INTERVIEW: Federico Minoli Speaks of Ducati Now and in the Future

More than any other man, 53-year old company doctor Federico Minoli has been responsible for the miraculous turnaround which Ducati has achieved since it was acquired from Cagiva by American venture capitalists Texas Pacific Group/TPG, in 1996.

Parachuted into Ducati to orchestrate what turned out to be a dramatically successful turnaround operation, Minoli stepped up to President of the company two years ago, handing the baton as CEO to the firm's Chief Financial Offfice Carlo Di Biagio.

But in the wake of biking beancounter Di Biagio's shock resignation in March, Minoli - himself an active motorcyclist, too, and a two-year veteran of the Motogiro classic which he was responsible for reviving under Ducati's aegis - has returned to head up day-to-day operations of the Italian manufacturer. This comes at a crucial time for Ducati, not only because of the company's impressive return to Grand Prix racing for the first time in 30 years while still maintaining its overwhelming supremacy in World Superbike, but also because of the difficult conditions in a sliding market.

This comes at a time when Ducati has overhauled its entire product range in a single year, with new engines for the Monster and SS models, the launch of the Multistrada, and the replacement of the iconic ten-year old 916 family of bikes with the new 999, and its 749 kid sister. With Ducati's turnover and gross profit flat-lining, and 2002 profits down compared to 2001, it's a difficult time to take up the reins of the company again - but is perhaps an indicator of the affection this high-flying figure in the world of business feels for Ducati, that he should accept the challenge of doing so. Visiting him in his office at the Bologna factory just a few weeks after his appointment, revealed a fascinating insight into his plans for Ducati's future.

AC: Federico, though you're often portrayed in the press as an American, I understand you were in fact born in Italy?

FM: Yes, that's right - in Gallarate, as a matter of fact, which was originally the home of MV Agusta. My mother actually came from Verghera, which was where Count Agusta was based - MV stands for Moto Verghera. So, because of that I grew up very much aware of motorcycles, until I went to work for Proctor & Gamble in Rome in 1973, just as MV's racing career was reaching its zenith. After that I moved from industry to consulting, Italy to the USA - I was at McKinsey and then Bain, and have been involved in several different industries as a result - among others Playtex, CIGA Hotels, Bally shoes, and of course here at Ducati.

AC: Would it be fair to call you a company doctor?

FM: Yes, at a certain point in the early '80s I started not liking being an outside consultant very much, but preferred to get inside a company, fin out what was wrong with it, then stay behind to fix it - that gives much more satisfaction, plus turning around a company can also be rather profitable, because if you're any good you can make a lot of money out of identifying the problems and working to fix them. My batting average is two successes, two break-evens and one failure - and Ducati is definitely one of the successes!

AC: And one you seem to have become attached to! Are you hooked on Ducati?

FM (laughs): Yes, even if it's not very economically attractive for me - I could make much more money finding another sick child to help cure! When I moved my family from Boston to Italy in 1996 to take over running Ducati, my wife, who's American, signed up for two years living here while we turned it around - but here we are more than six years later still in Bologna! I can only say that when I came back here full time in March this year after being only President of the company for a couple of years, she agreed to sign up for another four years - so now you've got me here in the Ducati hot seat for at least that long!

AC: And combining the roles of CEO and President once again, as you did in the turnaround period. However, isn't it true to say this has come about because Ducati has clearly had some recent problems with its senior management? Earlier this year the company lost three key executives in sudden circumstances, all in the space of a couple of months - its previous CEO, Carlo di Biagio, as well as its Director of Sales and Marketing, and the President of Ducati USA. What were the reasons for their departure, and have you taken steps to resolve those issues?

FM: Well, Carlo says he resigned because he needed to be back in Rome with his family - but frankly I think there were certain circumstances that made Ducati still the most successful Italian motorcycle company, but not as successful as it was for example two years ago. The reason for this is that we hit a slump in the market just at the exact moment we were making the maximum effort to invest in new products, and of course we strained our resources doing that. We recognized that we needed to overhaul our entire range, and that's what we did - but at some cost. If the company had grown another 20% we'd feel much better, because of course it's expensive to renew your entire line and also introduce a totally new model like the Multistrada, all in one year. But, after a decade of continuous growth the market turned, and together with other companies, Ducati is suffering the consequences. However, luckily enough we had paid down our debts, and therefore we're in a very strong financial position - so while we're here lamenting less profit than we would have liked, we still remain very buoyant, and there's absolutely no issue of Ducati being in a financial crisis, as I have read in some sections of the press.

