Cycle News is a weekly magazine that covers all aspects of motorcycling including Supercross, Motocross and MotoGP as well as new motorcycles
Issue link: https://magazine.cyclenews.com/i/786372
VOL. 54 ISSUE 6 FEBRUARY 14, 2017 P93 was impossible for the company to survive unless we acted promptly on the one side to restructure costs, and on the other to revamp the product line. So from 2010 to 2014 we made a significant investment in the product portfolio, and having started out with three models we increased our range to 21 different offerings, in terms of alterna- tive variants each very distinct one from another. In all we invested about 82 million euro in R&D, which is an incredible amount of money for a company of our size. Some years we were spending more than 25-30% of our revenue on R&D. But the result was that sales grew significantly, from less than 3000 units in 2010 to 7600 in 2014—al- though that's not so big if you compare it to the massive investment that we made. So we had a broad product range and good results, but not as good as we thought. So you were disappointed with only selling 7600 bikes a year, and wanted to sell more? No, it's not that I wanted to sell more, but what the invest- ment we made represented. That 82 million euro put us in a different, much bigger segment of the market, where our volumes were small compared to our competitors. So I have the same product range as a competitor, but I only sell one-fourth the number of units. So maybe the problem is that we have a weak sales network, so our task for 2014 was to reinforce the company and push to improve the distribution network. That was the point of the Mercedes deal—to reinforce the company and use Mercedes leverage to strengthen MV's brand image and distribution. Then we also hired some new top-level management. From the automotive sector? Yes, they came mainly from the automotive rather than motorcycle sector, and we pushed for growth, with a target for 2015 of selling 10,000 units. But the new management brought with it an increase in the cost structure of the company via their salaries and expenses, and our marketplace push had a poor result. We grew from selling 7600 bikes in 2014 to almost 9000 units in 2015, but we were a thousand bikes below our target of 10,000 units on which everything was based. Was the reason for that because you couldn't find the customers, or couldn't manu- facture the product for them to buy? No, it was the first, we sold less than the target number of bikes, despite the high investment we made in the restructuring of the sales network, and despite the fact that we entered the mas- sive new—for us—Touring market with the Turismo Veloce. So the growth target was a failure, but this created complexity in the company and we had a cash-flow crisis, as you said, we started to cash in late, and we couldn't pay our suppliers in time. You may say, it's a cash problem, but no it's not—the problem is industrial. It means that despite the large investment that we made, MV cannot pursue a growth strategy through volume manufacture, because we did not sell what we wanted to despite all the investment in product, and in the sales network, too. Yet our brand is recognized for high-end, super premium products—it's a niche of a niche market, which is why we sell out all the top limited editions of our models, the RC and RR and so on. We had a growing cash constraint at the end of 2015—so you say okay, you put more cash into the business. But no, that's wrong—if you have your bathtub full of water and you don't put the plug in, "I reacquired the company in 2010 from Harley- Davidson. It was a beautiful brand but had only three products, and the market was declining at a double-digit rate."