In May 2025, Bajaj Auto made headlines by securing a Rs 5,250-crore loan through its European subsidiary, just days before a crucial funding deadline for Austrian motorcycle manufacturer KTM AG. This move comes against the backdrop of KTM’s ongoing insolvency crisis, which began in November 2024 when the company declared bankruptcy after struggling with volatile demand, excessive inventories, and rising operational costs in Europe. The pandemic-induced downturn in the two-wheeler market, coupled with high energy and labor expenses, pushed KTM to the brink and threatened thousands of jobs in Austria’s industrial sector.
The purchase of MV Agusta and significant investments in MotoGP operations added to KTM’s financial difficulties and resulted in excessive debt levels. Ultimately, a restructuring plan approved by the company’s creditors required that KTM deposit roughly Rs 4,896 crore (548 million euros) with its insolvency administrator by May 23, 2025. Resuming operations at KTM’s Mattighofen factory and avoiding liquidation required this payment, which accounted for 30% of the outstanding debt.
Bajaj Auto’s Timely Financial Intervention:
At this crucial point, Bajaj Auto, which holds an important stake in KTM’s parent firm Pierer Mobility, stepped in. The one-year, unsecured loan was obtained by the company’s European division from a group of international banks that included DBS Bank Ltd., Citigroup Inc., and JP Morgan Chase & Co. Although Bajaj’s exchange filings state that the funds are officially intended for “investment purposes,” the timing and magnitude of the loan make it clear that KTM’s immediate cash needs would be met.
This is not the first time Bajaj Auto has supported KTM during its financial distress. The Indian automaker had previously infused 150 million euros into its investment arm, with 50 million euros extended to KTM to restart operations earlier in 2025. However, production was halted again in April due to supply chain concerns, as suppliers feared KTM’s inability to pay for components. The latest loan ensures that KTM can meet its restructuring commitments, pay creditors, and potentially restart manufacturing, stabilizing the company in the short term.
Strategic Rationale Behind the Loan:
Bajaj Auto’s decision to take on such a substantial loan is rooted in both strategic and financial considerations. As a co-owner of Pierer Mobility, Bajaj has a vested interest in KTM’s survival and long-term viability. KTM is a key partner for Bajaj, with the Chakan facility in Pune producing small and mid-capacity KTM motorcycles for global export. A collapse of KTM would have significant consequences for Bajaj’s international business and its reputation as a global player in the two-wheeler market.
By stepping in with the required funds, Bajaj not only safeguards its investment but also positions itself to potentially increase its stake in KTM. Industry analysts suggest that, depending on the structure of the new funding and any subsequent equity conversions, Bajaj could emerge with a controlling interest in the Austrian brand. This would give Bajaj greater influence over KTM’s strategic direction and access to advanced technology and premium motorcycle segments.
The action shows Bajaj’s financial stability and its capacity to swiftly gather resources in the face of international difficulties. The company’s commitment to support KTM during difficult times is probably going to improve its reputation with foreign suppliers and partners and strengthen its position as a trustworthy and dedicated stakeholder.
Implications for Bajaj and KTM:
The Rs 5,250-crore loan is a lifeline for KTM, providing the immediate liquidity needed to meet creditor demands and avoid liquidation. For Bajaj Auto, the move is both a defensive and offensive play-protecting its existing interests while opening the door for deeper integration with KTM. The outcome of this intervention will depend on KTM’s ability to stabilize operations, manage costs, and adapt to a rapidly changing market that is increasingly shifting towards electric vehicles and cost-conscious consumers.
For the time being, Bajaj Auto’s prompt response has prevented a crisis and given KTM crucial time to reorganize. The episode emphasizes how global automotive businesses are interconnected and how crucial strategic alliances are to overcoming industry challenges. All eyes will be on KTM’s next moves and Bajaj Auto’s changing position in the European motorcycle market as the May 23 deadline draws closer.
