When an MV Agusta motorcycle took the chequered flag to win the Milan grand prix last year nobody was prouder than Giovanni Castiglioni, the 34-year-old CEO of the Italian company. In a sense it was the culmination of the latest chapter in the history of the extraordinary brand that Giovanni took over in 2010 when his father, Claudio, died. “For me it was really emotional,” Giovanni says.
That is probably an understatement. Claudio - a legend in the motorcycle world who reinvigorated Ducati in the 90s - had terminal cancer when he bought super-premium brand MV back from Harley Davidson, who had bought the struggling company from the family just two years previously for $109 million but failed to turn it round. When Claudio took it back, it for the third time in 20 years the family had bought it.
Claudio first acquired the firm in the early 90s from its founding family - Meccanica Verghera Agusta was started as an aeronautical firm by an Italian count whose two sons transformed it into a motorcycle company after World War II - and a few years later sold a large stake in it to Malaysian firm Proton for $70 million. A year later, they sold it back to him for $1. Then came the Harley deal, which also made Claudio a lot of money. So when he bought back MV it meant a lot. He died just months later, passing the baton to his son.
So far, Giovanni is living up to his father's expectations. In the glory days of the 60s and 70s MV won over 3,000 races and dominated grand prix motorbike racing, before it was driven out of business in the early 80s by cheaper Japanese bikes. Getting MV back on the track was no small part of reinvigorating it, and it now takes part in the SuperSport and Superbike grand prix categories.
“Not racing is against the brand’s tradition,” Giovanni says. “We want to make a statement, to say that this is a racing brand. Also so we can say that when you buy a three-cylinder bike from us, the heart of it - the engine - is basically the same as the one that races in world championships.”
In his four years as CEO Giovanni has increased the number of models from two to 15, and developed a new four-cylinder engine. Sales are up from 2,000 bike a year before he took over to a forecast of 10,000 this year - 80% of which use the new engine. The aim is to reach 12,000 bikes a year, then to make an investment and reach 15,000 units by 2017.
“And then we should stay around that level, which will make a very efficient and profitable company,” says Giovanni, who recently landed a €15 million loan from an Italian bank to help fund the expansion. The number of employees has increased from 170 to 370, and it predicted to peak at 400. All the production, of course, will stay near Varese, in northern Italy.
This success has not gone unnoticed, and in October last year Daimler's Mercedes AMG - the German automaker’s high-performance wing - bought 25% of MV for an undisclosed amount. Giovanni says that he didn’t go looking for the deal but “we met because I am a client and we were having discussions, and this is what came up.”
The two companies will collaborate on sales, marketing, communications and media relations, and there are obvious “synergies in R&D”, Giovanni says, adding that “there is no intention for us to sell more nor them to buy more. It is a stable no-option agreement.” The first tangible result of the deal is that this year MV’s bikes will feature the Mercedes AMG logo, and Mercedes recently unveiled a racing car with MV livery.
Giovanni evidently feels vindicated by the deal. “The former owners thought there was no future for the company, we pushed, got new models, and we became interesting to a group like Daimler, a €130 billion group, and we are a €120 million company. All their brands, like Mercedes AMG, Smart and Maybach - are all super high-profile ones. And they wanted to be linked with MV,” says Giovanni.
“It is something really cool for the company, and for the employees” he adds. “It’s saying that we are such a strong brand that the Daimler group is a minority shareholder. That is unheard-of. It’s like if a niche fashion brand is participated by the Louis Vuitton group - normally they would buy 100% - and we can say that we are so good that even luxury brands want to be part of us, even to take a minority stake.”
So what is responsible for the turnaround of a dying brand to one coveted by a vast mega-conglomerate? Part of the credit should go to vice-president Giovanni Girelli, former CEO of Banca Generali, a private client-focused banking group.
“A big change in the company came when I brought him in,” says Castiglioni. “Sure he came from a different scale of business, but he has a passion for motorcycles and believed that the company could be so much more. I realised that we needed managerial change and sometimes for a family member it’s very hard to implement, so he has been very helpful and since he came we changed 60 or 70% of our top managers.”
Castiglioni’s own passion for MV is obviously the driving force, though. The day before we spoke he had gone for a “200km road-test” of the latest bike, the Dragster RR, and he tries out all the bikes. Since we first met in 2013 he has also grown a large, bushy beard. “Yes, I look like an old sailor guy,” he laughs, “this is part of the bike business. I have to adapt.” Such sacrifices suggest someone seriously dedicated to his business.