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This dosent look to good
Ducati cuts production and salaries
By Vincent Boland in Milan
Published: August 12 2009 03:00 | Last updated: August 12 2009 03:00
Ducati, the Italian motorcycle maker, is cutting production this year and senior executives have taken a pay cut as the downturn shrinks the market for luxury models.

Along with other Italian luxury goods makers, Ducati is feeling the pinch as customers reduce spending on high-end goods such as the top-of-the-range motorbikes the company makes.

Gabriele Del Torchio, chief executive of Ducati, said in an interview with the Financial Times that the market for luxury bikes had probably shrunk by about 30 per cent in the six months to the end of June.

The decline was most evident in the US, where he estimated that sales had fallen roughly 50 per cent.

A Ducati bike costs between €8,000 ($11,300) and €38,000 depending on the model.

Mr Del Torchio said the mid-price range of bikes was the bracket affected most by the recession.

"I don't see signs of recovery before the spring of next year," he said.

Ducati's main markets are the US and Italy, which between them account for about half of sales and revenues.

An estimated 80 per cent of Ducati's US customers used credit finance to buy bikes, and "it's very difficult to get credit", he said, speaking at Ducati's manufacturing plant on the outskirts of Bologna.

He expressed confidence in Ducati's financial performance.

The company, which is controlled by InvestIndustrial, an Italian private equity firm, had revenues of €470m in 2008 and made earnings before interest, tax, depreciation and amortisation of €76.5m.

He said revenues in 2009 would be close to €400m, though he hoped the ebitda margin would be higher this year than last.

Senior executives at Ducati have taken a 10 per cent cut in their pay and will not receive any bonuses because of the decline, while Mr Del Torchio said he had taken a 20 per cent pay cut.

Mr Del Torchio said Ducati's objective in 2009 was to reduce its inventory - the stock of motorbikes held at the plant and by dealers - while production was reduced to about 34,000 bikes for this year. Last year it sold a record 42,800 bikes.

"The biggest risk is to push rather than pull. I'm not pushing sales," he said.

At the same time, the decline in the market for luxury bikes was allowing Ducati to raise its market share from about 5.5 per cent in 2008 to roughly 7 per cent in the near term.

Ducati's distinctive red bikes - other colours are available - are a fixture not just on the roads but at racing tracks. Racing is central to the company's image among the ducatisti .

Mr Del Torchio said Ducati invested about 10 per cent of its annual revenues in its racing business, and that there was a direct relationship between winning races and the number of bike sales.
 

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Based on the last statement, you know Ducati's sales will be down with Stoner out and Haga for all intents and purposes is out as well. Also, Fabrizio is moving up on a temp basis so hes no threat to Spies in WSBK. The only brite spot is Pegram in AMA. Pegram is a case in point of what I have said about Spies, you don't have to be the most talented guy out there, but having the fastest bike certainly helps. I'm tired of many putting Spies on this pedestal that he is some phenom equal to Rossi, bla bla bla. The analogy of Pegram fits, its the bike mainly why Spies is where he is today. I give him credit for what he has done, but he had the Yoshimura GSXR-1000 like Mr. Mladin had and now he has been blessed with the fastest bike on the grid in WSBK. Spies needs a humbling experience in the wake of racers like Hopper and Toseland. Now if he were to jump on a mid pack bike and develop it into a winner within a couple years, I'll bow to him and say I'm not worthy.
 

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Hmm.. Lots to think about, but capturing 7% market share is indeed a good sign. Guess it is better to cut back before you really need to.

On another note, it is great to see Pegram doing so well in our local club racing.........but to even compare him to Spies is well, apples and oranges. I do believe that Spies is indeed a rare phenom. Talk about developing a bike, I do believe that is the first year for that pig they call a yamaha r1-big bang. Just imagine him on a Duck!!!!!

