By William Boston
BERLIN -- Volkswagen AG is in talks about a potential sale of
its Bugatti luxury sport car brand, a move that could signal a
broader realignment of the German car maker's vast stable of
VW, whose brands range from Audi to Porsche and Skoda to
Lamborghini, is discussing the possible divestment with Croatia's
Rimac Automobili, a person familiar with the talks said, stressing
that there was no guarantee these would lead to a deal.
The existence of the talks, which were first reported by
Germany's Manager Magazin, suggests that the world's biggest car
maker by sales is moving beyond efforts to preserve its cash during
the pandemic and exploring more strategic questions, such as the
reordering of its vast portfolio of assets, many of which the
company has discussed selling in recent years.
While the talks are in early stages, Volkswagen appears willing
to sell and the company holds Rimac and its founder, Mate Rimac, in
high regard, the person said.
Volkswagen and Rimac declined to comment.
Rimac is an-electric performance-car maker near Zagreb, Croatia,
that provides technology for high-performance electric cars to auto
makers such as Volkswagen's Porsche, which owns 15.5% of Rimac,
Aston Martin, Pininfarina, and Koenigsegg.
Mr. Rimac founded his company in his garage in 2009, when he
began developing an ultrafast-performance electric car.
Volkswagen's late patriarch Ferdinand Piech purchased the
century-old Bugatti trademark in 1998 for an undisclosed price,
three years after the company had gone bust and ceased production.
He also bought Lamborghini the same year, part of a strategy to
build a stall of luxury brands to enable Volkswagen to compete
directly against German rivals BMW AG and Daimler AG's
Last year, Bugatti presented at the Geneva Motor Show the most
expensive sports car ever built, the Bugatti La Voiture Noire, a
1,500 horsepower machine with a top speed of 265 mph that sells for
just under $20 million.
The talks show that Volkswagen has revived an appraisal of its
portfolio that began in the wake of the diesel emissions scandal
and could lead to further disposals as the company adapts to the
technological transformations that are affecting the sector
In the past, talks of divestment have met with hostility with
workers' representatives, who under Germany's corporation law have
a strong say in management decisions through their board seats.
In 2017, Volkswagen was negotiating to sell the Ducati
motorcycle brand to Harley-Davidson, but the deal was blocked
internally by the labor representatives and the Porsche-Piech
family, according to people familiar with the situation at the
The family, which owns a controlling stake in Volkswagen, has
also been reluctant to jettison assets seen as a cornerstone of Mr.
Piech's legacy. But this may be changing.
"The family is not opposed to a sale," the person familiar with
the situation said.
High-price auto brands such as Bugatti and Lamborghini provide
flair to Volkswagen but aren't thought to do much for the company's
Volkswagen doesn't publish revenue or profit figures for
Bugatti, Lamborghini or Ducati, but in 2019 Bugatti sold just 82
vehicles, Lamborghini 8,205 and Ducati 53,183, compared with 6.3
million vehicles for Volkswagen's eponymous brand.
Industry analysts and investors have complained for years that
Volkswagen's conglomerate structure conceals a lot of the value in
its most lucrative brands, such as Porsche. Some investors have
urged Volkswagen to group Porsche with the company's luxury brands
and spin them off as a separate entity. Volkswagen rejects the
idea, citing the synergies it gets across its brands.
Porsche and Audi serve high-end markets and provide hefty
returns. Other illustrious brands such as the Ducati motorcycle
brand, Bugatti and Lamborghini offer little more than their brand
cachet, analysts say, and aren't core business.
"These brands are completely irrelevant in the broader context
of VW," said Arndt Ellinghorst, an automotive analyst at Bernstein
Research, adding a sale of Bugatti would make no difference to the
company. "I'm sure there's some strategic rationale, but for
investors it's irrelevant."
Write to William Boston at email@example.com
(END) Dow Jones Newswires
September 21, 2020 14:42 ET (18:42 GMT)
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