It was only last September when the Philippine distributorship for KTM changed hands from Adventure Cycle Philippines to Lucky MAPI. However, it appears things were even more dire for the Austrian brand worldwide, because news has just come out that KTM’s liabilities are now in the billions of euros.

According to Cornelia Wesenauer, insolvency expert for the Alpine Creditors Association (AKV): “It was clear that the liabilities of the KTM companies would reach a high level. Nevertheless, we are surprised that the liabilities are so high. After all, at first glance, we expect liabilities of  €2.5-3 billion. That is now clear. This is the largest insolvency procedure in Austria this year.”

At today’s exchange rate, that’s around P185 billion. Holy cow. The bombshell first broke when KTM announced on November 29 that it would undergo a 90-day period of self-administration.

KTM CEO Stefan Pierer tried to sound upbeat: “We inspire millions of motorcycle riders around the world with our products. Now we are taking a pit stop for the future. The KTM brand is my life’s work, and I will fight for it.”

After a brief surge in sales during the COVID years, sales took a sharp slump for the motorcycle industry in general. Sharp inflation in Europe has also been to blame, leading to excess stock in the marketplace. This year alone, parent company Pierer Mobility cut its executive board from six to two members, along with factory layoffs and increased manufacturing migration to India and China. KTM is also aiming to shave over €1 billion from operating expenses at its Austrian plants over the next two years, implying even more layoffs.

Nobody asked me, but placing too much emphasis on low-volume, high-margin models like the 890 and the 1290 series, with multiple variations on each—while not maximizing popular, entry-level models like the 390 Adventure quickly enough—cost the company dearly.

CFMoto, for example, is selling as many 450cc models as it can churn out of its factory, while it was only recently that KTM decided that a Rallye version of the 390 Adventure could actually work. Too little, too late?

And while KTM Philippines was quick to address worries about excessive camshaft wear on the 790 model, other countries were not as proactive, further hurting prospective sales. As for spare parts…well, it’s never a good sign if a prospective buyer is warned by well-meaning friends to expect a long wait for things that could break.

KTM reported a net profit of €53 million midyear of 2023. However, only a year later, it posted a net loss of €172 million by July 2024.

Around 3,700 employees will be affected by the insolvency, not to mention also affecting KTM’s numerous suppliers. It is estimated that KTM has approximately 2,500 creditors. Of the total debt, KTM AG owes an estimated €1.3 billion to banks, €365 million to suppliers, and €40 million in employee salaries.

Naturally, KTM is doing its best to reassure dealers and customers: “We guarantee that we will continue to deliver motorcycles, spare parts, and accessories under the usual conditions. There will be no irregularities—neither in the flow of goods nor in customer service.”

The good news—at least for now—is that wages will continue to be paid this Christmas through KTM’s Insolvency Wage Fund. The bad news is that it really could be the last Christmas for many workers at that company.

With its self-administering period underway, KTM has 90 days to negotiate new debt financing conditions with creditors, and hopefully find a large infusion of cash. However, there have thus far been no news yet if longtime partners Red Bull or Bajaj Auto will step in.

As of June 30, KTM AG’s net debt had increased by a whopping 89% to €1.4 billion. Next year, a further €136 million in debt is scheduled to be due. With KTM’s self-administration period ending in February 2025, we’ll find out if KTM has somehow managed to step back from the brink of bankruptcy, or if it’s curtains down for Team Orange.