German luxury-car manufacturer Audi, a division of Volkswagen, said it agreed to buy Italian motorcycle manufacturer Ducati. Audi will pay the previous owner, Performance Motorcycles SpA, about 860 million euros ($1.13 billion), including debt of around 155 million euros.
Most industry analysts believe the purchase won’t offer much to Audi. “Ducati is good motorcycles, not a good business,” said analyst Michael Uhlarik. “It has just not made money for most of its life. Suppliers consistently go unpaid/late paid, debt goes up but sales refuse to go much beyond 50,000 units.” “Ducati doesn’t enhance Audi’s business model in any way, it’s just a trophy in the wall cabinet,” said Stefan Bratzel, director of the Center of Automotive at the University of Applied Sciences in Bergisch-Gladbach.
Ducati won 13 Superbike World Championships since 1988, it makes some of the most desirable motorcycles in the world, and leads in innovation (see Ducati 1199 Panigale article). This is the company’s most recent image. Before 1985, Ducati changed owners frequently and innovation was inhibited by the lack of funds. In 1985 Ducati was bought by Cagiva and soon it started making world-class bikes and winning championships. Ducati was sold to Investindustrial Holdings SpA in 2005 and in 2012 to Performance Motorcycles SpA. Last year Ducati sold about 42,000 motorcycles and posted about 93 million euros in earnings (before interest, taxes, depreciation and amortization).
In comparison, Volkswagen, the parent company of Audi, sold 8.4 million vehicles with a revenue of $209.1 billion, which makes Ducati’s price tag of $1.13 billion seem like a drop in the bucket. Last year, Audi sold more cars than Mercedes-Benz and “has vowed to surpass BMW for the top spot in luxury car sales this decade.”
P.S. The photos were taken by an Audi marketing intern who was given the job of developing social media content about the acquisition. To take the photos, the intern parked a Ducati Diavel next to an Audi R8.