Aprilia SpA

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Aprilia SpA

Via G. Galilei 1
30033 Noale (Ve)
Italy
(41) 5829111
Fax: (41) 441054

Private Company
Incorporated: 1979
Employees: 647
Sales: L 558 billion (US $350 million) (1995)
SICs: 3751 Motorcycles, Bicycles & Parts

With revenues quadrupling from 1992 to 1995, Italy’s Aprilia SpA is Europe’s fastest growing motorcycle maker. In 1995, the company boasted 24 percent of the Italian scooter and moped market, and 34.7 percent of the country’s motorcycle business. After establishing European operations in 1993, the firm built up a 16.7 percent share of the continent’s scooter/ moped market and 13.5 percent of motorcycles by mid-decade. Aprilia also claimed to offer the broadest range of motorbikes in Europe, ranging from 50cc mopeds and scooters to 1200cc street bikes. Aprilia hoped to continue its impressive growth rate through the creation of international operations, joint ventures, and continuing product development. Under the leadership of Ivano Beggio in the mid-1990s, the family-owned firm was expected to go public by the turn of the century.

Postwar Foundation and Developments

Italian motorcycle design was world renowned in the immediate postwar era, but the advent of the Fiat automobile in the late 1950s drew attention and talent from two-wheelers. Aprilia was one of a handful of manufacturers—including Ducati, Piaggio, and Cagiva—who revived the country’s motorcycle industry in the 1970s and 1980s. The business was founded in 1955 as a bicycle manufacturer in the medieval town of Noale, just a few miles outside of Venice. When Ivano Beggio joined this, his father’s company, in 1968, it had 18 employees and about L 1.5 billion in annual sales. But the son was not interested in human-powered cycles; he wanted horsepower. He built his first motorbike in 1970 and soon began to collect classic cycles from the 1930s.

Five years later, Beggio convinced his father to begin making motorbikes, starting with the mopeds for which Italians had become famous. Also known as “motorized velocipedes,” mopeds originated in the 1950s, when people started adding small engines to bicycles, creating a very light mode of transportation that did not require an operator’s license or insurance. Aprilia soon branched out into scooters, small-wheeled motorized vehicles where the rider sits inside the frame instead of straddling it as in most motorbikes. Aprilia and its fellow Italian scooter manufacturers led the world in the production of these low-power vehicles into the mid-1990s.

But Ivano Beggio would not be satisfied with these small-engined (less than 125cc) minibikes. Aprilia began developing full-sized motorcycles in 1981, adding ever more powerful engines and developing broader ranges of styles. To establish a good reputation among the “enthusiasts” to whom it hoped to appeal, the company got into off-road racing, also known as motocross. Aprilia modified these racing cycles for street use, sometimes by simply adding lights, turn signals, and a license bracket. Even Aprilia’s mopeds were styled after dirtbikes, featuring knobby tires and high fenders. Dual-purpose models designed for on- and off-road use were also introduced during the 1980s. Aprilia’s production volume doubled from 13,000 units per year in 1984 to 28,000 units per year by 1986, and by 1987 it led the 350cc segment of the Italian motorcycle industry.

Much of Aprilia’s success has been credited to its potent combination of extraordinarily lean manufacturing and top-notch design. Instead of investing mountains of capital in machines and equipment, Beggio spent his money on design, marketing, and assembly. In fact, more than one-fourth of Aprilia’s total staff worked in research and design. Using a strategy it calls “the olonic system,” the company outsourced all the parts it needed, then assembled them at Noale. By 1996, it had formed a network of about 250 outside suppliers. Orbital Engine Corporation Ltd.’s Rotax division became Aprilia’s primary motor supplier. This manufacturing strategy maintained the company’s operating margins at more than ten percent annually, double the industry average. It also allowed Aprilia the flexibility to shift production emphasis quickly from one model or class to another according to demand. From 1989 to 1991, for example, when sales in the 125cc class declined by nearly half in Italy, Aprilia was readily able to increase its production of more popular and less expensive scooters. Thus, although its revenues slid from L 179 billion in 1989 to L 154 billion in 1991, Aprilia remained profitable.

Emphasis on sharp design and attention to detail quickly became two of Aprilia’s primary strengths. Kevin Cameron of Cycle World praised the company for combining “sensuous design” with “craftsmanship.” In 1987, Cycle World’s Alan Cathcart called Aprilia “perhaps the most exciting motorcycle company to watch in Italy, if not in the world.” But, unlike some of its Italian competitors who were criticized for ranking form over function, Aprilia also brought innovations such as liquid-cooled engines and catalytic exhaust systems to the motorcycle world. The company even beat Honda to market with a centrally located rear disc brake in the late 1980s.

