02/11/2025
𝙆𝙏𝙈'𝙨 𝙣𝙚𝙬 𝙗𝙤𝙨𝙨 𝙬𝙖𝙣𝙩𝙨 𝙩𝙤 𝙘𝙪𝙩 𝙧𝙖𝙘𝙞𝙣𝙜 𝙗𝙪𝙙𝙜𝙚𝙩
Rajiv Bajaj, CEO of Bajaj Auto, KTM's new owner, said in an interview that they will cut expenses in several areas, including sport, by 50 percent, and called the previous owner, Stefan Pierer, greedy.
Worrying news comes from India, where the CEO of Bajaj Auto, the company expected to take full control of KTM in November, revealed his plans. In an interview, Rajiv Bajaj said he will cut costs by up to 50 percent in various departments, including racing, which directly impacts the KTM team and its satellite Tech3 team.
"We see an opportunity to reduce overhead costs by more than 50 percent, including in R&D, marketing, operations, and general administration. Interestingly, of the 4,000 people currently employed at KTM, only about 1,000 are manual workers, with another 3,000 working in administration. This is puzzling because manual workers are the ones who build the bikes," explained Rajiv Bajaj, CEO of Bajaj Auto, in an interview with CNBC-TV18, based in Mumbai, India.
Although the Indian company now controls KTM after receiving several cash injections to rescue it, it is still awaiting approval from the European Commission to give the green light for the sale of the Austrian manufacturer.
"Currently, all approvals related to mergers and acquisitions are in place, and I think the necessary approvals for foreign investment have also been obtained. We are now awaiting the main approval from the takeover commission. We understand that it could be obtained in November. We hope for a positive outcome, which would mean that after almost 18 years as a minority partner, we will become a 76 percent shareholder in KTM AG and, from an observer's perspective, we will take over control," he said.
Rajiv Bajaj did not use adjectives to describe the performance of KTM's former largest shareholder, Stefan Pierer, whom he blamed for the company's bankruptcy.
"We were shocked, and most of the industry was quite shocked by the speed with which this all happened. My mind goes back 30 years to when my first management guru, Dr. John Wallace, told me that the primary reason for a company's demise is greed. I've actually witnessed this unfold at KTM in the last twelve months. Broadly speaking, I would say there are three types of greed," Bajaj told the former CEO.
"First, operational greed, best exemplified in the last two years, when KTM Austria continued to overproduce, even though peak demand following COVID-19 had subsided. As a result, dealers and distributors accumulated inventory for more than a year, which frankly makes no sense.
"Strategic greed. Companies often get into businesses they shouldn't be in. In the case of KTM Austria, the best example was their entry into the bicycle business (...) which had no real synergy with their core business," he recalled the orange brand's disastrous bike division failure.
"These two factors combined to drive KTM into bankruptcy in a matter of months. "You could say Bajaj was part of it, and I admit that yes, we were also part of what went wrong, but as a minority partner, we couldn't avoid it. I can say that we did our best to combat it, so much so that it ultimately led to a third type of greed, which can be called governance greed, where certain decisions were taken without our knowledge, without our information, or sometimes without following due process," he continued.
Among many other questions, the Bajaj Auto CEO was asked how he would achieve the reductions he proposed.
"It's very easy to achieve. We see an opportunity to reduce overhead costs by more than 50 percent, including research and development, marketing (including racing), operations, and general administration," he explained.
"The previous management had reduced the workforce from 6,000 to 4,000, which was still considered too many. Interestingly, of those 4,000, only about 1,000 were workers, with 3,000 being administrative staff, which is puzzling." "This reminds me of Mark Zuckerberg's quote about managers managing managers managing those who do the work. The over-management and bureaucracy in this otherwise excellent organization is shocking," concluded the Indian executive.
