Home » Features » ‘We’re placing our bets on U.S. market’ – September 4, 2006

‘We’re placing our bets on U.S. market’ – September 4, 2006

SALT LAKE CITY, Utah — Two CEOs, normally separated by thousands of miles, stood side-by-side, merely inches away from it.
A few feet away stood almost 90 percent of the 160-plus Ducati North America dealer network, giving it, and the two forces behind it, Federico Minoli and Michael Lock, a standing ovation.
“It” is a new motorcycle. A motorcycle that is likely to play an immense role in whether Ducati North America becomes more than just a company with a two-year sales spurt, but one that reclaims its distinction as a pioneering brand with impressive profit margins.
“It’s not an evolution next year, it’s a revolution,” Lock, Ducati North America’s (DNA) CEO, told the standing crowd of dealers. “We’re going to become a new company with this.”
This, the new bike, is not being unveiled to the public until November in Milan, Italy. But DNA is boosting or changing a number of its programs in anticipation of a big retail year after the bike’s unveiling. The changes include:

  • the dealer incentive plan. DNA is switching tactics, moving away from a winter inventory protection plan to a retail objective program, a shift meant to encourage sales rather than rewarding those who did not meet their sales goals.
  • apparel. Ducati is placing a bigger emphasis on apparel, and as a result, Lock expects DNA’s record ’06 apparel sales to possibly double next year.
  • technicians. Ducati is partnering with WyoTech to expand tech-training options, including the addition of a facility on the West Coast.
  • dealer services. Ducati has partnered with RPM Group, which will introduce a 20 Group for Ducati and other European brand dealers, and Pied Piper, which will offer a mystery shopping program for Ducati dealers.
  • reduced service costs. Ducati said product improvements to its ’07 lineup will cut service costs to consumers by as much as 50 percent.
    But even these changes drew only muted response from dealers in comparison to the standing ovation the new bike generated, not only for its technology improvements but also for its price. The dealers’ reaction, at the close of the first of the two-day meeting, was so intense that at one point Lock, standing next to Minoli on stage, appeared close to tears.
    “In the last four or five months, I’ve been to Italy three times to talk almost exclusively about this new model coming,” Lock said later that night about his emotional response. “Nothing else, because I sensed an opportunity (with the new bike) that I might not get again in my time.
    “And it’s taken it from being an interesting project to being a company-changing one. I really believe that now, and I think the reactions you saw from the dealers today is the proof.”
    Dealers also got to see a very candid Minoli, the Ducati Motor Holding CEO who took the company through an ownership transition in 2005 and a capital infusion process earlier this year. Minoli impressed upon dealers the importance the U.S. now plays for the Italian company — “we’re really placing our bets on the U.S. market” — by not only showing off the new bike, but sharing detailed information about Ducati and its new controlling owner, Italian private equity firm Investindustrial Holdings.
    “This is a solid group of people that are committed to the long-term health of the company,” Minoli said of the new owners in a later discussion with Powersports Business. “They are not a short-term investor.”
    Minoli appears every other year at DNA’s national dealer meeting, but this time it was different, Lock said. “It was very much more an academic discussion last time,” Lock said of Minoli’s speech to dealers two years ago. “For him to come here and talk hard numbers, he’s never done that before.”
    Lock also discussed hard numbers, including that DNA sales are up 22 percent this year, which is more than double what the Motorcycle Industry Council’s on-highway totals reflect.
    “It’s a year of growth this year on top of a year of growth last year,” Lock said.
    And the growth has been spread throughout the nation, with some states reporting triple digit increases.
    To generate even more sales, DNA is changing how it rewards its dealers. For the first time, DNA will give each dealer a retail objective, an expected annual number of sales that will be calculated by using different criteria, including product mix, availability, price, market share and historical sales. If dealers hit their goals on a monthly basis, they’ll receive a monthly bonus.
    Lock said the previous program, which helped dealers with winter inventory levels, rewarded dealers “for not selling bikes.”
    “We’re going to encourage you to make a connection with the customer,” Lock said. psb

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