Despite being a motorcycle fan with a penchant for Italian brands, I never believed for a second there was any industrial logic behind Volkswagen’s 747-million-euro acquisition of Ducati. BMW can attest that the few synergies that exist come largely from adapting four-wheel technology such as antilock brakes for two-wheel applications.
Motorbikes are simply a different animal. Freed of burdensome emissions regulations that beset the car industry, its high-revving engines and lightweight chassis are designed for only one purpose - performance. That was why Ferdinand Piech, Volkswagen chairman at the time of the deal and a scion of the Porsche sports car dynasty, coveted the brand: no carmaker can possibly match Ducati's power-to-weight ratio, he once gushed.
With Piech now gone from the VW board and set to liquidate the bulk of his indirect stake in VW, Volkswagen has put a "For Sale" sign in front of Ducati's Bologna headquarters, according to Reuters. It's hard though to see how VW could recoup the high price it paid given stagnant global growth prospects for 500cc-plus bikes.
In mid-March, I had the chance to interview Ducati CEO Claudio Domenicali and ask him how deep the integration has gone ahead of July's five-year anniversary of the deal.
The sobering answer was not a lot, and that makes Ducati vulnerable.
Audi Select, which offers the brand's customers the choice to drive up to three different Ducati models a year, expanded the range to include bikes such as the XDiavel cruiser for example. Ducati is also increasing the share of parts it sources from VW Group suppliers every time it develops a new motorcycle.
The most advanced synergies currently are on the import side, Domenicali told me. Ducati is distributing its bikes in China to retailers through the VW Group's wholesale network, the fourth such arrangement after similar deals in Argentina, Spain and Austria. Since Audi dealers are not properly trained, however, Ducati bikes continue to be sold in exclusive showrooms.
"We are still developing a number of synergies that will raise the benefit of being part of the group," Domenicali said. "There are many more things we're considering."
Ducati does bring one important thing to VW Group. It is as strong a brand in its segment as Porsche and enjoys a similarly passionate fan base. They come repeatedly to the dealership to inform themselves about trends, tune their bikes, swap out parts and chat about MotoGP racing. Ducati counts roughly 300,000 owners, many of which who buy premium cars, and another 3 million people follow the brand regularly on Facebook.
Ducati also monitors how many of its customers drive a VW Group car, and Domenicali says the percentage is increasing year on year, although he won't provide specifics, citing competition reasons. "When we know there is a very engaged customer enthusiastic about racing who already owns a Ducati, that could be a potential customer for an Audi RS model," he said.
Finally Ducati is one of the best run motorcycle manufacturers, better positioned and more broadly diversified than any pure-play premium brand apart from BMW. Volumes rose over 20 percent in 2015 thanks to the launch of its popular Scrambler line, and the brand went on to earn more money that year than Audi's other Italian brand, Lamborghini. Even if revenue last year gained only slightly, Ducati's underlying margin was still a very healthy 7 percent. Nor is it a drain on the group's resources since it can finance its growth internally and is net cash positive.
Perhaps its biggest weakness is the weak tether to the mothership. Ducati rival MV Agusta, a storied Italian brand famous for its stunning F4, was unceremoniously dumped by Harley-Davidson at the owner's first sign of crisis in 2010 for this very reason.
Selling Ducati certainly isn't going to yield a windfall profit or appreciably add to VW Group's cash pile that stood at 27 billion euros at the end of last year. So while there was no strategic argument for VW to purchase Ducati, now that it has it, there is also no compelling reason to dispose of it, either.