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MUMBAI/DELHI: Italy is fast turning into a hunting ground for Indian auto companies and more so for Mahindra & Mahindra. The tractor and utility vehicle maker is learnt to have set sights on Italian motorcycle marque brands — Cagiva and MV Agusta — famed for designing high-end, high-performance superbikes that are a rage on the speed motorcycle circuit.

This development comes close on the heels of M&M’s interest in buying a controlling stake in Italy’s Stile Bertone, a high-end design company. ET had reported in April that M&M has initiated buyout talks with the Bartone family.

The Castiglioni family, which owns flagship MV Agusta and Cagiva motorcycle brands, has been facing financial troubles for some time and has been on the look out for a potential acquirer.

Despite a limited roll out of 8,000 bikes a year, demand for MV Agusta has been stagnant, eroding its profitability. The company is now forced to look at alternative markets for growing the brand. There are, however, no production figures available for Cagiva, which is a mid-segment brand.

Sources said that M&M is keen on entering the two-wheeler space and has been talking to a number of Italian and domestic two-wheeler brands. The utility and tractor major is understood to have held talks with Ducati at one point in time, but it failed to materialise.

A deal with the Castglioni family is likely to give Mahindras access to high-tech design and technology and also help the Indian auto company in its plans to build a global footprint. M&M, which already has a strong focus on rural markets, is likely to develop cross-segment, two-wheeler products for the Indian market. The Italian company had earlier expressed interest in selling its bikes in India, but never found a suitable partner. When contacted M&M officials refused to comment.

While it’s too early to peg a value to the deal size, the Italian company is estimated to have posted a combined revenue of euro 141.3 million in 2007 (around Rs 1,057 crore) and a loss of euro 34.4 million during the same year.
Although India is a large two-wheeler market with annual sales of over 7.5 million units, the country can’t still boast of high-end, high-performance bikes.

The Varese, Italy-based MV Agusta has been strapped for cash and has been unable to invest in new product developments, according to sources. Recently, the company shelved its plans of participating in the World Superbikes series, fuelling speculation that all was not well with the legendary bike company that ranks third largest in Italy.

The MV Agusta has bikes in the 700cc to 1,100cc range, while Cagiva bikes have 125cc engine displacement. Mahindras’ two-wheeler strategy could include lower displacement from Chinese companies. The company had been negotiating for long with Chinese two-wheeler maker Lifan Motor Company for sourcing the right technology for mass-market products.

Its premium two-wheeler product is likely to come from the Italian bike maker. The company is already looking at acquiring land at Uttarakhand for its low-cost Chinese bikes and other high-end products, sources said. The company already has a unit in Uttarakhand for its three-wheeler range.

The Pune-based Kinetic currently develops components and engines for the 125cc Cagiva motorcycles.

M&M’s interest in the segment springs from the strong growth rates witnessed in recent times. However, rising interest rates, increasing competition and growing input costs, took a toll on the industry last year. M&M is one of India’s leading manufacturers of general-purpose utility vehicles, light commercial vehicles, tractors and SUVs.

“MV Agusta has fabulous products in each segment, but has not been able to captialise on its strengths. It makes smaller bikes which are more suitable for the developing market like India unlike us who are mainly into performance bikes,” Ducati CEO Gabriele Del Torchio told ET during the launch of the Ducati range in India last week.[/SIZE][/SIZE][/FONT]


http://economictimes.indiatimes.com/News/News_By_Industry/Auto/MM_revs_up_for_Italian_ride/articleshow/3054487.cms
 
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