Will VW sell Ducati to help fund electric-car efforts?
The possibility of Volkswagen Automotive Group shedding several brands in the wake of ongoing diesel scandal expenses has been floated since the outbreak of the 19-month-old crisis. Italian motorcycle manufacturer Ducati, as well as truck brands Scania and MAN Diesel & Turbo, were on a shortlist of companies to be sold to generate cash, but VW and its core group of brands appeared to weather the storm well, even delivering a record 10.3 million cars in 2016.
Reuters now reports Ducati, purchased by Audi for $935 million in 2012, could be offered to outside buyers. The possible sale has been reportedly prompted by the need to fund a “strategic overhaul” following the diesel crisis, currently centering on Audi. Almost a year ago, analysts saw Scania and MAN as the prime candidates for sale — Ducati was seen as too sweet a possession to part with just to acquire short-term cash.
Audi purchased Ducati in 2012.
On the heels of a $4.3 billion settlement with U.S. authorities that was ratified by a federal court in Michigan just this week, and some $25 billion into diesel crisis-related expenditures in the U.S., Volkswagen now needs cash to execute a pivot to electric cars, which it views as vital for its medium- and long-term survival. The need for money is now tied to cost-cutting and reorganization efforts, rather than the need to keep its head above water.
Reuters reports VW has engaged banking specialist Evercore to examine options for Ducati, as well as putting out sale feelers to potentially interested parties.
Reuters’ sources indicate Ducati generates pre-tax and interest earnings of 100 million euros per year, so it stands to attract a market valuation of 15 times that amount. A sale price of $1.5 billion is still fairly tame in proportion to the value of the brand itself — this amount was easily eclipsed by VW’s criminal penalty of $2.8 billion to the U.S. just this month — suggesting a potential buyer will view Ducati as a trophy asset, according to Reuters. Buyers of such trophy holdings are currently found in China, which has been heavily engaged in this sort of brand shopping spree.