Development of Grand Prix Racing Team Paces Growth in the 1980s and 1990s

Although half of Aprilia’s annual revenues continued to come from moped sales through the early 1990s, the company, its product line, and its clientele matured, expanded, and grew slightly more mainstream throughout this period. Aprilia branched out into road racing in the mid-1980s, entering its first World Speed Championship in 1984. Like the motocross competitions of the previous years, these races served as proving grounds for the company’s forward-looking designs and mechanical innovations. They also became an important factor in the promotion of the Aprilia name, as the company edged closer and closer to the top ranks of the racing world.

The firm nurtured its own team of riders over the course of the decade, eventually securing back-to-back world titles in the 125cc class in 1993 and 1994 and adding victories in the 250cc category in 1994 and 1995. In the latter year, Aprilia was Europe’s only cycle maker to enter all three championship classes. The company’s winning reputation earned it a devoted following in its home country and bolstered its image abroad. Aprilia’s “Replica” line of motorcycles, featuring real grand prix racing engines, parlayed these competitive successes into marketing triumphs. Cycle World’s Oily Duke called the 250cc version “the hottest road-going race replica” of 1995. By that time, Aprilia had begun to challenge market-leading Japanese imports from Honda and Yamaha.

In 1992, Aprilia signed a joint venture with BMW and Rotax to manufacture “a 650cc endurance bike” assembled by Aprilia, but sold under the BMW nameplate and made according to the German company’s specifications. This tripartite effort not only brought Aprilia increased cash flow and boosted its image, but also allowed it to adapt innovations (to quiet engine noise and increase endurance, for example) in the cooperative venture to its own designs.

Motorcycle enthusiast and well-known industrial designer Philippe Starck joined the Aprilia design team in the early 1990s. Together, the two designed the 650cc Moto, a postmodern homage to the everyday street bike of the 1950s and 1960s. Launched in 1995, this model applied Starck’s signature style via an expanse of chrome punctuated with a colored gas tank. Chief designer Starck called it “a real motorcycle for the real world.” Its down-to-earth price, around US $7,700, signaled the company’s continuing evolution from boutique bikes to more mainstream rides. Business Week characterized this sleek European alternative to America’s hoggy Harley-Davidson as “just about the coolest thing going on Europe’s highways.” Starck committed to designing a second motorcycle for Aprilia, leading Cycle World’s Alan Cathcart to speculate that his style would continue to imprint the company’s designs through the turn of the century.

Although Aprilia continued to revel in its European origins, it also sought to appeal to Americans’ need for power, developing lOOOcc and 1200cc models in the mid-1990s. These moves gave Aprilia the broadest range of motorcycles on the European continent.

Although the size and variety of its product line continued to grow into the early 1990s, Aprilia did not abandon its historic small-engine core. In 1993 it launched the 50cc Scarabeo, with a sharp design and top-of-the line mechanics that quickly vaulted it to the summit of the Italian motorscooter heap.

Global Push Highlights Mid-1990s

Having consolidated its domestic position, Aprilia looked to international growth as it entered its fifth decade. The company planned to increase its overseas revenues to 50 percent of total sales by 1999. One of the most fundamental obstacles to international expansion was “the reputation of Italian bikes as exiting, exotic and unreliable.” It launched branches in Spain, France, and Germany in 1993, and in the Netherlands three years later. Aprilia planned to establish an American operation by the end of 1996. Mitch Beohm, editor of Motorcyclist magazine, corroborated that strategy, telling Business Week’s John Rossant, “There’s a big demand for exotic Italian motorcycles over here [in the United States], and Aprilia has a very good chance of breaking into the market.” The company was also in the process of infiltrating the world’s fastest growing market for two-wheelers, China.

By 1995, international sales contributed about 43 percent of Aprilia’s L 558 billion revenues, and annual production had more than tripled, from 47,200 in 1991 to 167,000 by 1995. The company continued to invest heavily in research and development, nearly doubling the budget from L 7.4 billion in 1994 to L 14 billion in 1995.

Aprilia’s rapid growth came during an unusually prosperous period in Italy’s economic history. The success of this and other Italian companies has been related to larger trends in the domestic economy, including low inflation, a wage freeze, and low commodity prices. The weak lira helped make Italian products cheaper overseas, thereby benefiting Aprilia’s internationalization plan. But at the same time, analysts like The Wall Street Journal’s Thomas Kamm warned that the country’s scandalous collusion between government and industry, a high level of corporate and national debt, and high interest rates threatened to bring a halt to recent industrial success. By increasing its rate of internationalization, Aprilia reduced its exposure to the vacillations of Italian political and economic conditions. CEO Beggio hoped that this “buffer” would ensure his company’s success in the waning years of the 20th century.