Ducati: Rebirth of a Legend; from Ailing Concern to Major Brand, Italian Motorcyle Maker Ducati Is Following in the Wheeltracks of Harley-Davidson. Noah Barkin Reports

The Birmingham Post (England), November 14, 2000 | Go to article overview

Ducati: Rebirth of a Legend; from Ailing Concern to Major Brand, Italian Motorcyle Maker Ducati Is Following in the Wheeltracks of Harley-Davidson. Noah Barkin Reports


Byline: Noah Barkin

Few corporate comeback stories can rival that of legendary American motorcycle maker Harley-Davidson, which emerged from near extinction in the 1980s to become a stock market star of the 1990s.

If stylish sports bike manufacturer Ducati plays its cards right, then an Italian version of the celebrated Harley motorcycling metamorphosis may soon take shape.

Just four years ago, the maker of high-performance bikes was on the edge of financial ruin, unable to pay its suppliers and cobbling together only 25 motorcycles a day.

Today, one-and-a-half years after listing its shares on the Milan stock exchange, the company is back on track, borrowing liberally from the business plan of the American icon and hoping investors will soon start snapping up Ducati shares as they have the stock of Harley-Davidson.

Although still in its infant stages, the Ducati turnaround has already been impressive.

Since 1997, the year after a group of venture capitalists led by the Texas Pacific Group bought out the then-crippled Bologna-based firm, annual sales have nearly doubled and the bottom line has moved back into the black.

The Ducati product range has been broadened and the firm now produces more than 200 motorcycles every day to satisfy burgeoning demand for its stripped-down bikes.

The high profile of racing superstar Carl Fogarty riding Ducati machines has also helped considerably. Fogarty, aged 35, from Blackburn announced his retirement in September after realising he could no longer put his body through the pain it would take for him to return to the track. The factory Ducati rider spent most of this year recovering from a triple break to his left arm suffered during a crash at the second round of the World Superbike series in Australia in April.

Like Harley-Davidson before it, Ducati is branching out into higher-margin clothes and accessories sales, hoping to capitalise on the elusive brand appeal that allows it to charge premium rates for its motorcycles.

'Over the past three years we were really working against a backdrop that was not so far removed from bankruptcy,' Ducati chief executive Carlo DiBiagio said.

Speaking in Paris following an investor road show, he said: 'Now our situation is different. Sooner or later we think investors will see that and start looking at Ducati as another Harley-Davidson story.'

The Harley-Davidson turnaround has become a case study in how to leverage a top brand name for financial gain.

After years of trying to beat more efficient Japanese manufacturers at their own game, the Milwaukee-based firm rediscovered its roots and began exploiting its classic look and rebel image to remarkable effect.

An investor who put $10,000 into Harley-Davidson shares in 1986, the year it re-listed on the New York Stock Exchange, would be sitting on a cool million today.

Ducati hopes that by exploiting its own top-notch image gleaned from years of success on the race track and sleek styling, it can produce similarly stunning gains for its own investors.

In its relatively short life-span, however, the shares have failed to match the muscle of the company's powerful sport bikes, trading in a narrow band between 2.4 euros (pounds 1.45) and 3.4 euros (pounds 2.06) since its introduction in March 1999. …

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