VW/Audi Buys Ducati. Why?
Italian motorcycle maker Ducati makes some of the world’s finest motorcycles and superbikes. It’s been doing so since 1926, winning the 2011 World Superbike Championship and 17 other world titles. Their machines are gorgeous.
Audi reportedly will take over the firm today for $1.1 billion—chump change for Volkswagen but another jewel in its trophy quest to own the best, now including Lamborghini, Bentley and Bugatti. (And nine other brands, including two heavy-duty truck makers—Scania AG and MAN SE.)
Ducati’s revenue is “more than Lamborghini’s and Bugatti’s combined, but to the automotive operations, it’s a mere accessory.” So remarked a Frankfurt-based analyst with IHS Automotive. It’s “strategically insignificant” for Volkswagen, he said.
Volkswagen Führer Ferdinand Piëch is the reason. He’s a motorcycle freak and has been drooling for Ducati since it first went up for auction in 2008. The nominal reason offered is that the buy will now give Audi a chance to go head to head with BMW on motorcycles.
According to Reuters and one of its analysts, the deal also shows “how much VW’s 17 billion euro [$22.3 billion U.S.] pile of cash was burning a hole in its pocket.” The company needs (by law?) to find investments or distribute the extra cash in dividends to shareholders.
Honda, the industry leader, sold over 16 million cycles last year. Ducati makes some 40,000 bikes a year, but demand for the big sportbikes has dropped sharply owing to the financial crisis. A BMW spokesman said the market for big bikes has fallen by half and shows no real sign of recovering.
Motorbike technology doesn’t carry over into the automotive world either. Bikers want blinding acceleration (like 0-100 kph in 3 seconds), top speed, very light weight and extreme cornering ability. The physics of two-wheelers is something entirely different from that of cars.
So now King Ferdinand has his twelve jewels in the VW crown, exactly the number he said he wanted back in 2009. He also has twelve children.
Will Audi’s purchase of Ducati enhance the brand? Will it sell more motorcycles?