Business – MV Agusta: Giovanni Castiglioni seeks to recover the shares of Mercedes – Occasions MV AGUSTA

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MV Agusta: Giovanni Castiglioni seeks to recover Mercedes shares

Business - MV Agusta: Giovanni Castiglioni seeks to recover the shares of Mercedes - Occasions MV AGUSTA

In the grip of financial difficulties, MV Agusta recently downsized. At his helm, Giovanni Castiglioni wants to keep his business afloat, strategically change course and prospect for new partners to replace AMG… Interview.

Despite a turnover multiplied by three in five years (read), MV Agusta is going through a difficult period, so much so that his boss, Giovanni Castiglioni (heir to the famous Claudio), was forced to restructure his company, industrially and financially ( read).

Rather than spreading the rumors that fuse in the Italian newspapers, Site preferred to contact the young, tall and handsome boss directly. Giovanni Castiglioni returns for us on the current situation of his company, on the correction of, on the disappointing shareholding partnership of AMG and on the commitment of MV in WorldSBK…

"MV Agusta must move towards Super Premium motorcycles"

Site: At the launch of and in October 2014 you were aiming for a production of 12,000 motorcycles in 2015, but last December you announced that you had sold a little less than 9,000. Why ?
Giovanni Castiglioni: These targets were set just before and we revised them to around 10,500 units. In the end, we sold just under 9,000 motorcycles. This is confirmation for us that MV Agusta must focus primarily on the high-end market, "Super Premium" motorcycles. We know that our customers expect this type of product from us. As a result, the market segment in which we are actually operating is very limited. It is now estimated that we need to produce between 7,000 and 8,000 machines per year. But that did not prevent us from progressing by + 30% in 2015 compared to 2014 !

MNC: The year 2016 has started well for you, mainly thanks to the. Do you think that investing in the Touring segment was a good strategic choice? Shouldn’t you have focused on your roadsters and sports cars ?
G. C .: It is always easier, a posteriori, to analyze a situation. But I can give you my opinion on the past six months. We have seriously revised our strategy. Until then, the objective was to invest in new segments to reach 12,000 units, then 13,000 and aim for 15,000 in 2020. But as I told you, our real market is a niche market and our customers demand the top of the top. Therefore, in the future, MV Agusta should not maintain a policy of large platforms and will not tackle new segments. The year 2016 has indeed started well, we recorded an increase of + 27% in the first quarter thanks to our models. The factory produced fewer motorcycles to deal with our cash flow concerns but at the same time registrations have increased as there are still motorcycles available in dealerships and the new Brutale is very popular..

As for the Touring, I have to say we are very happy with our, it’s a fantastic bike. We see it more as a "Hypersport Tourer" more than a "Tourer". It is a motorcycle designed to offer the pleasure of a sportswoman and the comfort of a Touring motorcycle. It is therefore a hybrid, both sporty and Touring. So, was this the right choice? I think we made a really good product and I believe MV Agusta can really produce all kinds of bikes, but in the end it’s always our Brutale, Dragster, F4 and F3 that sell the best. This is what customers ask us. We are appreciated for our Superbike, Supersport, "naked" and beyond that, for our very high end products. We sell our, or RRs much better than the entry level and 675.

"The new 4-cylinder will not be released in 2017"

MNC: By the way, is the 4-cylinder you told us about last year still planned for 2017??
G. C .: No, our plans have changed on this as well. MV has invested heavily in R&D over the past five years (around 80 million euros). This has allowed us to significantly increase our lineup, from three models in 2010 when I took over the company to 21 today. Our turnover rose from 30 to 100 million euros. I consider that we now have a sufficient product portfolio and that it is time to reap the fruits of our investment, to consolidate our current range, to increase the quality, to refine the positioning of our products, to deliver our motorcycles. and to focus on the very top of the range … We will continue to develop new projects, but at reduced speed, which means that the new 4-cylinder will not be released in 2017 but in the following years.

"MV Agusta must become the Ferrari of the motorcycle"

MNC: What is the financial situation of MV Agusta today ?
G. C .: We have payment constraints. Payment to our dealers has increased from 60 days to 200 days. The fact of cashing in 200 days required a certain cash flow effort and we were not able to settle the invoices with our suppliers. We have therefore reduced our production and restructured our company. The previous structure dated back to 2014, when AMG arrived, with the aim of increasing our sales and reaching 15,000 units. But we have since realized that our market is limited and that MV Agusta must become the Ferrari of the motorcycle. So we resized the company, the number of employees and the costs. To give you an example, we spent $ 18 million on R&D last year and $ 4 million on competition. This year, it will be 7 and 1 million respectively. We have started a financial restructuring which will be announced in the next two months. We are also looking to raise new funds.

