Is The Clock Ticking On KTM

Writing about KTM motorcycles, the financial drama they are suffering, and the reported 250,000 – some say 300,000 – unsold motorcycles, has made for popular copy.

I’ve read articles that range from enthusiastically praying for a billion-euro saviour to appear, all the way to those who are already picking over the corpse, wanting a KTM 1290 Super Adventure S for £5,000 in what they believe will be the inevitable fire sale.

KTM Open For Business

Looking at the KTM website, the only indication of there being any question over the company’s future is that the flagship models at the top of the range are still listed as 2024 models, whereas most others carry the 2025 tag.

So, if you have £17,499 for a 2024 model 1290 S or £13,999 for a 2025 890 Adventure R, KTM are currently open for business.

A four-year warranty is now splashed on the pages, replacing the previous two-year deal. It comes with the caveat that regular servicing at a KTM-authorised dealer is required, and KTM has offered zero latitude on this policy in the past.

I know because I’ve been there. It seems that a non-KTM dealer changing the brake fluid can cause the radiator to leak – Who knew?

Where Can I Find …

But Would You?

Yet with KTM’s impending need to find a chunk of cash to meet the clauses of the restructuring plan set earlier this year, would anyone part with their money?

As for the warranty, it is reported that KTM have paused production again because they have exhausted the supply of parts, and as they still owe their suppliers for parts already delivered, I’d guess that cash up front is needed for anything else they ordered.

If there is one thing worse than KTM ceasing operation, it would be owning a KTM with a warranty problem and the parts being unavailable to fix it.

How Much?

From memory, Volkswagen once sold a luxury car for less than it cost them to make it. It was a vanity project. Volkswagen wanted to show what they could make, but were caught in the high-end sales trap.

To sell high-end, exclusive products, they must have a certain mystique. They must be something we aspire to own. With all the noise around KTM at the moment, I’d suggest that ship has well and truly sailed.

The joke has often been that KTM stood as a reminder to potential purchasers to Keep The Money. One motorcycle dealer I know frequently described KTMs as “switch gear made from cheese and undesirable as trade-ins”, and that was before the current troubles.

But is there a price at which you would be willing to buy a KTM that would still give KTM a fighting chance of staying in business?

Fire Sale Dreams

The stockpile of KTM motorcycles is quoted as being somewhere between 250,000 and 300,000. There is scant information on which models make up the stockpile, but for a moment, imagine they are all the same.

Under the restructuring plan agreed earlier this year, KTM needs to pay 30% of its debts by 23^rd May 2025. For this, they reportedly need 548 million Euros.

If the money comes from the fire sale some people are hoping for, then each of the 300,000 stockpiled motorcycles has to generate a minimum of 1,830 Euros in profit to KTM.

This comes after the dealers have made a living from the sale of the bike, and the distributor in each country has had their piece of the pie.

KTM will still need to recover the cost of the motorcycle. They can’t sell it for less than they made it for, and they can’t undercut the dealers who are holding stock, or at least I hope they wouldn’t.

With all of that in mind, any fire sale price for a KTM then needs to be beating off the opposition. The price can’t just be lower than that of their competitors, it has to be … to quote Tom from Lock Stock … “a deal, a steal, sale of the clucking century”, or why else would you run the risk?

So, a fire sale of KTM motorcycles as a method of generating enough cash to get past the 23^rd May payment deadline isn’t going to happen. There is – or perhaps was – a share issue, which current shareholders get first refusal on. That is something I know nothing about, but it would appear to be investing more money in a company that already owes more than it is worth.

Bottom Line

It isn’t easy to see how KTM goes forward from here. All of the meetings and restructuring arrangements look to be nothing more than one last roll of the dice and hoping for a double six. I so hope that happens.

A fire sale isn’t going to do it, and even if they did, what is left of the mystique and desirability of the brand would be lost. KTM were always having flash sales where they would cut a chunk of change from the sticker price of a bike and piss-off those who paid full price … perhaps now we know why.

A white knight riding over the hill, clutching a long line of credit and the substance to back it up, seems unlikely. Perhaps a better deal for would-be investors is to let KTM go to the wall and buy the pieces you want from the embers.

But what do I know? I’m not an accountant. I don’t manufacture motorcycles or run a global company, so there is a good chance I’m wrong. For the people who work at KTM and the people who own the bikes, I hope I am.

Photo Credits: KTM Sportmotorcycle, Barbanti A.