Up Front
UP FRONT
Opera d'Italia
David Edwards
WELCOME TO THE RICKETY, NEVER-ending rollercoaster ride that is the Italian motorcycle industry. Latest to teeter on the edge is the Aprilia Group, consisting of Aprilia, Moto Guzzi and Laverda, struggling to keep out of the clutches of amministrazione controllata, the rough equivalent of our Chapter 11 bankruptcy.
How this came to be is a result of simple bad business luck and the usual overabundance of passion-common thread of all Italian motorcycle companies.
Founded in 1956 as a bicycle builder, Aprilia has always been a family-run operation. Ivano Beggio took over operations from his father in 1968 and charted a successful expansion into 50cc mopeds and scooters, then full-size motorcycles, culminating in today’s line of lOOOcc V-Twin sportbikes.
It was Beggio’s impassioned acquisition of Moto Guzzi in 2000, though, that squeezed the company’s resources to near-strangulation. Borrowing heavily, Beggio paid a ridiculously high $70 million, given the limping condition of the once-great Mandello del Lario-based make, which needed $35 million to get its tooling and manufacturing process straight, and another $5 million to develop a modern V-Twin. Beggio was drawn to Moto Guzzi by its rich competition history and by its status as the “Harley-Davidson of Italy,” builders of big bikes and police motorcycles.
“Okay, but no matter how much we all love the great Guzzi name,” says Bruno de Prato, Cycle World's man in Italy, “it was not worth a total of $110 million.”
At that time, however, in spite of substantial bank exposure, Aprilia was strong and healthy, thanks to a massive cashflow generated by the enormous success of its scooters and mopeds. This led Aprilia’s banks to renew their credit lines. Then, suddenly, the scooter market went dry, particularly the 50cc segment in which Aprilia was leader. The European Union’s mandatory helmet laws plus new licensing and insurance requirements drove buyers to bigger scooters, motorcycles or even cars. The dollar’s devaluation against the euro didn’t help the balance of trade, either.
“From then on, Beggio lost his golden touch and compounded his mistakes,” says de Prato. “First, by acquiring Laverda, a defunct brand with a solid following of die-hard ever-faithfuls. But there was no solid business plan, just quick patch-ups.
“Then, Aprilia pulled out of World Superbike when the completely renewed RSV1000 needed all possible support from its presence in the sport. Aprilia diverted the Superbike funds to MotoGP, developing a hopeless three-cylinder racer with no production potential.
“The last straw was the nonsense creation of a technological satellite operation manned by a team of Cagiva escapees, which gave life to a 450cc Supermoto engine-a total waste of precious money at the absolute wrong time!
“That’s how, in short, Aprilia ran from a leadership position into a sandbank,” de Prato sums up.
So, where do things stand in early June as this column is being written?
Well, Aprilia is fighting hard to stay afloat, announcing a new credit line of $36 million, which paid unhappy vendors and restarted production lines. Beggio has stepped down as president-either at the insistence of the banks or by his own volition so he can concentrate on wooing investors, depending upon whom you ask.
It is known that up to 15 suitors have shown interest in the Aprilia Group, some as minority investors as Beggio would prefer, some as majority partners or outright buyers as it’s rumored the banks would like.
One scenario has Bombardier, the Canadian parent company of Rotax, one of Aprilia’s engine suppliers, buying the whole outfit and adding a line of scooters and motorcycles to its recreational vehicle group, which already includes personal watercraft and ATVs. Bombardier is no stranger to two wheels, having built Can-Am dirtbikes from the early 1970s before pulling the plug in the ’80s.
Another possibility is a buy-out by rival Italian scooter giant Piaggio. Besides eliminating a major competitor and reaping some attendant cost savings, this move might lead to a rebadging of the Aprilia RSV V-Twins. Currently, there is nothing sporty enough in the Piaggio family to justify the storied Gilera logo, another of the company’s properties. This scenario has another interesting twist, namely the Moto Guzzi side of the business being sold off to Ducati. The Bologna-based manufacturer has already made clear its desire for Guzzi, which would give it a step up in its quest for a viable V-Twin cruiser-an important market segment not currently in Ducati’s DNA.
“It’s a delicate situation,” says Ducati North America boss Michael Lock. “We’ve done our due diligence, we know what we want, but it’s just not as simple as making a bid.”
Ironically, it wasn’t that long ago-the mid-1980s-that Ducati was in a far worse position than Aprilia now finds itself, reduced to being a mere engine vendor as part of the Cagiva empire. Ten years later, thanks to American investment dollars, Ducati was its own company again and on the move.
“There’s pride in Bologna. We’ve come from being a boutique bike-builder in 1996 to a small but well-run manufacturing company today,” says Lock. “More important, we’re profitable. That’s what we could do for Guzzi. It would once again be taken seriously, rather than as an oddity, which-let’s be frank-is what it’s become. We’ve done it before, we could do it again.”
Will it happen?
“I’d rate the chances at better than SOSO, but how much better I don’t know,” says Lock. “There’s Italian pride and emotion at work here. Moto Guzzi would be a good product fit for us and a good philosophical fit. We’re serious about this.”
And, of course, more than a little bit passionate, too.
