Next month the Volkswagen Group will host preliminary talks with potential bidders who are interested in buying various brands that sit under the group umbrella. Bugatti, Lamborghini and Ducati are all up for discussion.
The talks are part of a planning round where VW will plot out its future for the next five years. Electric cars are the focus for VW. In 2018 VW sold 50,000 electric cars, last year that number grew to 70,000 and by 2023 VW are aiming to sell one million vehicles. This growth requires economies of scale, which basically means making more of something for less money than they are currently spending.
Bugatti, Lamborghini and Ducati are all desirable, performance focussed brands which might not fit with VW’s focus on growing their market share in the world of EV. Of course these talks next month could also create opportunity for Ducati, there could be technology partnerships that they are suited to where they support the electrification of VW’s carbon neutral future. Those closer to the VW coal face than us are hinting at a sale in 2021 being more likely.
Ducati currently sits in the ‘Premium’ brand stream that the VW group owns, alongside Audi and Lamborghini. They have ‘Volume’ brands in VW passenger cars, SEAT, Skoda and VW commercial vehicles. Their ‘Sport and Luxury’ brands are Porsche, Bugatti and Bentley and finally their ‘Truck and Bus’ stream is covered by Scania and MAN. That’s a lot of brands, each with their own focus on a particular area of the markets they sit within.
Back in 2016, VW rolled out its Transform 2025+ strategy, which is geared towards becoming a market leader in e-mobility. Former CEO, Dr Herbert Deiss said at the time “From 2020, we will be launching our major e-mobility offensive. As a volume manufacturer, we intend to play a key role in the breakthrough of the electric car. We are not aiming for niche products but for the heart of the automobile market. By 2025, we want to sell a million electric cars per year and to be the world market leader in e-mobility. Our future electric cars will be the new trademark of Volkswagen.”
In July 2020 former COO of the group, Ralf Brandstätter took over as the CEO. His opening statement on taking control was one that emphasised the point made four years ago.
Chief Executive Officer of the Volkswagen Passenger Cars brand
“For Volkswagen, the course towards the future has been set. On the basis of the Transform 2025+ strategy, the brand is developing into one of the leading providers of carbon-neutral mobility and is on the way to becoming a digital technology company. We will follow our path resolutely together.”
So why can’t Ducati just start churning out electric bikes?
Ducati is a premium brand in the two wheeled sector. It’s currently possible to buy much cheaper and less desirable petrol powered bikes as you work your way to that dream Panigale. That’s not currently the case in the EV bike sector. There isn’t much depth in the market yet; you can either order something off Amazon, buy a Super Soco for less than £4k, or spend £20k plus on a Zero or a Harley Davidson Livewire. For a brand to be considered premium, there needs to be a mass market middle ground for it to look down upon. Attempting to fill that current void with cheap and cheerful toot would obviously make Ducati money, but it would come at the cost of the premium proposition that Ducati has worked so hard to create.
What does the electric bike market look like at the minute?
It’s predicted that the e bike market will be worth £18.1 billion by 2025, three years ago the market was worth £12.4 billion so the growth is sizeable. Electric scooters and motorbikes form a part of the wider market that includes Pedelecs (push bikes with motors that assist up to 25kph), Speed Pedelecs (push bikes with motors that assist up to 45kph) and Throttle on Demand (no pedalling required) bicycles. Growth by global region is also something to consider, Asia Pacific and North America are the areas where the most growth and opportunity exists. When you consider this, it should help you understand why it isn’t simply going to be a case of filling your local Ducati dealership with e-Panigales and watching the readies roll in.
What shape is Ducati currently in?
A good one is the short answer. Ducati closed 2019 with 53,183 bikes sold which delivered a £49.6 million profit. Panigale and Multistrada models worked the hardest for Ducati, neither of which currently suit being powered by anything other than petrol.
Aside from sounding healthy, that profit is also up on 2018. COVID aside, Ducati as a business is a healthy one which allows it to hold its head up high within the VW group. Healthy profit also makes it attractive to prospective buyers. It’s going to be an interesting few months.
Words: @johnatsuperbike Images: VW and Ducati