AC: What was your total production in 2002 compared to the previous year?

FM: We recorded 39,600 motorcycles in the last calendar year, which was 2% ahead of the year before, 2001 - so it was essentially a flat year because previously we'd been growing annually at around 20% in revenues and 17% in registrations. When I came here in 1996, we were making 11,000 bikes a year, so that gives you some idea of how the company's grown since then. In fact, back then production was down to ten bikes a day - and today we're doing 220 daily. That's with a total workforce now of about 1,100 people, compared to around 400 in those days, of which 980 or so are working here at the factory in Bologna, the rest scattered around the world at our various wholly-owned subsidiaries. And that's in addition to the 5000 people we have indirectly working for us through our network of suppliers - of the total value of each motorcycle we manufacture, just 7% is added internally, while 93% comes from outside, almost exclusively from suppliers in Italy and Japan.

AC: What's Ducati's target production for this year?

FM: That's a big question, because we really don't know what the market's going to do, and our sales and therefore our production are driven by registrations. We're not going to simply build more bikes and increase dealer stocks - but registrations were down 24% worldwide for the market as a whole in the first two months of the year, and if this is going to last, it'll be a disaster for everyone, not just Ducati. However, our prediction is that it will taper out, and by the end of the year we could see a total fall-off of under 10% compared to 2002. If that happens, I think Ducati will be stable in terms of growth - you might see us produce 41,000 bikes or so, and that'll be partly because we have freshened up our range so much, and partly because of our promotional success in racing. But we plan production six months in advance, so once the season has taken off in May we'll evaluate the situation and see what to do.

AC: But against this rosy overall picture since TPG's takeover at the end of 1996, the Ducati share price has bounced up and down like a yo-yo. It's recently shot up on the back of rumors about TPG selling off its stake in the company. Can you explain this?

FM: I have discovered that there is no relationship between the behavior of the company and the behavior of the stock, the reason being that it's so thinly traded - if somebody buys or sells a few hundred thousand shares, then the stock shoots up or down significantly. The last plunge was because a Chicago investor sold about 2.5% of the company, so the stock plummeted - but then it moved up based on rumors about Harley-Davidson having an interest in acquiring us, which we've denied because it's simply not true. Then once again it took off because of the Colannino affair with Piaggio (an Italian investor reported to be negotiating to acquire a substantial slice of the indebted scooter specialist, in which TPG has a small shareholding - AC) - but we have no interest in doing anything in that direction. I've never even met him, but the rumors spread and people buy the stock. It's very volatile.

AC: But another reason the share price shot up recently, was the rumor that TPG was actively looking to unload its remaining stock in Ducati. How much equity does it still hold in the company?

FM: About 33.4% - and TPG will unload it, since for David Bonderman (the boss of TPG - AC) this is now a vanity investment, even if he doesn't like me saying so! He keeps it because he likes sending his friends here to try our bikes and to go to races - really, for TPG a $140 million stake in Ducati is insignificant for a fund which now controls about $30 billion in sales. He has a price in mind, which is quite honestly pretty high - but I think he's set it that high because he doesn't want to sell it!

AC: So the assumption that many have made that you were reinstated as CEO of Ducati in order to plan TPG's exit strategy, is a false one?

FM (laughs): No, there's no relationship with that - they're not in fact planning an exit strategy, and to be honest they don't even look at us very much. They leave us alone and let us run the company - the best kind of investor.

AC: Turning to racing, Ducati's MotoGP debut this year could hardly have been more impressive - but at what cost? Can the presumably very high price of developing a bike good enough to lead its very first race on Honda's home circuit be justified in terms of Ducati's overall commercial strategy?

FM: I hope we can soon lead the whole race, not only the early laps! But in reality it has not proved that expensive, which is kind of strange. Originally we budgeted Euro 25 million a year for four years for everything, including Superbike which was however downscale budgetarily - but we discovered that 77% of the cost of our racing activities could be covered by sponsors, which is something we had not planned for! Frankly, we were taken by surprise by the attraction that the combination of Ducati, MotoGP and TV has for a major sponsor like Marlboro, Shell or companies like that. Also, we got some very interesting finance from the European Union for blue sky research into avantgarde engineering, part of which relates to our Grand Prix race program - after all, nobody makes a four-cylinder desmodromic motorcycle engine, except us!