Mark
 

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Rough Times in Bologna

Well, Italy is sure not immune from the economic downturn that has swept across the globe. I'm not suprised by the 50% downturn in the luxury bike segment. Just locally in the Palm Springs area we saw the local Honda dealer close its doors, and the local HD dealer has had trimmed its staff. We keep hoping for a local Ducati Dealer to open, but now don't even look for that to happen until 2011 realistically. Our nearest dealer is over 100+ miles away. So for you guys who live in big cities where you have at least one dealer, enjoy the luxury of local factory support. We're lucky to get UPS to deliver our parts to us that we order over the internet.
As for Mr. Stoner, he is "cooked" for the season. I don't look for him to be a force until maybe next year. Nicky Hayden has to pick up the pace, or take the risk of being embarrassed by Pramac rider Miko Killio moving up to Casey's seat. And while that is certainly big news in MotoGP, the WSBK upheaval with Fabrizio moving into Kallio's seat, makes Haga's job of protecting his slim lead with Ben Spies who's winning races like a runaway freightrain, even more stressful. Looks like the proverberal fertilizer is hitting the fan all over. Ah, the race season is just getting interesting!
 

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Yea, its not been a good year for Ducati... A few wins by Pegram, doesn't really do anything. In fact, Ducati owning BSB and WSBK in 2008, didn't really do anything either. In all honesty, I don't think roadracing is worth it anymore for publicity like it use to be. Times are changing and the money people put into MotoGP/WSBK is fading week by week.

Kawasaki and Honda are hurting WAY more then Ducati.

Ohh and Fabrizio is not giving up the fight with Spies, he is racing for GP only when WSBK is NOT.

I also think Haga will come back strong in September. Wether he wins anymore, or is a distant second place... thats yet to be determined.



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Well obviously the global recession is hitting everyone and motorcycles in the US are not considered needed so when cutbacks are made by the consumer its an area that feels the effect.

That said I think its great to see a company that has some suits willing to take a pay cut too and not just pass the misery down the line. It shows the true passion of our beloved Ducati and the employees at all levels and just makes me want to support them more. We all know profits is their bottom line and most companies don't really give two shiats about much else but somehow you feel Ducati does care about the Ducatisti way and that is pretty cool. Just my 2 cents........
 

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Well obviously the global recession is hitting everyone and motorcycles in the US are not considered needed so when cutbacks are made by the consumer its an area that feels the effect.

That said I think its great to see a company that has some suits willing to take a pay cut too and not just pass the misery down the line. It shows the true passion of our beloved Ducati and the employees at all levels and just makes me want to support them more. We all know profits is their bottom line and most companies don't really give two shiats about much else but somehow you feel Ducati does care about the Ducatisti way and that is pretty cool. Just my 2 cents........
Yeah, I agree. It's a very unAmerican response to an American problem...
 

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but Obama will save us all. lol.


He stated that 80% of all US buyers use credit and that it was hard to come by? I was in the shop about a month ago and they approved a guy for an 848 who had 4 repo's and a bankruptcy on his report. I just overheard this so I asked the salesman how long ago was his latest repo or when bankruptcy was declared and he said about 3.5 years ago. I was absolutely amazed.
 

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It is now... but it started here... derivatives, hedge funds, bad mortgages, etc...
Good point.

I was in the shop about a month ago and they approved a guy for an 848 who had 4 repo's and a bankruptcy on his report. I just overheard this so I asked the salesman how long ago was his latest repo or when bankruptcy was declared and he said about 3.5 years ago. I was absolutely amazed.
Sure, but at what percentage? 29? Dealers have lots of different avenues they can use for financing to get someone approved, including Big Ernies' Money Pool.
 

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Cutting production and managerial salaries and bonuses is indeed very honorable. I did not see any layoffs or downsizing; that is very cool indeed. It is reality to reduce production and it saves our resale values as well. This is not a sign of trouble, it is a sign of a well managed company.
 

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If they really intend to reduce output, I wonder if they'll start consolidating franchises? I hear other makes have already started. Entire shops are closing.:(
 
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