When I arrived in 2010, the company was still small and we needed cash to grow. I think we did a good job in 2014, we found a fantastic partner in Mercedes. Strategically, financially, industrially, commercially it was perfect, but it seemed to them that it was just a marketing stunt. We could have cooperated like BMW and BMW Motorrad, or Audi and Ducati, unfortunately they didn’t see it like that. I therefore have to restructure MV Agusta on my own and look for new investors who, like me, would like to consolidate our activity..

"For Mercedes, it was just a marketing stunt"

MNC: The partnership with AMG is therefore over ?
G. C .: No, no, to this day they keep their shares in the company, but I’m looking for a way to get them back. I personally invested 1.2 million euros in this company, and my father had done it before me. But my financial means are limited. Having a partner, however solid it may be, who does not share the same strategy is not advantageous, quite the contrary. In fact, there is no partnership with Mercedes but shareholders. This partnership never really took off: we signed an agreement at the end of 2014, and we have done nothing since, or very little. We put their logo on our Supersport and Superbike machines, and they put ours on their DTM cars. We also delivered 120 motorcycles to Mercedes dealers. But in the end, it didn’t work. It is better to go ahead and focus on MV. I will try to take back their shares and seek to raise new capital from new investors. MV Agusta has great assets, our plans are solid, the work done in recent years is appreciated by all, so I have good hopes of getting out of our "constrained cash".

"I would think twice before I sell"

MNC: Would you be ready to hand over the handlebars of MV Agusta to someone else? After all, your father Claudio had in 2008…
G. C .: Well, never say never, but honestly I don’t think so. This company must remain on its premises, it must remain Italian, it must remain a niche brand. I have spoken to many investment groups … I have experience in the area, since I managed the myself and was there when Harley-Davidson acquired MV (and during reverse operation, read). So okay, they’re big, they’ve got a lot of money, but the results were pretty dramatic. Today, I realize that Daimler’s participation in our company has not changed anything, and has even made the situation worse. Honestly, I consider that I should protect the company as much as possible. My father actually sold MV to HD in 2008 … Of course, selling would be the easiest solution, but I believe that I have a duty to my employees, my customers … And I remain passionate about this brand, I want to share this passion. So I would think twice before I sell.

"We have reduced the workforce from 300 to 250 people"

MNC: Has the production of your factory in Varese been stopped? ?
G. C .: No, today it is working. We stopped it for a while because it was necessary, in the first place to sell the stocks generated by our “push” strategy of 2014. Beyond that, the future was uncertain and rumors were flowing about the shareholders. .. Today production is relaunched and we expect to regain a cruising speed, comparable to recent years, by June. In terms of staff, the restructuring started last September. We had to lay off among the executives, not among the workers. We have reduced the workforce from 300 to 250. Now that this industrial step is taken, we must work on the financial plan.

MNC: What impact will these restructurings have on and its network? ?
G. C .: Not much, in fact. We have reduced the MV Agusta France team by one person, which is not huge. France remains an important market for us. Here too we want to reduce our stocks and focus on what sells best. Sell, collect then produce, run the business. France is a very good example because we sell Supersport, Superbike, roadsters and dragsters, high-end models. French customers do not come to MV for entry level 10,000 euros, they want the very top of the range. This is what we will focus on in the future.

MNC: You maintain your Supersport and Superbike programs ?
G. C .: Yes, we are really happy. As I told you previously, we have outsourced the management of the team…

"The new Supersport regulations are not favorable to us"

MNC: With ?
G. C .: No, no, it was a possibility, but in the end it did not happen. The owner of our team is our team manager, Andrea Quadranti, as is the case with Ducati, Honda, Kawasaki and others. The bikes and the riders are "MV Agusta", the team is managed externally. We have therefore optimized costs but we are continuing our development efforts. We are happy in Supersport, although the new regulations are not favorable to us. We have a very sophisticated production bike and the reduction in electronics is not going in our direction (read our. In Superbike we are constantly improving, this is only our second year…

MNC: Leon Camier, your only pilot, obtained !
G. C .: Yes, we are getting there, step by step. We reach the Top 5! We still have to find 5 or 6 horses, lose 3 or 4 kg, improve our management of electronics and we will have a good bike..

MNC: We will follow all this on Site, starting this weekend with the WorldSBK event in Sepang! Thank you for giving us this interview.
G. C .: thank you.

Interview by Matthieu BRETILLE

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