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coimbrabertone · 14 days ago

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MotoGP and the KTM Situation

So...KTM's parent company, Pierer Mobility Group, is in a bit of a mess.

A $3 billion in the red kind of mess.

How did this happen? Well, the short answer is that Pierer Mobility Group and KTM expanded too fast, too quickly, and now their debt is catching up with them. As for the long story, well...

Stefan Pierer, an Austrian businessman, founded an investment company called Cross Industries (what is now Pierer Mobility Group) in 1987, and in 1992, he took over KTM Motorrad in his native Austria. In 1994, KTM launched the Duke line, which took the traditionally dirt-bike focused KTM brand into the road bike business for the first time.

Dirt bikes remained a key element of KTM's business - and racing dirt bikes in things like Motocross and the Dakar Rally is a huge part of KTM's identity - but the allure of road bikes is what we'll be focusing on for this story.

A series of adventure and supermoto bikes followed, before in 2003, KTM entered Grand Prix Motorcycle Racing for the first time. While Ducati entered into the 4-stroke 990cc top class that same year, KTM instead focused their efforts on the 2-stroke 125cc class, as well as the 250cc class from 2005 onwards.

They took their first win at the 2004 Malaysian Grand Prix when Casey Stoner won the 125cc during his only season on KTM machinery, followed by a championship challenge the very next year. Mika Kallio won at Estoril, the Sachsenring, Motegi, and Valencia, whilst teammate Gabor Talmacsi won at Mugello, Assen, and Qatar. Qatar and Valencia were 1-2 finishes for KTM, and ultimately, Kallio finished second in the 125cc standings while Talmacsi finished third. Julian Simon on a third bike would win in the wet at Donington Park and finish eighth, putting three KTMs in the top ten in 125s in 2005 - a very respectable showing in just their third season competing.

Kallio would again finish second in 125 in 2006, with three wins to his name, whilst in 250cc, Hiroshi Aoyama won at Turkey and Japan, finishing third in those standings.

Aoyama and Kallio would both compete in 250cc in 2007, with Aoyama winning at the Sachsenring and Malaysia, while Kallio won in the wet at Motegi and then again at the season finale in Valencia. Aoyama would finish sixth while Kallio was seventh.

2008 would mark a full barreled 250 effort with Aoyama and Kallio joined by returning third bike man Julian Simon. Kallio would perform well, winning at Jerez, a wet Shanghai, and at a dry Donington Park, but Aoyama and Simon would go winless. The 125cc effort had also atrophied by now, with the most notable result being some rookie called Marc Marquez taking a third place at Donington.

KTM's attention was fading by this point, and their road bike efforts turned from Grand Prix racing and towards their new RC 1190 superbike. Additionally, the X-Bow track car gave KTM an exciting new toy to play with.

Their Grand Prix efforts were winding down.

KTM only competed in the 125cc class in 2009, and with Marc Marquez only managing a single podium at Jerez, they decided not to continue for 2010.

Marc Marquez in 2010 would move to the Red Bull Ajo team riding a Derbi/Aprilia RSA-125 and would win 10 races to dominate the championship.

So yeah...it wasn't a rider problem, their bike just kinda sucked by that point.

Meanwhile, KTM continued to expand their company. In 1995, they acquired Husaberg AB, a manufacturer established to keep dirt bike production in Sweden after Husqvarna's parent company Cagiva moved their production to Varese, Italy. KTM would in 2003 move Husaberg production to Mattighofen, Austria, making the whole thing rather pointless. Next, in 2007, came ventures with Indian giant Bajaj, who began distributing KTMs in India in exchange for a 14.5% stake.

In 2011 a similar collaboration would begin with CFMoto in China, which in 2017, became a downright joint venture between them and KTM.

Then in 2013, Husqvarna - now in BMW's hands - was sold to the Pierer Mobility Group, who promptly merged it and Husaberg, so instead of being produced in Sweden or Italy, it was all now in Austria.

In 2012, KTM would reenter GP racing with the introduction of the 4-stroke 250cc Moto3 class. They'd win the championship with Sandro Cortese, while in 2013...they won everything. Maverick Vinales in first, Alex Rins in second, Luis Salom in third, and Alex Marquez in fourth were all on KTM RC250GPs.

Fifth place was Jonas Folger on a KTM-engined Kalex.

Complete and utter domination.

On the back of this, KTM planned to enter the top class for the first time. With a V4 engine, a steel trellis frame, and Red Bull sponsorship, KTM entered the RC16 in the 2016 Valencian GP ahead of a full debut in 2017.

Who rode the RC16 at Valencia? None other than Mika Kallio, the Finn returning to KTM as their test and development rider after stints with Ducati in MotoGP and Marc VDS in Moto2.

Pol Espargaro and Bradley Smith would be their full-time riders for 2017 and 2018, with Pol scoring KTM's first podium at the 2018 Valencian GP - KTM sure does have a weird affinity with Valencia, eh?