AC: Nice to have Brussels sponsor the Ducati MotoGP team! But surely you're looking at your desmosedici as the prototype of a future road model, just as KTM has admitted doing with their future V4 GP bike? Will Ducati develop a V4 streetbike based on the GP racer?

FM: You know that I have to say no, don't you?! Under GP rules, the official line is that we will not develop a street four-cylinder bike - but however the official line is also that some of the solutions we are testing and developing in the prototype GP racer will eventual trickle down to the Superbike, and from the Superbike down to the production level. Ducati has always raced to develop something we then put into production. Let's leave it at that for the time being! Anyway, I look forward to seeing how the FIM is going to define the word 'prototype'...

AC: What's Ducati's position about World Superbike, though - not only in relation to MotoGP, but also in respect of the new 1000cc rules being implemented next year aimed at creating a level playing field for fours and twins - and triples, I guess?

FM: Superbike of course is our history, our heritage - our museum along the corridor is packed full of such bikes. The Flamminis were here just before you, by the way - and we have made an agreement with them that Ducati will continue to run a factory team in World Superbike indefinitely, because we believe that there is definitely the need, and the space, for two World Championships, provided they are clearly separated. I have always said that the beauty of Superbike lies in comparing it to Formula 1 car racing - the difference between a Ferrari fan and a Ducati fan is that the Ferrari fan is not a buyer of product, just maybe a T-shirt or a flag, but not the car. The fan that goes to see Superbike races is the one that buys the street version of the bike he sees on the racetrack, and you have only to look at the parking lot at a race to confirm this - I think MotoGP racing is more about the brand, whereas Superbike is about the actual customer product. Therefore, this form of racing is very important for us, and we will continue to be in Superbike for the foreseeable future. However, we want the other manufacturers to be there too, which is why we have accepted the new rules which I think do make sense and do offer the Japanese the opportunity to renew their commercial interest in Superbike, which in the past has lapsed. Now I think they have to come back: we were crazy enough to go into their field - at quite some risk of looking stupid, I might add - so now they have to come back on to our turf, as well.
However, I did tell the Flamminis that we have to work together on the TV coverage, which is what Superbike is weak on, especially right here in Italy. Superbike is great for the actual public that comes to the races, but it's not so good in terms of TV, and it's in everyone's interests to work on that.

AC: Looking at Ducati's future competition activities, there's also World Supersport, in which you were title contenders as recently as two years ago, but have since dropped off the pace. Will you return to the Supersport class with a competition version of the 749?

FM: Supersport operates under a set of rules which penalises small companies like Ducati, in terms of homologation levels. While in Superbike these are proportional to the size of the company, in Supersport it's a flat number irrespective of how big or how small the company that manufactures the bike is. That number (1000 units, compared to 150 units in Superbike for a company of Ducati's size - AC) is too high for a small compay like we are. We hope we will find within the MSMA a way to allow us to consider the opportunity to return to Supersport - but right now we can't even think about participating, because of the homologation numbers. I think we can bring added interest to a form of racing which has become very important, and exciting - but we have to work out a way we can do that which is fair to everyone, and the MSMA is the place to do that.

AC: Let's look at Ducati's present commercial situation, starting with the USA? Shouldn't it be your largest market?

FM: It should be, but it isn't - our Italian home market is biggest. We're suffering quite a lot through not being able to race there with bikes that have any resemblance to our World Superbike machinery. We hope that something will happen with the AMA, to establish a set of US Superbike rules which has some common sense and is at least pretty close to the FIM rules, otherwise for all manufacturers, especially one as small as Ducati, it doesn't make sense to develop different specifications of bikes for different championship series. We're either in or we're not in from now on - being in halfway like at the moment makes no sense. To be honest, it seems like we're being kind of kept out, whether intentionally or not I can't say - but for sure they're creating regulatory problems for us to go in and race there.

AC: How have Ducati's US registrations in the past five years charted?

FM: Well, it went from 2000 bikes a year up to 6000, and then it dropped slightly to between 5000 and 6000. But we know this is way below our potential, and we need to work hard to get up there. There's no reason at all why we can't sell 10,000 bikes a year in the USA, apart from being asinine about the way we've gone about it.

