Audi-Ducati 860 million euro deal implications

So the automobile and motorcycle world was rife with reports of Audi showing keen interest in acquiring Ducati, after the Italian sports bike maker’s current owner,  InvestIndustrial, a private equity firm, decided to part ways with the iconic motorcycle brand. News has just come in that the deal has been finalised reportedly for 860 million euros (58.31 billion Indian rupees) apart from taking over the estimated 180 million euro liabilities riding on Ducati. Volkswagen, the parent company of Audi, headed by the visionary Ferdinand Piech has been looking to take over a motorcycle company in recent times. It even considered reviving the German motorcycle firm, Horex in order to fulfil its ambitions to build an elite motorcycle entity. Piech, himself an owner of a Ducati motorcycle and a man with a yen for everything exotic, tried to acquire Ducati back in 2008 when the company was for sale but lost out to the present owner, Andrea Bonomi, Chairman of InvestIndustrial.

Now that the sports bike maker came up for sale again with a reported debt tallying up to 200 million euros (previously reported to be 800 million euros), Volkswagen Group has been the most active bidder for the deal, pitching the luxury car brand under its umbrella, Audi for the arrangement. It is a perfect match as the German luxury car maker Audi has roots in motorcycle business dating back to the 1930s, when Auto Union  was conceived after an amalgamation of car makers Audi, Horch, Wanderer and motorcycle maker DKW. In the mid-sixties, the Volkswagen Group took complete control of Auto Union from its previous owners Daimler-Benz and later merged its newly acquired firm, NSU – the largest motorcycle manufacturer back then, to form Audi as we know it today.

With such a strong connection to motorcycles since its inception, Audi is certainly the most eligible marque from the Volkswagen brand to acquire Ducati. Also the fact that the German major already has to its credit a successful takeover of legendary Italian company Lamborghini means Ducati will not lose its Italian roots but simply get the capital it requires to give the world some more iconic motorcycles like the 916, the 999 and the latest technological tour de force, the Ducati 1199 Panigale. 

Ducati will bring along the engineering prowess and technical knowhow on building lightweight engines, which will add another dimension to Audi’s expertise in car making, the benefits of which could be reaped across Volkswagen’s entire portfolio ranging from passenger automobiles, heavy trucks to ship engines. Audi’s technical headquarters in Ingolstadt already boast of a top notch facility focusing on development of lightweight fuel saving technologies and Ducati’s mastery in developing high-revving lightweight engines could find more application under the Audi banner. On a  larger scale, integration of the exotic Ducati brand will also mean that Audi will enter the superbike market and have in its sights long-standing adversary BMW, which currently is the only German automobile brand to have a motorcycles division, under the BMW Motorrad trademark.

Ducati Motor Holding has always found takers and lately in the hands of the InvestIndustrial Group, it has shown promising growth albeit the business is still claimed to be unprofitable by its current owners, leading to the sale. Acquiring Ducati has taken the number of brands under the VW portfolio to twelve and has also given it presence in the premium sports motorcycle space, something that Piech always desired. If Audi manages to repeat what it did with the famed Lamborghini brand, it could give Ducati’s financial status a much needed shot in the arm and drive the Italian marque to newer heights.

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There has been news of major global entities also pitching for Ducati, like the Daimler Group as well as Indian mega corporations Mahindra Group and Hero Group, but their withdrawal is imminent. Taking over a debt ridden Italian motorcycle firm like Ducati with its rising racing budgets and motorsport ambitions, requires a perspective not limited to number-crunching but a world view on motorsport. The global premium motorcycle industry in recent years has welcomed new superbikes from Ducati with open arms, the Bologna-based company selling about 40,000 motorcycles a year and holding almost a nine per cent share in sports motorcycle segment in the world. But with the financial backing of Audi powering the Italian bike maker, which is in severe need of funding for the new breed of Ducati motorcycles to turn a wheel as well as keep the company’s soaring road-racing aspirations and legacy going, the union of the two, if executed with the same finesse and care as VW has shown towards its other car brands, could prove tremendously potent in the motorcycle world.