Volkswagen Group’s Audi buys Ducati

April 23, 2012

business

 

Volkswagen Group (VG) has just announced that their Audi arm has done a deal to buy Ducati Motor Holding S.p.A.
The fuel tank of a Ducati motorcycle

Image by jbolles, via flickr

The Italian luxury motorcycle brand will further diversify Volkswagen Group’s now rather wide range of automotive products. VG didn’t reveal details of the takeover, but it has been widely reported that they paid around 860 million euros, now all they have to do is get the deal past the regulators.

The Volkswagen Group currently encompasses 10 major brands and with the acquisition of Ducati and a proposed merger with Porsche this should soon rise to 12.

Audi logo

Image by Tom Frisch, via flickr

The brands currently in the stable are:

  • Volkswagen
  • Audi
  • Seat
  • Skoda
  • Bentley
  • Bugatti
  • Lamborghini
  • Volkswagen Commercial Vehicles
  • Scania
  • MAN
A photo of a Volkswagen badge

Image by xddorox, via flickr

Ducati have won 13 rider’s Superbike World Championship titles in the last 23 years and are a hugely respected brand in the motorcycle world. While Ducati do have an excellent reputation, they do not sell a huge number of units; in 2011 Ducati sold around 40,000 bikes while market leader Honda sold over 16 million.

Several top German auto-industry experts have questioned the financial wisdom of the deal. Director of the Center of Automotive at the University of Applied Sciences in Bergisch-Gladbach, Stefan Bratzel, said of the deal:

“I can’t think of a concrete reason for Audi to warrant a business case for buying Ducati…Ducati doesn’t enhance Audi’s business model in any way, it’s just a trophy in the wall cabinet.”

For me, these auto industry experts seem to be missing a rather obvious point. Ducati are a highly respected, aspirational brand with a great sporting history and low sales compared with their main competitors; with some of VG’s famed management skills, efficient production and excellent marketing Ducati has the potential to massively increase their market share.

I do however agree that there may be an element of ego and competitiveness behind the decision. Audi have stated that they aim to displace BMW as the World’s best-selling luxury car brand within the decade. By moving into the motorcycle market it looks like they’re keen to compete with BMW in another automotive arena. And in terms of motorcycle racing, Ducati are significantly more successful than BMW.

VG will be hoping that the deal to buy Ducati goes more smoothly than their attempt to takeover Porsche which has turned into a proposed merger which now seems to have stalled. The unification of these German automotive giants has proved a rather difficult affair.

Do you think VG group have made a wise business move as Audi buys Ducati or is it really just a vanity project? Let us know in the comments section.
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