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VW Group sells majority of its luxury brand Bugatti

2021-07-06T09:00:22.730Z


Under Ferdinand Piëch, the VW Group prided itself on its brand empire. In the meantime, size alone is no longer an end in itself. Bugatti's French sports cars are now changing hands.


Under Ferdinand Piëch, the VW Group prided itself on its brand empire.

In the meantime, size alone is no longer an end in itself.

Bugatti's French sports cars are now changing hands.

Dubrovnik / Wolfsburg / Stuttgart - Adieu, Bugatti - the car manufacturer Volkswagen is giving up the majority of its prestigious French luxury brand.

For months there had been speculation about the future of Bugatti, the powerful mother in Wolfsburg and the little daughter in Alsace wriggled with inquiries.

It is now clear: VW will sell a majority of the manufacturer of handcrafted luxury sledges from Molsheim.

It is true that they want to keep a remaining stake in Bugatti through the sports car subsidiary Porsche AG.

Control and main ownership will pass to the Croatian company Rimac, as Porsche - responsible for the sports sector within the VW Group - and Rimac in Dubrovnik announced.

In future, Rimac will be responsible for operational management, said Porsche CEO and VW Group Board Member Oliver Blume.

No details were given about the financial terms of the deal.

Rimac had shown interest in the super-expensive and super-fast Bugatti cars for a long time and will in future hold 55 percent of the shares in a new joint venture called Bugatti-Rimac. Porsche wants to retain a minority stake of 45 percent in the joint venture, which will be founded in the fourth quarter and will be based in Zagreb. Before that, antitrust authorities in several countries still have to approve, as it was said. The two companies have been closely linked for a number of years: Porsche has had a stake in Rimac since 2018, and the sports car manufacturer now holds 24 percent of the Croatian company.

From a business point of view, the move shouldn't bring any major changes for Volkswagen.

Bugatti's numbers are very low, 77 units were delivered in 2020.

The company is silent about profit margins and concrete financial data, in the past year there was general talk in Molsheim of “positive earnings contributions”.

The brand's image and charisma are considerable - at least among motorsport fans and fans of extremely powerful engines.

VW lays hand on Piëch's twelve-brand legacy

For the VW vehicle brands, as previously defined, the sale of Bugatti means a reduction from twelve to eleven.

So the farewell now also has a symbolic meaning.

Former VW board member and supervisory board chief Ferdinand Piëch had built up an ever larger collection of brands at that time.

But in the meantime the times and the focus have changed.

“Twelve is a good number” - this is how the patriarch, who died almost two years ago, once commented on his urge to buy when Porsche was added as a VW brand after a takeover battle with the Wolfsburg-based company in 2009.

In 2012, the subsidiary Audi then achieved another coup with the installation of the Italian motorcycle manufacturer Ducati, which actually completed the dozen.

For the chief overseer, it was a dream come true.

The Bugatti brand was incorporated into Volkswagen in 1998. For a long time, the group basked in both financial success and the diversity of its empire. But that's probably over. Instead of glamorous models like the Bugatti Chiron with 1500 hp, a 16-cylinder combustion engine and CO2 emissions of over half a kilogram per kilometer, eco-consciousness and e-cars are in vogue. And what brings in too little money runs the risk of getting on the cross-off list anyway, given the tightened VW return targets.

What is still worthwhile, what is no longer?

What clashes with your own claim of wanting to be carbon-neutral on the balance sheet by 2050 at the latest?

Against the background of such questions, the Bugatti sale fits into the picture.

“That is logical,” says an industry expert.

In the old world, the passionate engineer Piëch's enthusiasm for technology was a special factor.

“Today, manufacturers primarily need brands that are in the middle of the business.

How do a few hundred niche cars help a company that wants to sell ten million vehicles a year? ”Even if Bugatti were to generate higher earnings, that would ultimately be play money for VW:“ Economically, that makes little sense, and it also ties up a lot of management time. "

Separation a logical step

CEO Herbert Diess has already made it clear: a large number of brands per se is no longer an important criterion. It doesn't bother him either that Toyota overtook the VW Group in terms of sales, he told the German Press Agency in the spring. "We need sufficient size for economies of scale, but size in itself is not a benchmark for us." It is more about market leadership in the electric car: "Here we want to grow faster and be more profitable than the competition."

Cost pressure and expensive specialty shops do not get along well. There has been repeated speculation that VW could trim the Piëch brand heritage. Another candidate should be Lamborghini - even if the responsible subsidiary Audi rejects solid considerations. The Swiss Quantum Group recently announced that it wanted the sports car maker from Italy. Audi emphasized: “Lamborghini is not for sale.” VW supervisory boards initially stated this in 2020.

Overall, Diess is aiming for streamlining with “conceivable” outsourcing, as he put it in 2018.

The discussion also revolves around Ducati.

Audi is also responsible for the motorcycle manufacturer, and the Bentley brand has been coordinated in Ingolstadt since March.

“It would make sense to think further about the concentration with Lamborghini,” says one observer.

"Unless there is a greater overlap with identical parts, for example with Porsche."

Other analysts think it is realistic to get rid of further peripheral activities.

But that is not easy.

Ex-Bugatti boss Wolfgang Dürheimer once described the role of his exotic species as follows: “Bugatti works at the limit of what is technically feasible.

We will later make the results of our work available to all Group brands. ”Dpa

Source: merkur

All news articles on 2021-07-06

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