Is Red Bull KTM in big trouble?

Sell wp to raise money…..oh wait,  nobody will buy them.

I really doubt it.  I had my time owning a KTM and had long since moved past it, but news like this really isn't good for anyone...certainly not the industry.  KTM almost had to shut out the lights back in '92 or so and looks like they are going to have to figure a way out again.  I can see Bajaj taking over a majority interest and we know they already produce a bajillion motorcycles, but don't see that as ultimately a good path for something considered a premium brand.  People can't normally wrap their heads around "India" and "premium" in the same thought. 

You may like ktm or you may not like ktm, but no motorcycle enthusiast should be happy or enjoy the fact that a motorcycle company is in trouble.

Have you seen Red Bull's sale's this year?  Way way down...

I had a funny feeling they bit off more than they  could chew a few years ago when they bought everyone else. Too much product, and you cannot create demand.

I would help to know the structure of all the international distributors to understand how the race teams are situated.  Meaning is Ktm USA a wholly owned subsidiary of the Austrian mothership, or are there other investors and they have some independence?  If a 100% subsidiary , it might not be so simple if Ktm Austria really cannot continue.

The “KTM should buy Suzuki” threads sure look stupid now

The plain reality of things is that pifalls of owning 3 lines of bikes is better handled by 3 parent companies than one. KTM entered into an exponential situation with all things being X3. The profits as well as the risks, which in this industry are perilous. It was pipe dreams on their part and now they are paying a dear price for their one time greed.

Suzuki is not going anywhere,thei have toyota and tokio bank as biggest share holders

He also seems to know nothing about how a reorganization works. ..

How so?

I can only assume because you say so.

Ready to Race but what % of dirt bikers race these days?  

I’m curious if we haven’t now reached the predicted 4T cost of maintenance inflection point?

I have seen a common scenario where young person  pays $300 a month for a $11K dirt bike and then realizes it needs $2000 of regular maint in a year or two.  Rather than repair they trade in  for .50/dollar and now that payment will be $500 due to high interest rates.  Upside on a bike with no money to repair is the end of the line for many.  

I guess the question is how long can the VET riders continue to support the sport.

where did you get such info? 

Curious to hear, if ever, their/his thought process on this whole deal from the on set.  Whole thing just seems weird to go all in on all three brands off of CoVid sales figures or have I missed some of the other more complicated understandings of simple business. 

It was not the covid or anything else besides the guy was smoking the books for years.All the reds flags...

I have seen it over and over. Everything is coming up roses for years then one write down before BOOM!

It's all gone Bro.Top to bottom.

I'm my opinion the KTM brand is ok, but under current leadership it can't survive.   It appears that they wanted to win literally at any cost.   When units were selling and the bills were getting paid it was easy to keep borrowing money.  The economy slows and a the first payment is missed and now the house of cards is scattered all over the windy parking lot.   

KTM has done so many good things for the sport.    Their passion for racing has no equal.  If you really understand what's going on its pretty sad.  They provided so many high level jobs.  Hopefully they are able to restructure back to a more sustainable level,  but it's going to be rough on some people.  

Has anyone tried to get a comment from decoster?

That's wild! I want to see the terms of the bankruptcy?

Hopefully there restructuring will be something to the effect of Gas Gas two strikes, KTM Moto and Husky Off road. A KTM/ GG/ Husq even at a discount is still thousands more than a kawi or Suzuki. Or even Yamaha and Honda at the right time of year. Think they rode the covid wave to long and now they’ve run ashore. Hope it works out. Curious to see what there “restructuring” ends up being. 

When are we going to figure out how Wells Fargo plays into this... 

Wow, almost 3bn debt, from what i have read today.  At low to mid 1's i thought there was a decent chance they survive, but 3bn is probably a bridge too far.  The only thing that KTM have going for them now, is that the problem is so big that their creditors (banks / Bondholders?  i'm not sure how its structured) now own the problem.  For them its a simple business decision, how do we best recover the most dollars and cents from this mess as we can.  These people do not care about motorcycles, so do not for one second think that "KTM can't fail, cos i went to the track today and Austrian bikes were everywhere".  If the creditors think they can get 45c in the dollar back by closing it down and selling off assets, versus 35c in the dollar maintaining it as a going concern, they will shut it down.  Saying that, i find it hard to believe their assets (factories / motorcycle design IP, and what else ?) are really worth anywhere near 3bn, but lets wait and see.  From the motorcycle world, it would probably be only one of the Japanese big 4 to have the financial swing to bail them out, and they will see more opportunity in letting KTM die than saving it.

I don't foresee a manufacturer buying them out.  If anyone will it will be a finance group looking to turn an unprofitable model into a profitable model and then selling it. Just another example of growing too quickly and then a couple of bad years it wrecks you. 

Post today's news, i would expect the restructuring goes something like this.

Stefan Pierer keeps lying to the public about their true situation, and releases a few more corporate speak gobblydegook press releases along the way.  

Factory closes for two months in early 2025... and never re-opens.

Companies die from

1. Poor cashflow

2. too much debt.

Put both of those together and its cooked.

I know i sound negative, but i'm actually mad.  I love KTM's bikes, have had three new 350's in the past 6 years years and they are awesome.  If they disappear it will leave a huge hole in the pro racing scene for a period of time.  I'm hoping as much as anyone that they survive, but putting my rational business hat on, they are finished.  Only way they continue is to find an investor willing to punt 3bn.  It seems unlikely, as given the state of the motorcycle market.  To get that return back will just take too long.  Maybe Bajaj lets it die, gets the factory for a song and restarts KTM production in Austria, maybe that's the best we can hope for.