The biggest story in the auto industry for many years that has been saturating the news over the last few days is how Volkswagen has admitted to cheating on emissions testing in the United States, potentially involving up to 11 million vehicles. So what effect may this have on Ducati which is owned by Audi under the Volkswagen Group umbrella?
Audi purchased Ducati only a few years ago for approximately $1.12 billion. That was a rather huge sum of money for a manufacturer that at the time only sold 40,000 motorcycles (last year it sold a record 45,100) which points to the fact that the purchase by Audi had nothing to do with profits, it was prestige – prestige in being able to own one of the most desirable motorcycle brands today.
The purchase was driven by then CEO Ferdinand Piech who had long desired to include a motorcycle arm underneath the VW Group’s banner. In fact, Piech is said to have turned down an opportunity to buy Ducati back in 1985 for what he described as “peanuts.” Piech was ousted from the company earlier this year by rivals on the board.
“The Ducati purchase is driven by VW’s passion for nameplates rather than industrial or financial logic,” stated Credit Suisse analyst Arndt Ellinghorst to Reuters in an interview at the time of the purchase in 2012. “It’s an unnecessary sideshow to VW’s main challenges.”
And this is where it might get interesting. In all the hullabaloo of what Volkswagen has done have been a wide range of analysts taking a guess at what the outcome will be. Fines upwards of $18 billion, the exit of the company from the US market, mass layoffs and even the bankrupting of the company once lawsuits commence are all theories put forward.
There’s about zero chance of the company going under. Given how much money the German government handed out to Greece and other nations to keep the European Union from imploding, there’s no way they wouldn’t do the same to keep one of their largest companies and employers in business – and that’s if it even comes to that.
But what this could all mean is that the new CEO and board members of the Volkswagen Group may decide that Ducati is nothing but an unnecessary distraction at a time when the brand will have a huge amount of work to do in rebuilding consumer confidence and more importantly rebuilding sales in their core market – selling cars. It’s currently tipped that Porsche brand chief Matthias Mueller will take over the reigns at the company along with a nearly entirely new board.
Should Ducati be sold, what will happen? Probably not a great deal. It’s well known that Mercedes Benz were very keen on Ducati as well until VW pulled the carpet out from underneath them. Despite Mercedes Benz since buying into fellow Italian brand MV Agusta, the company may still be interested in adding it to their stable. It’s just as likely though that a cashed up buyer from China or India would love to get their hands on such a prestigious brand too. But even if this does occur, it’s likely that Ducati will continue on as it always has – making a limited amount of motorcycles that everyone wants to ride and just doing things as they see fit.
Possibly the worst outcome may be a private equity firm buying them up which is what happened to Dainese late last year. And while so far Dainese seems to continue to operate as it was, we’re not sure that a brand with a quirky history like Ducati wouldn’t lose some of its desire should it be squeezed for all its worth such as what has happened in recent years to Formula 1. Only time and the desire of those wishing to punish Volkswagen as much as possible will tell what will eventuate.