AC: Viewed from outside, it seems surprising that Harley management agreed to sell the company to the Castiglioni family in a deal which did not bring them as much money as they could have got by selling it to a private equity finance house—one like TPG, for example, which was certainly interested. Why do you think they chose to sell it back to you and your father, rather than one of these?
Well, the contract we made with Harley at the moment of the sale back in 2008 was quite strict; therefore they would have had problems in selling the company to somebody else in a way that was anything but expensive for them.
AC: Was this because Harley still owed you money under the original contract of sale?
GC: Exactly—we still had yet to receive part of the deferred payment.
AC: But, is it true that when you reacquired MV Agusta, it was with a clean balance sheet?
GC: Yes, indeed, the company has zero debt today, and we also have good working capital, and cash in the bank. We also don’t have any assets used as collateral against a mortgage or other kind of loan, and so there is no cash flow problem at the moment. Of course, the company is still losing money and has yet to invest a lot of capital for future growth, but I am quite positive because we have a solid structure, a good brand, and new products generated via substantial investment from Harley-Davidson. The F4, the Brutale and the F3 are all paid for in terms of development costs to date, and thanks to that we can look forward to making the necessary profits for investing in further new products. I’m not worried about our cash flow; I’m more concerned about the global market, which is quite difficult at the moment—both for MV Agusta and for other manufacturers which have much more to lose than we do.
We are just now completing a thorough overhaul of the company, which was seriously over-structured in terms of personnel and costs. We have reduced our overhead by about 40 percent, not only by downsizing our workforce by about 45 percent, but also by creating efficiencies in the supply chain and streamlining our production process to make it quicker and leaner. By doing this, we have taken one million Euros ($1.4 million) per month out of the operating costs of MV Agusta without sacrificing quality.
We have a really conservative approach to the growth of the company. In 2011 we produced around 3500 motorcycles, and our plan is to increase that gradually to a ceiling of 11,000 bikes a year. We’ll do this by consolidating the existing product range with the new models that we are putting into the market now, starting with the Brutale 920. Later this year, we are also producing the F4RR which will actually be a 2012 model, and the complete opposite of an entry level bike! In fact, it’ll be a higher level F4R Superbike weighing 210kg (463 lb) with a full tank of fuel, with a still more powerful engine giving 203 horsepower in street-legal form, top quality hlins suspension, Brembo monobloc brakes, and a complete set of electronic rider aids including traction control, anti-wheelie control and so forth. That’ll cost 22,990 ($32,100), and we’ll also have a track day or Superstock race version.
AC: When will the F3 Brutalina arrive?
We’ll display the Brutale 675as it will be calledat EICMA in November, and plan to enter production with it in spring 2012. At the end of 2012 we will present a Supermotard version of the F3, and these three variants should be enough for us to cover all the market segments we want to attack. That said, we may eventually consider making a sports-tourer or an adventure-tourer, or even a street enduro comparable to the small Tiger 800 that Triumph has made. But first we must concentrate on what we’re best at, and that’s the pure sports models. SR