MV Agusta, Mercedes-AMG Partnership May End

Italian motorcycle manufacturer MV Agusta may be looking to part ways with Mercedes-AMG, with the intent of buying back shares. MV Agusta CEO Giovanni Castiglioni has told Italy's Il Giorno that he is negotiating a buyback of shares from Mercedes-AMG.

MV Agusta sold close to 9,000 motorcycles in 2015, posting a 30 per cent increase over the previous year, but the company finds itself in financial trouble. Castiglioni is struggling to keep things going, with a current debt of approximately 40-50 million Euro.

In 2014, Mercedes-AMG acquired a 25 per cent stake in MV Agusta, a move seen as bringing financial stability and security for the small Italian company. So, now in order to buy back AMG's shares in MV Agusta, Castiglioni will need to find investors who are willing to cover the 15 million Euro loan amount, and then invest in capital to keep MV Agusta afloat.

"Unfortunately, Mercedes-AMG has not turned out to be the strategic partner as I had thought. I am now working to bring new investors in the company. In the meantime, we are carrying out a plan that aims to generate cash and then restructure the debt," said Giovanni.

(2016 MV Agusta Brutale 800)

According to some reports, Mercedes-AMG is willing to buyout Castiglioni's position in MV Agusta, and take full ownership of the Italian brand. But Giovanni Castiglioni is not willing to let go.

Under pressure, due to lack of liquidity and mounting pressure from suppliers for repayment of outstanding amounts, MV Agusta is planning to massively reduce its business operations in order to return to profitable growth.

The workforce is expected to be reduced by up to 200 people, and the company plans to scale down production from last year's 9,000 units to just 6,000 this year. Spending on R&D will, reportedly be slashed from 15 million Euro to 7 million, while MV Agusta's racing budgets will be cut down from 4 million Euro to just 600,000 Euro.

In India, MV Agusta has just started operations, in a tie up with the Kinetic Group. Kinetic is bringing MV Agusta bikes to India, as Completely Built Units (CBUs), Completely Knocked Down Units (CKDs) and Semi Knocked Down Units (SKDs), marketing, selling and providing after sales support for MV Agusta bikes in India through its initiative called Kinetic Motoroyale.

Currently, MV Agusta India is in the process of ramping up the number of dealerships across India. There's been no response yet from MV Agusta India about the latest developments and Giovanni's statements.