AC: How do you see Ducati's sales developing over the next five years? What's your corporate gameplan?

FM: I came to the board a few days ago and said that our next dream was to make 50,000 bikes in one year - and I think you must have just one dream at a time, and that's ours right now. How long it will take depends on the market specifically and the macro-economic situation in general, and especially what's going on in the USA and Germany. The other countries in the world are just fine for us, but those two have a question mark. But just look at what happened in Japan - we became the No.2 manufacturer after Honda in the sports bike market: we're selling more sports bikes than Yamaha or especially Suzuki, which is pretty astonishing. It became our third biggest market with 15% of our production, after Italy which takes 24%, and the US with 17%, followed by the UK, Germany and France which are all around the same, then Australia which is a big one, too. But a lot will depend also on how the Multistrada does for us. Right now we see this as a family which can sell maybe 5000 bikes a year, but from the reaction we've got from our dealer network and the press, as well as from early public response, maybe that's wrong and we can in fact expand the Multistrada concept into other niches which will allow us to do more. But we also want the SS range to come back and represent a higher proportion of our total volume than it has in recent years. That's a priority, now.

AC: So can we take a look at Ducati's future model strategy? Taking your answer about the V4 desmosedici streetbike at face value, let's look at other potential new families of models in the Ducati range. Given your problems in terms of market penetration in the USA, have you considered building a line of bikes specifically targeted at the American customer?

FM: I don't think you'll see a cruiser in Ducati's lineup anytime soon. You see, right now the share of dream we have in the United States is so much larger than our share of market, that it is exclusively our fault not to catch up, and the share of dream is built on Ducati's true essence, which is absolutely not cruiser. In order to grow in the US we don't need to invade other markets - we should do better what we already know how to do, and that is to sell sportbikes. Through a series of circumstances, we have not done the job in the US, and that's down to our marketing strategy, not our products.

AC: What are those circumstances?

FM: First of all, usually no European company does well in the US, which is a complicated country which takes some learning to approach properly. No European company has enough scale to go there and mount a countrywide operation correctly, so you have to choose the areas you want to concentrate on. The ideal would be to have a dealer network exclusively specializing in European motorcycles, with the same level of dealer coverage as Harley or the Japanese - but while the European industry is so fragmented and litigious, this is something that wouldn't make a lot of economic sense. But right now no European brand can afford to have a specialized dealer network in the USA, because they don't have the volume to do it with, given the geography of the country. All together, they could do it - and the interesting thing is that within the existing dealer network, there are some dealers which are exclusively specializing in the European brands. But they've had the foresight to go and assemble these franchises themselves - there's no master plan, no common ground so that we share the costs and the benefits of this. And that's a pity, because for many of our potential customers in the US, the fact there's no Ducati dealer within 300 miles of their house is a real problem - so the dream does not become a purchase.

AC: Wouldn't one solution be to make a deal with Harley to sell Ducatis through their dealerships - even if the rumors of their interest in acquiring you are unfounded, there's zero crossover between the two ranges, and one would presumably help the other? Have you explored this with them?

FM: Well, let's turn that around and ask if we would be open to selling Harley-Davidson motorcycles through our stores in Italy, to which the answer is definitely no, because we're so much stronger in Italy that we would never allow a competitor for the floor space in the store to come in on the back of that. We have the scale in Italy to do it by ourselves, just as they have in the USA - so why should they want to help us? What you need to do is to join up with other people who don't have the same scale - firms like Aprilia, Moto Guzzi, Triumph, KTM and lots of others.

AC: Speaking of KTM underlines that such a link would provide Ducati dealers with the dirtbike range they presently lack. Why did you reject the chance to distribute their products through Ducati dealerships in Japan, perhaps as a prelude to a greater collaboration in other markets?

FM: Because with the blurring of all the motorcycle segments, we and KTM are getting pretty close to treading on each other's toes! I would say that KTM, us and Harley-Davidson are the three most successful motorcycle companies in the world - we don't even know if the Japanese are truly successful or not, so leave them aside from it. I have great admiration for what the other two have done in quite different model sectors from each other, and from us - but that doesn't stop each of us from looking over our shoulders at the other two!

