Bajaj is a beast in the automotive sector, and it is also the savior of KTM. After investing to save the Austrian firm, they are now beginning to take control after the approval of the Austrian Acquisitions Commission, and the first thing they have done was change the name of the parent company.
Until now we were talking about Pierer Mobility AG, but Pierer has been erased in one fell swoop and was renamed, logically, Bajaj Mobility AB. Rajiv Bajaj, the CEO of the company that bears his name, revealed to CNBC-TV18 that they had looked at the possibility of reducing overhead costs by 50%. He explained that this cut, in his own words, “It covers R&D, all marketing areas, including motorcycling, and all operational areas.”
But Rajiv Bajaj did not stop there in his statements, as he did not miss the opportunity to be critical of the decisions of the former KTM management:
“The previous management has already reduced the workforce from 6,000 to 4,000, which is still considered too many. Interestingly, of those 4,000, only about 1,000 are operators; 3,000 are administrative employees, which is disconcerting, because the operators are the ones who make the motorcycles. Future changes in production volume will affect line workers relatively little; the problem will be the excessive number of office employees.”
It ended with a message that pointed directly to those responsible for the situation, even though others will end up paying the consequences: “This is a problem that has not been caused by 99% of KTM employees. It is a problem of the former KTM senior management, and most of them are already gone.”
Bajaj’s decisions seek to return KTM to profitability
It is clear, therefore, that under the direction of Bajaj things are going to change significantly at KTM. One of those affected is GASGAS, which, as we mentioned a few days ago, was going to change its operation, although it stated that it will only affect 20 of the brand’s 300 employees in Girona.
Likewise, it is expected to noticeably affect the racing department, which will presumably be affected to a greater extent by decisions including the MotoGP category. This precisely opens the door for Bajaj’s partner and rival, the Chinese CFMoto, to follow the plan of reaching the premier category. But that, for now, is just speculation.
What there is no doubt is that Rajiv Bajaj himself believes that a general restructuring is necessary to return KTM to profitability, and that means reducing costs and increasing profits.
This would also mean taking all production out of Europe, which, on the one hand, could save the brand but, on the other, would put an end to what KTM stands for, which were motorcycles manufactured in Austria in the majority of their models.
