing presence and not vastly different.
PE will prob squeeze the life out of the company.
That may not be an option in Austria, or even Europe, all the automotive manufacturers are struggling with reduced demand, high costs and competition from China.
Yeah, Automotive is just one example. They may have already tried what I'm suggesting. My point is simply to bring in outside work for a time, or forge partnerships. There are at least 2 EV companies that failed recently, I believe because they couldn't ramp up production. KTM could've helped with that.
I don't see an larger Austrian company that would benefit from KTM's assembly line...
There may be some other European companies, but no one I'm aware of that could fully utilize KTM's assemble capacity.
Offering technical services to other companies would be difficult, there are a lot of European consulting companies, that already provide technical engineering services and have existing customer relationships that have been built over years.
It would be easier for KTM to pivot to other markets, and products if they were a smaller company, it's difficult for large companies.
KTM doesn't have the potential to significantly grow their market, so the only way forward is cutting costs by downsizing to reduce overheads, marketing and manufacturing costs and outsourcing some or all of their manufacturing.
Pit Row
That's good insight, and you're right!
But, even bringing in some outside work should lessen the amount they need to downsize.
It's hard for large companies to pivot, but it's necessary to survive long term. Things change. A company has to as well!
KTM diversified with other brands, Husqvarna and GasGas, utilizing existing assembly lines, suppliers and sales networks, it worked and increased total unit sales and total revenue, but they went too far going outside their core business with MV Agusta, and bicycles.
They should go back to their core competences, divest the other products, and cut costs manufacturing their core products.
Alpine Creditors Association (AKV) now says PMG debt is 2.185 B.
Discussions are happening with 23 potential investors, that should be more detailed after the Extraordinary General Assembly of next Monday.
A lot of assumption that these vendors/suppliers are going to just absorb a 70% hit and carry on business as usual. Some may may fail creating holes in the chain. I just don’t see this being an easy fix.
I still doubt they'll make their vendors/suppliers eat 70% of the debt.. No way that will fly.
That’s the option.
Refused, it goes to bankruptcy. And they get 10% at most.
Pick
From what I have seen of Pierer's math bankruptcy is the better option.
Right, insolvency means most creditors will never get their money back, but now they have a say in choosing the least worst option for them.
Option 1: bankruptcy
The number quoted in court was that creditors would get a little under 14%.
Option 2: restructuring
PMG will present their plans to reimburse a minimum of 30% in 2 years. Some protected creditors would still be due all their money but the intricacies of Austrian business law are way beyond my comprehension.
So creditors will vote on the plan on February 25th. They can vote for bankruptcy if they're not satisfied with the restructuring.
Keep in mind that PMG bankruptcy might be even more painful for smallish suppliers, it's a double whammy: beyond taking a big hit by not recovering a large part of their money, it would also mean that a possibly quite significant part of their orders vaporizes for ever.
Scenario 3: CFmoto and/or Bajaj do a hostile takeover. Convince the creditors to vote no on the 30% and buy up the debt at a higher percentage than what is offered through the insolvency process.
Anyone surprised Pierer is out? I'm amazed it didn't happen sooner.
Is he really out though? This company continues to try ad BS their way around reality.
"Press release: Mattighofen, January 23, 2025 – Stefan Pierer, CEO of KTM AG for many years, is handing over the management of the company to his Co-CEO Gottfried Neumeister. With this step, one of the world’s leading motorcycle manufacturers is strategically positioning itself for the future. Pierer will continue to accompany the reorganization process as a member of the Executive Board with full commitment and will remain part of the KTM family."
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