AC: KTM came very close to purchasing Moto Guzzi, then withdrew at the very last moment. The word is that Ducati very nearly acquired Guzzi after that, presumably to expand your product range into the cruiser segment, without building a Ducati cruiser. How close did you come to purchasing Moto Guzzi?

FM: I think we came very close indeed - when it came down to the wire, it was us and Aprilia, and we actually offered more money at the end of the day than Ivano Beggio. But because we are a listed company our offer was subject to having to go to the bank and get the documents to arrange the finance, whereas Beggio was in the very fortunate position of being able to simply pull out his pocketbook and write a check. And so although the check was for less money, given the desperate situation Guzzi was in, they took the check now rather than wait for a bigger one tomorrow. I guess you can't really blame them for that.

FM: OK - but how about Husqvarna? Is it true you've been shopping around for a dirtbike manufacturer to give Ducati dealers the offroad product they presently lack in a growing market?

FM: We actually made an offer for Husqvarna back before Christmas, because with the same logic we wanted to acquire Moto Guzzi for, I think Husqvarna is a nice complement to Ducati's product line, and it would help us also to gain mass in the USA. We have a lot of respect for the product and the brand, and what it represents, and we thought it might also be a way to help Claudio Castiglioni, who at the end of the day I admire as a great product man. But unfortunately this is not the time when you can overpay for something - you have to be careful that everything makes sense from the balance sheet, not just for the passion. So the passion was there, the product was there, but I'm afraid the balance sheet wasn't there, so we just couldn't do it.

AC: Did you consider purchasing the whole MV Agusta group from Banca Intesa, which holds the majority of the company's debt?

FM: Well, I think MV Agusta itself would do so much better in Claudio's hands - it's a super- niche product which overlaps the very top end of the Ducati range, so therefore it would not have been interesting for us. We only wanted Husqvarna, and so far we couldn't get it.

AC: How about VOR, which was recently acquired by Mondial? Did you explore that first?

FM: Yes, we knew it was up for sale, and we looked at the company, which was a good one. But it was pretty small, without much substance, so it was more like buying an idea - and we have plenty of those ourselves, so we don't need to pay someone to think them for us!

AC: OK - but will Ducati develop a dirtbike range in-house? Given the worldwide increase in interest in single-cylinder Supermoto bikes, will Ducati develop its own interpretation of this type of bike, especially when you have such a history of dual sport machinery from the past?

FM: Well - I've learned to never say never. I think it's an interesting market, and what really appeals to us is the overlap between the dirt and the road. Take the Multistrada - I think that was an interpretation of what we have seen out there, and as we saw the blurring of the model segments, we thought we could take some of our traditional core strengths from the sportbikes, and put them in a bike that was blurring with another segment we were not in - and that was the reason for the Multistrada.

AC: What about a true dual-purpose enduro version of the Multistrada - one designed to get its tires muddy? Have you considered developing such a bike?

FM: Look, we're a small company and we can't afford to veer around in too many different directions. We can't exclude that - but we're still trying to get a feel for this model segment, which to start with is exceeding our best expectations. But is it a 3000 bikes a year segment, a 5000, or a 6000 a year one? If it's 6000, then of course we'll do other versions of it, and not necessarily only the enduro. We could do a touring version, too - there's lots of potential, once the market's proven to us it's there. We really don't know what the boundaries of this Multistrada family are going to be.

AC: Will you produce a desmoquattro version?

FM: If we see that people want more power, why not? But the Multistrada is a bike we had to have a lot of guts to put into production, because it's such a great departure from our tradition. When we become a little more familiar with what the bike does and what our customers want from it, then you will see it moving in other directions. Pierre Terblanche has about 300 directions he wants to go with it!

AC: OK - but now let's return to Supermoto. This is a fast-growing sporting sector, which is now taking off in the USA where it was after all invented 20 years ago. Does Ducati plan to become a player here?

FM: We've seen the trend, of course, and now we're grappling with the idea of how we should respond to it. But when we launch a product, it's not a copy of something that's already out there, so while we're very interested in doing something, we don't know if our segments are going to blend nicely into that or not. For example, do you need a single or can you do something with a twin, which of course would make it much easier? If we had to develop a single, this would be a problem because as you know very well we already have a very good sport single which we did not think we could sell enough of in street form to justify converting to that from the road racer! At this point in time I don't think we have a single we can use for anything involving the dirt - but I think you do need a single for Supermoto, and so probably the answer is that we will not do it anytime soon.

