WETZLAR, Germany-When Andreas Kaufmann used his inheritance to buy Leica, the fabled camera maker was close to bankruptcy, with new digital technology putting it at risk of extinction.

Two decades later, he is the proud majority owner of the rarest of jewels: a manufacturing success in a region that is rapidly deindustrializing because of rising costs, waning international trade and cutthroat competition from China.

More than 100 years after launching its first consumer product, Leica still builds its pricey, minimalist cameras largely in Europe. Sales hit a record in four of the past five years, with the brand's retro designs winning over younger buyers who have driven a resurgence of interest in analog photography.

Leica's revenue of roughly $650 million makes it a minnow compared with market leader Canon. Its spot at the luxury end of the market also means its survival playbook isn't universally applicable to Europe's suffering manufacturers. Still, Kaufmann says he can teach bigger players a lesson or two.

"I have a relatively simple perspective," Kaufmann said in a recent interview. "You need four elements to succeed over time: a strategy, the right tactics...good people to implement them, and money to leverage everything."

Kaufmann, a former schoolteacher, first invested in Leica in 2004, using the roughly $1.7 billion proceeds of his family's Austrian paper, pulp and packaging empire.

At the time, Leica was directionless and cash-strapped. Digital photography was disrupting the industry, but the company's then-chief dismissed it as "an intermezzo." Technical limitations also made it hard to convert its compact film cameras to the new tech.

Having gained some turnaround experience at a small software company his family had acquired, Kaufmann thought he could put Leica back on track.

He brought in new management and invested in technology, eventually sourcing a digital sensor small enough to fit its cameras. The result was the M8, the first digital Leica rangefinder, launched in 2006.

This turned the company's fortunes around. While Leica still makes highly refined and deliberately pared-down film cameras, four out of five models it sells are now digital.

$10,000 handmade digital cameras

Leica traces its roots back to a microscope maker founded in 1849. It started selling the world's first 35mm film camera in 1925. Its name is a portmanteau of Leitz-the surname of its then-owner-and camera.

Today, Leica is one of Europe's last surviving camera and optics makers. The rise of Japanese low-cost SLR cameras decimated the German industry in the 1960s and 1970s. The switch to digital photography and then smartphones were the latest challenges.

Leica makes its lenses and assembles most of its cameras-including all its flagship M-series-in two factories, one in Portugal and another at its birthplace in Wetzlar, a hilltop village of half-timbered houses north of Frankfurt.

Its Bauhaus-inspired headquarters features a curved front resembling a camera lens. The wider campus-known as Leitz Park-is now a pilgrimage destination for fans, with a hotel, two Leica stores and a museum. It is also home to the company's archive.

The Leica factory is half high-tech clean room, half old-world workshop. Technicians in robes and hairnets sit at workbenches, polishing, cementing and hand-painting lenses. Around the corner, a humming high-tech machine presses glass into lenses.

Only 45 of Leica's top-selling M models are produced here every day-a figure that reflects the meticulous craftsmanship required and results in the camera's price tag: more than $10,000 for a digital M11 and $7,000 for the analogue M6.

Such a labor-intensive process is no blueprint for mass-market producers operating on a bigger scale and with lower margins. But Kaufmann says there are still some things Europe's carmakers, for instance, could learn from Leica.

"There are two things anyone who produces anything in Europe should care a lot about: materials and design," he said. "And unfortunately, there are almost no European car I could imagine buying today because they all look so ugly."

Kaufmann says Leica has been able to keep most of its manufacturing in Europe largely thanks to a decision 53 years ago to open a factory in Portugal. The site handles preproduction of large components and produces Leica-branded binoculars. It is more automated than Wetzlar, and labor costs are just over a third of those in Germany.

Digitization wasn't the only factor in Leica's revival. Under Kaufmann, the company took control of its distribution from dealers, opening 120 Leica stores, often coupled with galleries. It now generates 50% of its sales through its own distribution channels.

Leica has also captured part of the secondhand market for its cameras-a lucrative business in a sector where used products can outprice new ones. The company has its own auction house, which last year sold the late Pope Francis' M-A camera for roughly $7.5 million, and has started selling refurbished models through its stores.

New products and new challenges

Now Kaufmann is pushing the brand into new product lines. Those include the Cine 1, a home-cinema projector developed with Hisense, and the EUR2,000 (about $2,280) Leitzphone, a photography-focused smartphone made by Xiaomi and launched in March.

In April, Leica announced a deal with China's Gpixel Microelectronics to develop its first proprietary sensor for its future lines of digital cameras.

The Chinese partnerships have caused unease among some hardcore fans that Leica may be diluting its German DNA. So did a report earlier this year that Blackstone, which holds a 45% share in the company, was considering selling to a Chinese investor. Deal talks have since ended, according to a person familiar with the matter.

Still, there is an inescapable sense that Leica is entering a new era. In April, the company appointed Andreas Voll, a 44-year-old former consultant, as its new chief executive.

Voll comes with new ideas. He wants the company to offer more video-focused products and launch a lower-priced camera to help appeal to younger buyers.

There are fresh challenges too: Volatile geopolitics have made business costlier and less predictable, while artificial intelligence now allows users to create photorealistic images by just typing words.

Leica's premium positioning and small scale have been a shield of sorts. It was able to pass on President Trump's tariffs to consumers in the U.S. without losing market share.

But it isn't fully geopolitics-proof. In 2021, the company had to part ways with Huawei, its first Chinese smartphone partner, after it was hit with sanctions.

Being forced to choose between its two largest markets of the U.S. and China-for instance if the U.S. were to ban imports of some Chinese components or sanction a key supplier-could be a hard crisis to rebound from.

Kaufmann says the company is actively diversifying, constantly considering new suppliers and exploring new markets. But he doesn't think Leica will get crushed in a confrontation between the two superpowers. "We're much too small for that," he said.

"Leica has had its share of challenges, going as far back as hyperinflation in the 1920s, but it always managed to pull itself together," said Kaufmann.