Ducati Cuts Production as US Sales Decline by Half
Ducati is cutting production this year and curtailing salary packages as the economic downturn and especially the credit crunch adversely affects it’s sales all over the world. Ducati is feeling the pinch as customers reduce spending and the global market for premium motorcycles has contracted by 30 percent in the first half of 2009 and even more in the important US market.
Ducati CEO, Gabriele del Torchio, told the Financial Times that the decline was most evident in the USA where he estimated sales of premium motorcycles were down by about 50%. He went on to say that it was the mid-range price of bikes most effected.
“I don’t see signs of recovery before the spring of next year. An estimated 80 per cent of Ducati’s US customers used credit finance to buy bikes, and it’s very difficult to get credit”
link: FT.com
In light of the economic circumstances Mr Torchio has taken a 20% pay cut and mandated a 10% cut for his senior executive team. The company is committed to the very sensible mandate of controlling inventory util demand returns and will produce about 34,000 bikes this year. Last year it sold 42,800.
“The biggest risk is to push rather than pull. I’m not pushing sales,” he said.
Despite the hard times the company estimates that revenues this year will be down only about 15% as the company continues to gain market share in the face of a falling market with it’s share now estimated to be about 7% . The company continues to spend about 10% of it’s revenue or some $60M on racing and still subscribes to the win on Sunday, sell on Monday value of this investment. The company’s two most important markets remain the USA and Italy which together account for about half of global sales.
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