Bultaco, the maker of motorcycles once ridden by former world champion Barry Sheene, is preparing its return to Spanish roads and race tracks propelled by new electric engines and a fresh flow of credit.
Powering Bultaco’s plans to revive a storied Spanish brand are the deals he’s lining up with two lenders to provide financing to would-be customers, said Juan Manuel Vinos, chief executive officer of Bultaco Motors.
“What happened in the crisis was that people lost the confidence to borrow, but that’s changing,” Vinos, a former consumer loans specialist in Spain with Barclays Plc, said in an interview. “Banks are more keen to lend.”
The dream of reviving Bultaco aligns with plans by Spanish lenders to grant more consumer credit as the European Central Bank’s efforts to stimulate the economy squeeze margins. In a May 6 report, the Bank of Spain urged banks to reconsider their business models because the persistence of low interest rates is putting “substantial pressure” on profitability.
With the economy on track for 3 percent annual growth through 2018, according to the government in Madrid, banks are making more credit available to households, which held back on purchases through Spain’s five-year slump.
New consumer credit, which yields higher margins than other types of loans such as mortgages, rose more than 20 percent in the first quarter from a year earlier, according to Bank of Spain data. The loans carried a weighted average interest rate of 8.1 percent in March compared with 2.1 percent for new home loans, according to the central bank.
Bankinter SA is among Spanish lenders stepping up investment in its consumer finance business while Banco Santander SA last year agreed to set up an auto-financing partnership with PSA Peugeot Citroen.
“The attraction of consumer finance is clear for the banks -- it’s a higher-margin, but also a higher-risk business,” said Ricardo Wehrhahn, a managing partner at Intral Strategy Execution, a banking and business consulting firm in Madrid. “In a low interest rate environment with the economy growing, it becomes more appealing.”
Spanish motorcycle sales have risen 18 percent in the first four months of 2015 from a year earlier, according to the National Association of Two-Wheeled Sector Companies. Access to financing is key to that recovery and the revival of Bultaco, whose original Barcelona plant closed in 1983, said Vinos.
The company founded by Paco Bulto in 1958 specialized in making two-stroke motorcycles, including the 250cc Metralla MK2 in 1966 and the Sherpa T trials bike. His descendants support the new project because it’s in keeping with Bulto’s philosophy of entertaining innovation, said his grandson, Daniel Bulto.
“Bultaco means passion for motorcycles in competition and also for life,” said Vinos, who keeps five motorcycles, including a 1975 Bultaco Alpina, in his garage.
Bultacos won nine world championships, four European championships, 11 Spanish championships and five world records for long-distance speed. Barry Sheene, the British world champion motorcycle racer, who died in 2003, began his career riding a Bultaco TSS at the U.K.’s Brands Hatch circuit.
“Everyone from club riders to multi world champions and those behind the scenes are passionately dedicated to the marque,” Tim Britton, editor of the U.K.’s Classic Dirt Bike magazine, said in an e-mail. “This passion went into all areas of motorcycling and carries on today.”
The firm’s development of electric motor technology will power its first model called Brinco that combines battery and pedal power and has 130 pre-ordered sales, said Vinos.
The manufacturer is also developing a battery-powered motorcycle called Rapitan and doesn’t rule out reviving classic brands in the way Triumph Motorcycles Ltd. has with models such as the Bonneville, he said.
LGN TECH Design SL, an engineering firm founded by Vinos and partners including Gerald Poellmann, a former general manager for corporate strategy at Magna Steyr, took on the Bultaco brand and a bike built by the new firm competed for the first time in 2011.
Increased competition as Spain’s motorcycle market opened up at the end of the Franco dictatorship in 1975 was among the factors that brought about the demise of the original Bultaco, said Vinos. As he seeks to resurrect the marque, access to credit through consumer lending deals with banks will be “fundamental” to the firm’s plans, he said.