2019 would mark two big changes: first is that Johann Zarco replaced Bradley Smith, second is that KTM gained a satellite team for the first time. Yup, after competing as Monster Energy Yamaha for ten years, Tech3 became Red Bull KTM Tech3, with Hafizh Syahrin and Miguel Oliveira riding for them.

Zarco would force his way out of KTM before the year was even over, forcing Kallio to fill in for him at the final six races, but other than that...KTM's 2019 was more of a building year. They collected some points while, in the background, KTM began to move away from the steel trellis, aluminum swingarm, and old school screamer engine.

The frame became a more typical steel/aluminum hybrid, the swingarm a radical carbon fiber, and the engine conformed to the now ubiquitous big bang firing order.

The results? Rookie Brad Binder wins the 2020 Czech Grand Prix in just his third start, while on the Tech3 bike, Miguel Oliveira wins at Styria and Portimao.

KTM also took the opportunity to buy out the struggling GasGas brand in 2019, giving Pierer Mobility Group its third brand.

KTM was winning in MotoGP, it was expanding its business, but it was also already signing its own death warrant.

With the purchase of GasGas, Pierer Mobility Group now had three different brands that were predominantly in the dirt bike business. They tried to position GasGas as the entry level brand, KTM in the middle, and the Husqvarna as a premium brand, sort of trying to be the General Motors of motorcycles, there's just two problems with that:

One: Bikes are so much more niche compared to cars.

Two: even in cars the multi-brand thing doesn't work so well, with GM killing off storied brands like Oldsmobile and Pontiac in recent memory, along with more recent ventures like Saturn and Hummer failing to carve out a niche.

Nevertheless, with COVID giving a lot of people a lot of time on their hands, KTM initially had very strong sales. Lots of people were trying out their motorcycles for the first time, and with KTM giving variety between dirt bikes, road bikes, and even teasing a return to the superbike market with the RC 990, maybe things would work out.

They did not.

KTM banked on the COVID bubble.

They spent money acquiring the likes of GasGas, Husqvarna, and now a 50.1% stake in MV Agusta as well, they banked on joint ventures with Bajaj and CFMoto giving them access to the eastern markets only to develop a reputation in India for being overpriced and having bad build quality. On top of this, KTM began the scummy business practice of hiding riding software behind a paywall, most notably with their cruise control.

(For no reason at all, I'm also going to point out that Stefan Pierer has a seat on the Mercedes-Benz supervisory board.)

The end result of all this? KTM sits on 265,000 unsold bikes. Unsold bikes which only meet Euro 5 emissions standards, meaning that when the Euro 5+ standards come into effect in March, KTM will not be able to sell those bikes in Europe, where, with 11.8% market share, KTM is the largest motorcycle manufacturer.

Furthermore, KTM was not able to pay its workers their December salaries until last Friday, the 27th. November salaries remain unpaid, and Christmas bonuses have been cut entirely.

300 jobs at KTM are expected to be cut in January.

So...with all this going on, there are some big, big question marks about whether KTM will be able to continue racing in MotoGP.

They have released a statement confirming they will race in 2025 and with KTM having already sending two of their three factory rally raid riders to Dakar - the third is out with a leg injury - that seems reasonably secure.

Beyond that? It's unclear.

It's unclear how much development KTM will be doing to stay competitive as well. Initial reports suggested that KTM has already paused development, but KTM disputes this.

Now, a recent Austrian report says that KTM plans to withdraw in 2026, citing contracts and not wanting the PR disaster of early termination. What does that mean.

Well, KTM is contracted with Dorna through 2026, the end of the current regulation cycle.

Brad Binder has two years left on his contract, while Acosta, Vinales, and Bastianini are all on multiyear deals - traditional wisdom in racing says that multiyear deals typically translate to 2 years + a 1 year optional extension.

Furthermore, an engine freeze is coming into MotoGP in 2026, which will reduce development costs.

So...I believe that this means that KTM will see out their contracts, racing through 2025 and 2026 with their current set of riders. 2025 is already budgeted and we know that's secure, while seeing out the 2026 season and leaving at the end of 2026 seems to match up with these Austrian reports.

This is still a developing story, so I may well be wrong here.

It's also important to remember that this is about more than racing, it's about the people. Many, many, many people work at KTM, both on the production bike side and on the race team. These people are going through a tough time right now with this KTM bankruptcy drama, and you have to hope things turn out well for them.

I'm not much of a KTM fan - I don't oppose them either, I suppose I'm more of a neutral then - but I'd hate to lose them in MotoGP. I'd hate even more to see people lose their jobs because the ownership chased unsustainable growth.

That COVID bubble has been vicious to the business world.

#motorsports #racing #motogp #motorcycle #motorcycles #ktm #red bull ktm factory racing #tech3 #brad binder #pedro acosta #maverick vinales #enea bastianini

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