Ducati CEO Gabriele Del Torchio...
Ducati CEO Gabriele Del Torchio loves to talk about the company he has headed since 2007. Photo by Henny Ray Abrams
Gabriele Del Torchio is a natural born salesman with a very good product to sell.
The CEO of Ducati Motor Holdings has seen his sales rise while those of his rivals drop, in some cases precipitously. This isn’t lost on Del Torchio.
The voluble Italian loves to hold forth on the virtues of the Ducati and the recent team introduction in the Italian Dolomites was the perfect background. Del Torchio pointed out that in 2010, the final year of their three-year strategic plan, Ducati was able to move the needle higher in almost every way. There was a 5% increase in worldwide registrations, reaching 36,200 motorcycles and giving them a market share of 8.6%, a 1.5 point improvement on 2009 and double their market share from 2007.
Sales grew in Italy, where they have a 15% market share, but also in the U.S. and the Far East, the rapidly growing region in which Ducati enjoyed 64% growth. Leading the company’s growth was the Multistrada 1200, which has been a standout performer since its introduction in April of 2010. In less than nine months, 8,887 units were sold, and 7,200 registered, giving it a 14.3% market share. And in that short time it became the segment’s “second world-best-seller,” according to Ducati.
With one of the world's most...
With one of the world's most popular athletes in Valentino Rossi to help market the brand, Del Torchio knows Ducati is in a very good position for the immediate future.
A new three-year plan starts now, with Ducati looking at growth and strengthening their financial position. We caught up to Del Torchio in the congress hall in Madonna di Campiglio, where the team was launched.
The past two years have been very tough on the motorcycle industry worldwide. How has Ducati fared?
2010 despite the very bad market condition has been an excellent year for Ducati. The market itself declined by a farther 13% in the segments in which we compete during 2010. Despite this bad market condition, we were able to increase our sales by 5% in volume. That means that our market share is achieving the highest level in our history. At the end of 2010, we have recorded 8.6% market share on a worldwide basis. That means roughly two times the market share that we had in 2007.
During the last three years we increased constantly 15% of our budget every year in order to have new products available for the market, while in our strategic plan the objective was to introduce in the market ten new models. We have been able to introduce in the market 12 new models. So together with this market and its results, given the financial and economic results of the company, are quite good. Our shareholders are very satisfied. So I believe the company today is in very good shape and is very robust and solid to start a new era. I am now working together with my team on the strategic plan covering 2011 to 2013 and our objective is for farther growth and for farther increase of our financial results.
You said you introduced all those new models. Was that the main reason for your market share increase or was it a particular model or strategy?
I believe that there is a composition of elements. First of all, introduction of new models and talking about introduction of new models, in 2010 most part of the results are due to the introduction of the Multistrada. The new Multistrada is really a global success. We have been able to sell something like 8600 bikes during 2010 and we achieve market share over 14%, despite the fact that we introduced the bike only from April. So I believe that the contribution coming from Multistrada has been really noticeable. Together with the product introduction I believe that we achieve also results because of improvement in quality. The quality of our products has been noticeably improve in comparison with the past. All evidence are showing that the warranty costs declined by something like 50% during the last four years, so this is another very important contribution in order to improve the reputation and to improve the opinion of the customer towards Ducati. And then also we have been working to have a distribution network and in terms of brand coolness, that’s very important, even the brand awareness, because even the brand is now in a very good shape.
Last four years you had Casey Stoner riding for Ducati, what about the Australian market? Have you noticed a difference there because of those four years with Casey?
Results in Australian market have been very good. And I believe that the contribution of those results are mainly due to two factors. One factor are the Australian, Casey Stoner and Troy Bayliss. Please remember Troy that is our hero. So the contribution coming from them. And the contribution coming from the Superbike in Australia, the sportbike segment. During last year, unfortunately, the Supersport bike segment declined quite rapidly and quite sharply in Australia. So we weren’t able to improve our market share. We stayed as we were. But definitely the results in Australia are mainly due to a composition of product and rider, Australian riders. That means our reputation and image into the Australian market.
You were asked about Yamaha and Rossi’s affect on sales, and you said the racing image is more important at Ducati than at Yamaha.
I’m fully convinced of that, because Ducati is a small company. We are a small company, we are far smaller than Yamaha. And the best for us to communicated our image, to communicate our name is through racing and in the meantime there is another element that is different between ourself in cooperation with Yamaha is the fact that our MotoGP team is really the laboratory for research and development. We are working inside of the racing to develop new solutions, to develop advanced solution, and in due time we move those solution into production.
