Bajaj Auto, one of India’s biggest motorcycle makers, could potentially exit KTM, the premium bike brand from Austria.
According to a statement by KTM Industries AG, the parent company of KTM, Bajaj is in talks to sell its minority stake in KTM back to the European parent.
Bajaj had stepped in as a white knight to save the motorcycle company in the immediate aftermath of the 2007-08 financial crisis, gradually raising its stake in the company to about 48%.
KTM Industries AG, the original owner of KTM, saw its stake fall to 52%. KTM Industries AG was founded by Stefan Pierer, who continued to lead KTM even after Bajaj took a substantial stake in the company.
The bike maker has seen a remarkable turnaround in its fortune since Bajaj’s acquisition of a minority stake, and is today one of the world’s largest maker of premium motorbikes.
The exact amount invested by Bajaj Auto into KTM is not known.
However, given the remarkable turnaround in the company’s fortune, Bajaj Auto is likely to walk away with a large profit if it manages to sell the stake back to Stefan Pierer’s company.
“Pierer Industrie AG and Bajaj will now evaluate the proposals in detail. The transaction decision is targeted to be made in the second quarter of 2019,” the Austrian bike maker said.
It is not clear what will happen to the current business and technology tie-ups between the two companies.
Bajaj has helped KTM notch up a decent share of India’s premium motorbike market, even as KTM helped Bajaj improve its own line-up of premium bikes under Pulsar and Dominar brands.
KTM has set up a pan-India network of showrooms with the help of Bajaj Auto, while several of Bajaj’s bikes come with modified KTM engines.
KTM bikes are pricier than their Bajaj counterparts. While Bajaj focuses on the Rs 1-2 lakh price category with its premium bikes, KTM’s focus is largely around the Rs 2 lakh price range and above.