Another Italian company has opened a sumptuous flagship store in the heart of Manhattan to spotlight its luxury merchandise and lavish accessories.
But this is no Bulgari or Gucci. It’s Ducati S.p.A., maker of deluxe motorcycles. Taking a page from the playbook of its U.S. rival Harley-Davidson Inc., it’s mounting an ambitious push to market its bikes as passports to a fast-paced lifestyle.
“This is not a mechanical industry thing. This is about exclusivity, luxury, having fun,” says Ducati’s new chief executive officer, Federico Minoli. “We want to create a Ducati way of life.”
Since the Ft. Worth closed-end fund Texas Pacific Group acquired a 51 percent stake in Ducati in 1996, the company has been acting more like a purveyor of luxury goods than a motorcycle maker.
Ducati rolled out a line of leather motorcycle-racing suits last year and plans to introduce sunglasses this year. The New York boutique opened on the newly spruced-up 42nd Street. Eight other Ducati stores are on tap for this year in Italy.
The Ducati brand is starting to create a louder hum. Neiman Marcus featured a limited-series Ducati 748 in last year’s “wish list” catalog, along with such items as a Porsche bicycle, Emporio Armani watches and Gucci shoes. New York’s Solomon R. Guggenheim Museum opens an exhibit in June called “The Art of Motorcycling” that will feature several Ducatis.
Minoli, the 48-year-old Bain & Co. management consultant who advised Texas Pacific Group on the acquisition and then defected to run Ducati, says he and Ducati’s new owners walked into a potential textbook turnaround situation. “It was a great brand without a company around it,” he says. “We just had to build up the company.”
One big asset was Massimo Bordi, the engineer who had designed Ducati’s famed Desmo V-twin engine as his thesis at the University of Bologna in 1973. Bordi kept the company producing some of the world’s most admired motorcycles, such as the 1994 Ducati 916, designed by Massimo Tamburini. Racers on Ducatis have won the world SuperBike championship eight of the last 10 years.
Until 1996, Ducati was the best-selling brand in the Cagiva S.p.A. motorcycle group. But other, money-losing Cagiva brands were sucking Ducati’s revenues away. Ducati was left without funds for investments, and eventually without the cash to pay its suppliers or employees.
When the new owners arrived, production had nearly ground to a halt, with only about 30 bikes being turned out each day. Spare parts weren’t available when motorcycles broke down. Workers had drifted home, their salaries unpaid in the two months before the company was sold.
“In the first three days, I signed $50 million in checks to pay suppliers,” says Minoli, who kept Bordi and his team on board, and brought freelance designer Pierre Terblanche in-house. “Then I hired 250 people. We had to restart production.”
Ducati produces about 135 bikes a day and pays its bills on time. The company’s revenue has doubled to $229.6 million in 1997 from $114.8 million in 1996, with dealers selling 20,000 bikes at retail in 1997, up from 12,000 in 1996 and 17,000 in 1995.
Ducati’s medium-term goal is to produce 40,000 bikes annually by 2000.
Cagiva’s owners maintain a 49 percent stake in Ducati but they no longer have a hand in management.
Honda Motor Co., Suzuki Motor Corp. and Kawasaki Motor Corp. all make motorcycles that compete with Ducati on the racetrack and in the showroom. But while its Japanese rivals aim for the mass market, Ducati’s is elite. In the four categories of bike Ducati sells, it says it accounts for 4.7 percent of the U.S. market, up from 2.9 percent in 1996.
The new management decided to expand Ducati’s market with a range of new products.
The company introduced a sport touring bike in 1997, Ducati’s first comfortable motorcycle for long trips.
“It’s the right thing to do,” says Bordi, “if you want to enlarge your niche.”
The other new bikes are mostly variations on Ducati’s two best-sellers, the $8,000 Monster and the $17,000 top-of-the-line 916.
Meanwhile, Tamburini, the designer, has a four-year contract that includes developing a successor to the 916, but no date has been set for its launch. “He’s an artist–we can’t set dates,” says Minoli.
Other steps included beefing up sales and marketing, investing in machinery so engines could be designed not only by hand but also using computers, upgrading machine tools in the factory and revamping distribution.
Ducati owners tend to be speed and racing fanatics, while Harley owners seek a custom look and comfortable ride. Still, as Ducati’s strategy evolves, it’s looking more and more like its Milwaukee-based cousin.
“Harley created a lifestyle,” says Minoli. “We’re offering a sport-performance experience for people who are passionate about riding.”
At the New York store, called Ducati Manhattan, customers can purchase a package that includes, the motorcycle, racing lessons and a group excursion in Italy, with the customer’s motorcycle delivered afterwards to his doorstep in the U.S.
Ducati now offers plenty of spare parts, so owners can customize their bikes by painstakingly changing lots of small pieces, just like Harley riders do. In June, Ducati is expecting 10,000 to 15,000 Ducati owners to show up in Bologna for their first worldwide gathering–something Harley owners have done for years.
“Ducatisti are seriously sick about their Ducatis,” says Minoli. Fans dissect and study motorcycle parts on a page of the company’s Web site (www.ducati.com) called Look Inside Your Bike. And Minoli tells of one man with a Ducati on order who wrote to complain that the pedestal in his living room couldn’t wait any longer for it to arrive.