Is racing with Rossi more important than racing with Bayliss and Stoner?
Equally important. I don’t see a reason why it should be more important. I believe that it will be equally important. For sure for us being Italian is very important, because, you know, an Italian bike, an icon of the Italian industry together with a world champion like Valentino Rossi is an ideal composition to create a kind of national team in motorbikes. But Italy for us represents something like 23% of my volume. 77% is generated outside. So for Italy, is definitely a very important, outside Italy is equally important as Casey, as Troy. What is really important to win possibly or at least to do a very exciting tournament.
You were also asked if you had made a calculation on Rossi’s impact on the brand.
I believe that he will have a tremendous impact on our brand and I believe that it will help us a lot in terms of technology development. But I’m expecting a contribution from Valentino in terms of product development.
Sales, it will depend. The main reason why we have Valentino with us is not to push sales. Is to maintain the brand awareness and obviously in long terms to boost ourselves. If you look at the history of Ducati, we had a series of world champion together with us and we always try to have the best together with us.
You’ve done a number of signature models in the pass. Can we expect a Rossi model?
In due time, in due time. Now it’s too early to say, but in due time you can expect.
Have you noticed since Valentino signed, the very brief time he’s been with Ducati, has there been any impact in the marketplace that you noticed?
No. A lot of comments. A lot of visibility. A lot of articles around the world. There’s a lot of attention, so it’s too early to say. For sure I believe that for our licensed products, you know that we are working together with Puma and together with others. For sure for merchandising there will be a huge impact.
Del Torchio is expecting great...
Del Torchio is expecting great things from the new Diavel, Ducati's entry into the power cruiser segment.
What’s the next big seller from Ducati?
Is the Monster line. Monster remains our second top seller.
Is there a specific model that’s going to have a big impact?
This one (slapping seat of the Diavel). We have a lot of expectation. This is really an outstanding bike. We invited the journalists to join us in Marbella at the end of January to do finally the test. This is really a fantastic bike. It’s very light. It’s only 207 kilos. It has an engine with 183 horsepower. And despite the bit tires, you can lean up to 41 degrees. You’d be surprised testing this bike. So I have a lot of expectation from this bike. Not only from North America.
Does this bike exist because the Supersport segment seems to be diminishing?
This bike exists as an attempt of Ducati to expand the level of sales and to increase market share and because there is a need of this category of bike. Is very difficult to define this bike because we tried, as we did with the Monster many years ago, to introduce a new market segment. Because for it’s not a cruiser, for sure it’s not a naked. It’s a new animal. So we try to explore some new directions and I believe the company as Ducati has the responsibility to explore new directions.
Del Torchio knows that now...
Del Torchio knows that now that Rossi and Ducati are together, the brand's image is also dependent on Rossi's fortunes.
Some will say if the Ducati wins next year, it will be because of Valentino. And if Valentino loses, it will be because Ducati. It’s risky to have him with you.
You know, I cannot make forecasts right now. But one thing is for sure, Valentino and Ducati are now together. If we will win, we will win together, if we will lose, we will lose together, no doubt.
What about Fiat's current issues with the workers unions, which could eventually affect Ducati as well?
Everyone must worry about themselves first and foremost. But our company made the choice to be Italian. We have no intention of leaving this place. Sure, we recently announced an assembly facility in Indonesia, but that isn't a desire to leave here, but rather a matter of balancing tariffs. When we export our products to that geographic region, the tariffs can reach as high as 80% of the product value.
The only way to get around this was to carry out assembly in that region, but the majority of the parts will come from Italy and the design will always be our own. We are also talking about products destined exclusively for that geographic region. Getting back to Fiat, I don't want to compare our situation to that of others, but I will just say that we, like everyone else in the industry, are very sensitive to productivity. We had constructive meetings with the unions, and we want to work together towards greater efficiency and productivity.
Ducati's commitment to Italy also means a significant investment in their operations here.
We are working, together with the regional and Bologna municipal authorities, to do everything necessary to start construction on a new production facility. We want to invest a considerable amount to have a brand new Ducati facility. A facility that will continue in the Ducati tradition, as the symbol of Borgo Panigale. We have identified a location that is right in Borgo Panigale, and I think that in the next months—bureaucracy permitting, which always takes a long time in Italy—we can have the necessary authorization to break ground on a new Italian production facility. Being realistic, this could all take place in early 2012.