Aprilia Motorcycles Facing Bankruptcy, Production Halted

Italian motorcycle manufacturer Aprilia confronts financial problems that halt production/

Italian motorcycle maker Aprilia, which is also the parent company of Moto Guzzi and Laverda, faces bankruptcy unless it can obtain a large cash infusion by May 3. Bills from suppliers have gone unpaid, and they have stopped shipping components to the company, stopping motorcycle production. Banks have cut off credit for the firm and told the company that it must come up with 7.4 million Euros by Monday to prevent bankruptcy. A government task force has been set up to solve the crisis and protect the interests of Aprilia's 650 workers.

The company's financial problems appear to come from a variety of quarters. Scooter sales in its Italian home market, a big portion of the company's business, have slowed dramatically. The devaluation of the American dollar, though it sells more Harleys abroad, means sales of bikes imported to this country either send fewer lire home or require price increases here, reducing sales volume. The firm's acquisition of struggling Moto Guzzi and perennially failing Laverda has probably also been a cash drain. In addition, Aprilia's MotoGP program requires a substantial investment.

Rumors of financial issues have hung about the company for the last couple of years, but only recently have they begun to appear in the press. In the same period, Aprilia's motorcycles have met a warm reception in the press and sales have grown in the U.S. Its acquisition of Moto Guzzi also seems have revitalized that brand's presence in the American market by raising Guzzi's profile and expanding and improving its model line.

Most observers are optimistic that Aprilia will survive the crisis. Reports from Europe suggest that Ducati may wish to buy Moto Guzzi. The current ongoing growth of the motorcycle market should make it easier for Aprilia to find companies or investors who want a piece of its pie. Canada's Bombardier, parent of Rotax and maker of (among other products) Ski-Doo snowmobiles and, for decade a quarter-century ago, Can-Am motorcycles, is also reported to be interested in Aprilia. Unless a substantial cash injection is obtained, the company's GP program maybe curtailed or eliminated.

Positive reviews of its motorcycles haven't been enough to keep Aprilia financially healthy, but the strength of the motorcycle market should attract the cash it needs to keep going.