AC: You wouldn't consider making something out of a 620cc V-twin Multistrada-based bike which could be stripped out and perhaps you could use for Monomarca racing, just as KTM is talking about doing with a Supermoto version of their V-twin 950 Duke, when it comes?

FM: I think it's a good idea, but this is all part of learning about what we do with the Multistrada family - and we're not at that point yet. We see that the market is out there, but we're still asking ourselves if that's for us or not - does it match with our traditions, with our overall strategy, with our product line. Once we have a clear idea of what's out there for us, then we can decide better what idea comes next.

AC: How about an entry-level volume production Ducati model? Do you feel there's a need for such a product, and if so, what form should it take? How about a Ducati scooter?

FM: You see, I always like to say that Ducati is a tribe, and of course you need an entry door to this tribe - though right now, our entry door is reasonably expensive. Our most successful such bike is the Monster 620 Dark, and an astonishing number of people who never owned a motorcycle before entered into our family via the M620 - something like 40% of all the buyers, which is terribly high. But, while we do have an effective if comparatively costly entry door to the Ducati family, we could consider another entry level product - however, you will not see the Ducati equivalent of a scooter or any basic means of transportation, because we don't have the industrial structure to do it. Anyway, I think we're much better off remaining a niche brand, because in this niche we know we can make a profit - and I don't see so many scooter companies turning a profit, right now!

AC: You know I won't let you get away without asking this! Why won't you make the Supermono with lights, for the street?! Especially as you can add value, and performance, by fitting a supercharger which has been proven to work effectively on single-cylinder motorcycles, represents an avantgarde form of proven technology that on two wheels would be unique to Ducati, and would allow you to position the model advantageously pricewise.

FM: From my point of view, this is a matter of priorities. We are a small company, so we have to choose what's most important. Do we develop a single? Do we make a four? Do we produce a three-valve air-cooled twin? Or how about a triple? I don't think we can afford to bring too many kinds of engines through to production, because although you're correct when you say that we've done all the hard work in actually designing a prototype Supermono, from there to actually rolling the first engine off the production line will cost us approximately five million Euros. Can we really expect to turn that much profit from such a product? That's what we have to ask ourselves. I'm not going to take this company down the road of over-investing as compared to the size that we have, and the profit we want to generate. So - sorry!

AC: OK, but you have produced niche market special edition models using existing engines, such as the MH900e. Do you plan any more in the near future - such as the PS750e Paul Smart Replica celebrating his Imola 200 victory in 1972 which Pierre Terblanche is reputed to have been working on for some time?

FM: Stay tuned, and keep checking our website www.ducati.com to know when you have to place your order by. That's all I can say right now!

AC: Speaking of the MH900e, is your dispute with Pauline Hailwood about using Mike's name in connection with this model now resolved?

FM: Yes. I think we arrived at a mutually satisfactory settlement which brings Pauline and her son David back into our family, which is where I think they belonged all along. To mark this, David will be riding his father's bike in the TT Lap of Honour in June on the 25th anniversary of Mike's great TT victory for Ducati, with Neil Hodgson following on a 999. It's worth underlining that Pauline was kind enough to contribute the money that we paid her to Riders For Health, which as you know is the charity we support. I think that's a fine gesture.

AC: Any plans to market a 25th Anniversary Mike Hailwood Replica of the 999 to commemorate this?

FM: Hmm - no, but that's a very good idea. Just don't expect us to pay you for it!

AC: Let's turn to Bimota. Is it true that you've made an agreement with Lorenzo Ducati, son of one of this company's founders, and his partner Giuseppe Della Pietra, to supply engines to the revived Bimota company so that their future range is exclusively powered by Ducati?

FM: There is no formal agreement, but they asked us for the engines and we said we would be willing to supply them. I guess it all depends if they can find enough money to get started again, but - yes, we will sell them Ducati engines for whatever they make. We're quite willing to support them, because I believe that the more interest we raise in Italian niche products, the better we enlarge this segment of the market as a whole, in which we'll always get our fair share. So I want to see MV Agusta back on track, I would have liked to see Benelli prospering and wish Merloni all good luck in achieving that, and I'm happy to help Bimota get back in business - because by enlarging the market for Italian or even European brands worldwide, we increase Ducati's chance to do better.

