Volkswagen's Audi unit has agreed to buy thoroughbred Italian motorcycle maker Ducati for about €860 million euros (R8.8 billion) including debt.
The deal allows VW chairman Ferdinand Piech, who has long coveted Ducati and himself owns one of their superbikes, to make up for a missed opportunity nearly 30 years ago to buy the maker of the fire-engine red 1199 Panigale, which boasts “the most powerful twin-cylinder production engine on the planet”.
One source said Ducati's debt was well below €200 million (R2 billion) in an acquisition analysts said lacked obvious benefits for premium carmaker Audi and did little but polish Piech's reputation as a collector of rare and exotic brands.
Industry analyst Arndt Ellinghorst said: “The Ducati purchase is driven by VW's passion for nameplates rather than industrial or financial logic.
“It's an unnecessary sideshow to VW's main challenges of integrating sports-car maker Porsche and merging truck operations at MAN and Scania.”
LONG-STANDING RIVALRY WITH BMW
Ducati, which has won 13 rider's Superbike World championships since 1988, will increase the VW group's brand portfolio to 12 and extend Audi's long-standing rivalry with Bayerische Motoren Werke to superbikes. It was Piech who piloted VW's expansion to an 11-brand entity covering fuel-efficient city cars to 40-tonne trucks.
Another industry analyst said: “The purchase does have a trophy feel to it, in the sense of something you might mount on the wall next to the stag you shot last year,” but admitted that his own bike was a Yamaha R1.
When exclusive Italian superbike rival MV Agusta was put on the block late in 2009 by a Harley Davidson desperate to sell, Piech said he only had eyes for Ducati.
“I would still like a small, valuable motorcycle manufacturer,” Piech revealed in an interview with a German magazine in April 2008, complaining that he should have jumped at the chance to buy Ducati in 1985 when it cost “peanuts”.
40 000 MOTORCYCLES A YEAR
Ducati makes about 40 000 motorcycles a year across its range of cruiser, supermoto, adventure, naked and superbikes that include the muscular Diavel and dual-sport Hypermotard. By comparison, industry leader Honda sold more than 16 million motorcycles in 2011.
Demand for large sports bikes has contracted sharply following the financial crisis, with weekend riders less willing to shell out €10 000 (R100 000) or more for an expensive toy.
Rudy Probst, a spokesman for BMW's motorcycle division, said: “The market has halved since 2008 and still shows no real sign of recovering.”
Motorcycle technology has only a very limited crossover to car manufacture, so Audi is unlikely to see any direct benefit, and though technology transfers flow more often in the opposite direction, there are cultural limitations.
EXTREME ACCELERATION
Bike makers place much less emphasis on fuel efficiency and lower emissions, the major trends in the car industry. Instead sporty motorcycles are designed for extreme acceleration, high speed and tight cornering.
The Yamaha-riding auto industry analyst put it in a nutshell: “Filling my bike used to cost €18 (R185). Now it's €25 (R255) and if it goes up to €35 (R360), I'm still not going to care. My R1 takes about three seconds to go from 0-100km/h, all in first gear. That's why I bought it.”
Probst said: “Integrating new technology into the engine of a motorcycle is often a question of weight; it's easier for cars to add on a few extra kilos than a motorbike, where handling would suffer.”
Variable valve timing, he said, was another fuel-saving feature yet to be really embraced by motorbike owners.
“Other aspects like traction control cannot simply be adopted directly from their application for cars. Extra expenditure must be spent to adapt it to the different physics of having two wheels on the road as opposed to four,” he said.
LUXURY PURCHASE
David Arnold at Credit Suisse didn't see the logic, either, but couldn't begrudge Volkswagen the luxury of splashing out on Ducati, since it has such a strong track record of reviving tarnished brands such as Lamborghini.
“VW would likely say that cylinder head design in the motorcycle industry is much more advanced than in passenger cars, a common argument, but that sounds a little bit far-fetched to me,” he said.
Analysts say VW chose its luxury brand to buy the Ducati since Audi can claim rival BMW also has a motorcycle business to enhance its sporty image, thus lending the deal a figleaf of justification. - Reuters