Cash-strapped Volkswagen Thinking of Dropping Ducati: Report

by Steph Willems

April 26th, 2017 1:50 PM

cash strapped volkswagen thinking of dropping ducati report

After history’s largest and most expensive automotive scandal forced a sudden pivot at Volkswagen Group — from expansion-minded to profit-focused — the German automaker might let go of a cherished toy.

According to insider sources who spoke to Reuters, VW is exploring the sale of Italian motorcycle manufacturer Ducati as part of a company-wide streamlining effort. After shoveling over $20 billion to the United States in a bid to end its diesel debacle, the company is in full penny-pinching mode.

The revered boutique motorcycle company was a long-awaited feather in ex-VW chairman Ferdinand Piëch’s hat, but after just five years of ownership, it may be time for Ducati to find a new home.

Two sources claim VW has hired investment banking firm Evercore to look at money-saving options, including a Ducati sell-off. This shouldn’t come as a major shock. One year ago, the company admitted in its annual earnings report that unexpected expenses could lead to a sell-off of one or more of its many holdings. (The brief mention was subsequently downplayed by VW’s chief financial officer.)

While no decision has been made on the divestment, VW has already reached out in search of potential buyers, the sources claim.

Volkswagen Group’s Audi brand purchased Ducati for just under $1 billion in 2012, 18 years after Piëch, a motorcycle enthusiast, passed on an earlier chance. Ducati began manufacturing its own motorcycles in 1950 after first selling small engines for bicycle conversions. The company was founded in 1926 as a radio component manufacturer.

In recent decades, Ducati became something of a foster child. After being sold to Italian motorcycle manufacturer Cagiva in 1985, the brand fell under the control of private equity firm TPG Capital in the late 1990s. The following decade, it changed hands again, this time to Investindustrial Holdings.

Both VW and Audi refused to comment on the report. Should the company decide to let the storied brand go, it could prove a lucrative move — one of the sources estimates Ducati’s value at 1.5 billion euros ($1.63 billion), 15 times what the sportbike builder earns every year.

[Image: Audi AG]

#Audi #Brands #CorporateFinance #Divestments #Ducati #Motorcycles #Volkswagen #VolkswagenGroup #VW

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Bikegoesbaa on Apr 27, 2017

Bah to Ducati. Was fixing to buy a Hypermotard before I learned they use un-warranted timing belts because "tradition".

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- Syke on Apr 27, 2017
  
  And if you're going to be so monetarily nit-picky as complaining that the timing belts aren't covered under warranty, you don't want a Ducati. Trust me. Owning one of those is like owning a Ferrari - both to the good and the bad. Get yourself a Honda. You'll be more comfortable with it.
  
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- Bikegoesbaa on Apr 27, 2017
  
  @Syke My concern isn't the cost of the belts, it's that Ducati uses belts that impose significant drawbacks and no benefits for no reason other than "that's how we've always done it". If I'm missing something and belts have something to offer the rider then please let me know what it is. I don't expect them to replace wear items under warranty, but my local Duc dealer said that if the (properly serviced) timing belt fails they don't cover the ensuing engine damage under warranty. I really liked the Ducatis, as they made the Triumphs and Japanese bikes in the same showroom look like they were literally made out of garbage. I did wind up going for a Kawasaki instead. It's significantly less pretty, but still a hoot to ride. It also requires no special attention to work right, and if the timing chain goes boom they buy me a new engine.
  
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- Tylermattikow on Apr 28, 2017
  
  @bikegoesbaa In the late 2000's Ducati vastly increased service intervals in response to these concerns. The Desmo and belt service is at 7500 miles, which is a pretty long time for a bike considering how little most are ridden. I believe the interval used to be 4500... For the record my bike only had one issue, a faulty immobilizer when it was nearly new. It now has 6500 miles and it is 8 years old with no other problems.
  
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Markf on Apr 27, 2017

Yeah, timing belt and Desmo valves "Tradition" Ducati is a lifestyle brand, like every guy on a Harley every Ducati rider has branded clothing on when they ride. But they can't make enough of them. I'll stick with Aprilia, Italian bikes, reliable and much less than Ducati. Just hard to find dealers and get proper service.....

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