AC: One reason Italian motorcycles command such fervent admiration around the world is because of the quality of their design, and styling. Massimo Tamburini is revered as the Michelangelo of motorcycling, and of course he was responsible for the Ducati 916, for many people the quintessential bike design of the 1990s. Is it true, as rumoured, that you recently approached him to design another bike for Ducati?

FM: The answer is no. We know that Tamburini is extremely loyal to Castiglioni, and while he has all our admiration and it would be a dream to work with him again, he has made other choices, which we respect.

AC: What response do you have to the accusation surfacing increasingly often of late that Ducatis are over-priced? In view of the current downturn in the market, have you considered reducing your prices as a response to this?
FM: Well, I think if you look at our prices we have already significantly reduced some of them - look at the Monster 620 which is now available at an entry level price which did not exist before. The Multistrada is most definitely not overpriced - it has a very competitive sticker. But I do think that if we want our products to have the technology, to have the quality, and to have the racing heritage, all wrapped up in a single high-end package, we are bound to be at a premium price over our Japanese competitors. It's the same way that Harley-Davidson has a premium price over the others - not overpriced, not excessive, but just and appropriate. It's a systemic issue - we can not compete on volume, so we can not compete on price, because our industrial system does not permit it. So what can we do? We can add something to the product that justifies the premium price - we have the heritage, the soul, the character, the ongoing World Superbike and GP success, to all of which we add the World of Ducati, which is really working nicely for us right now in terms of making our customers feel part of the Ducati family. Which of course, they are. However, we will add entry doors into our world - the Monster 620 is one of them, the 620 Sport another, and we are thinking about building some other entry doors in terms of pricing, because we've found out we have a repeat purchase level which is amazingly higher than any other brand except Harley, which is the same. That's really astonishing - we have a repeat purchase level twice as high as Honda, for example.

AC: Part of the sense of belonging is fostered by the WDW/World Ducati Weekend and DRA/Ducati Revs America events, which you've pioneered in the past, and which rival marques like Aprilia are now copying. Do you plan to continue these?

FM: Very much so - and we'll keep adding new ones. For example, this year we're organising the third Motogiro, which has become an annual event, and now we have the Centopassi later in the year, which is a kind of Italian version of the US Iron Butt rally, inspired by the guy who makes my pizza in a little village not far from here. He's done about 40,000 km. in a year on a Monster S4 that he owns, covering all these one hundred mountain passes around Italy, and it was from hearing him brag about this that we got the idea for the Centopassi. Should be fun - I'm going to do it myself on a Multistrada, and then maybe I can start bragging to him!

AC: Maybe he'll give you a free pizza! But how about the WDW and DRA - will they be held again in 2004?

FM: WDW for sure, in June - yes. But DRA is not certain - there's been such a total freeze on consumption in the USA, so that for instance for the first time in many years Harley registrations have actually declined by 3.5%, which is a worrisome signal. Their sales went up, but registrations dropped, which means they're loading up their dealers with stock, which is contrary to our policy. We need to be sure that it would be well enough attended to go back to Las Vegas again, though we'd like to do so.

AC: Looking at Ducati's future product mix, and leaving aside the issue of a possible high end V4 range....

FM (interrupts): Double-two!

AC: ....of course - that'd make it different from your MotoGP bike with its conventional firing order, so would skirt the FIM prototype rules! But leaving that aside, will Ducati continue to focus exclusively on desmodromic V-twin motorcycles with a sporting flair - no singles, no triples, no valve-springs, no narrow-angle V-twins?

FM: Not so long as I'm here! But do you think maybe we should produce a non-desmo bike?

AC: Not unless it has pneumatic valve operation, which could be perceived as a modern version of desmodromic technology.

FM: Which we will not do, by the way - even though we considered that when we were looking at the desmosedici, to the point we had it designed, developed, stuff like that. But then on the computer we found out that the performance with the pneumatics was not significantly better than the desmo, the cost was of course enormously higher, and it represented a radical departure from our existing traditions. So once we were sure we were not giving up any performance, we opted to stay with the traditional desmo valve operation, and I must say judging by the way the bike accelerates, maybe it wasn't such a bad decision after all...!



For more information on Ducati:www.ducati.com

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