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INTERVIEW MV AGUSTA PRESIDENT AND CEO GIOVANNI CASTIGLIONI: PART 1 P94 easy to criticize from the outside, but not so easy from inside! Is one of the reasons why MV has got into difficulty the fact that you spent an exces- sive amount of money on product development, even if you produced a range of well- engineered and very individ- ual motorcycles that people want to buy? Do you in fact have the best and the worst of problems: you make products that people want to purchase, but don't have the money to build them because you've spent so much creating them in the first place? Partly so. In 2014 MV Agusta was burning cash investing in R&D, but I knew that otherwise our profit and loss account was very positive. If our company would have been a producer of chairs or knitwear it would have been highly profitable, but to be in a position to compete with our rivals' profitably in the sectors of the market we chose to be in, our R&D budget arrived at a point that it averaged 20-30 percent of our revenues. That's a lot of money, meaning we were spending upwards of 15 million Euro per year on R&D. On total revenues of how much? Our total revenue was just over 100 million Euro in 2015, and in 2013 and 2014 we passed from 30 million to 75 million in revenue, but our R&D was then 15 million Euro, so that's 20 percent. It's a lot, but okay, this is the price you have to pay to compete effectively, but unfor- tunately the financial resources that I had were insufficient to cover this on a continuous basis, so I had to look for a partner to fund new capital. I had discus- sions with several private equity companies, but at the time I thought private equity was a bad solution for MV, that instead we needed a strategic partner, so I kept on looking. If I could go back in time now I would defi- nitely have taken a private equity partner, because MV has a cash flow problem they'd be perfectly capable of resolving, but anyway, then we met with Mercedes- Benz. Mercedes was interested in joining up with MV Agusta as a partner by purchasing equity in it, but I'm sorry to say the part- nership has been disastrous, a total failure. I mean; there is no partnership to speak of. I've seen the official statement they put out that MV for them is just a market- ing partnership, and they're not interested in anything beyond that, and they have no interest to buy MV Agusta, even if I wanted to sell it, which I don't. According to them, we're just a marketing tool, and the total scope of the partnership has been putting the AMG logo on the F4 Superbike and us putting our MV logo on their DTM [German Touring Car race series—AC] racecar. I mean, who cares about the DTM? Really, it's a fine race for the German market, but nobody else sees it. I don't care about putting the MV logo on the car, which by the way was always last; at least my bike wins races! CN Stay tuned for Part II of this exclusive interview where Cas- tiglioni discusses the new direc- tion of MV Agusta and possible partners in its expansion. In next week's issue, Cathcart chats to Giovanni about the future direction for MV Agusta.

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