Last October, Volkswagen Group CEO Martin Winterkorn told me: "Motorcycles are without question beautiful objects. But there are no plans to enter this line of business."
That will change if VW Group subsidiary Audi buys Italian motorcycle maker Ducati, as suggested in media reports. Here are five reasons this deal seems likely to happen.
- Piech's wish is a command: VW Chairman Ferdinand Piech said he regrets having missed out on the chance to buy Ducati "for peanuts" in the past. The 74-year-old legacy-building executive does not miss many opportunities to add to his collection of brands.
- Premium competition: One reason Audi has been successful is because it is not afraid of copying BMW, which is the world's top-selling premium automaker. BMW has a successful motorcycle division. Audi wants one, too. The deal also would keep Mercedes-Benz, which had a marketing alliance with Ducati, from getting its hands on the Italian motorcycle maker.
- CO2 hedge: Automakers with motorcycle divisions (BMW, Honda, Suzuki) are hopeful that they will be able to consolidate those low-CO2 two-wheelers into their fleet totals to make it easier to reach the pending EU target of 95g/km.
- Image boost: Ducati is a strong brand that could be developed further.
- Future mobility: The VW Group produces powertrains for everything from massive trucks to minicars. One gap is motorcycle engines. Having expertise on these powerful, fuel-efficient powerplants would give the company a big advantage. As would the access to more knowledge on making vehicles lightweight.
There also are some reasons why this deal, if it happens, could be bad news for Audi and VW Group.
- Complexity: Adding another player to the group might prove to be too much.
- High cost: Reports say Audi would pay about 850 million euros ($1.12 billion) for the Italian company. This would include taking over the Ducati's debt, which is estimated at 200 million to 800 million euros. On Monday, Winterkorn said, "One should never say no if an interesting opportunity arises, but we're big enough." The CEO doesn't like money-losing companies, and he already has a chronic loss-maker in Seat.
Piech has never been scared away by a high price. If he wants Ducati, VW Group will get it. With the exception of Seat, and possibility Bugatti, Piech's big purchases have paid strong dividends.
I foresee the finalized Ducati deal being announced in mid-April and would not be surprised if VW Group keeps trying to convince Fiat to sell Alfa Romeo.