Audi to keep Ducati for now

Audi’s parent company Volkswagen asked banks to evaluate options for Ducati earlier this year as it seeks to become more nimble in its shift towards electric and self-driving cars following its diesel emissions-cheating scandal.
Audi’s parent company Volkswagen asked banks to evaluate options for Ducati earlier this year as it seeks to become more nimble in its shift towards electric and self-driving cars following its diesel emissions-cheating scandal. PHOTO: REUTERS

The German marque is taking steps to reduce costs amid pushing the shift to pricey zero-emissions and autonomous technologies

INGOLSTADT (Germany) • Germany's Audi has shelved plans to sell its Italian motorcycle brand Ducati, in a sign of confidence that the carmaker expects to be able to carry the costs of its transformation.

Steps to reduce costs by €10 billion (S$15.8 billion), cut red tape and deepen ties with fellow Volkswagen-owned brand Porsche are "gradually increasing our financial and organisational leeway for the strategic realignment", said its chief executive Rupert Stadler.

There is therefore no economic need to sell Ducati, he said.

Volkswagen asked banks to evaluate options for Ducati and transmissions maker Renk earlier this year as it seeks to become more nimble in its shift towards electric and self-driving cars following its diesel emissions-cheating scandal.

"I can assure you that Ducati belongs to the Audi family," said Mr Stadler. "Ducati is the perfect implementation of our premium philosophy in the world of motorbikes."

The plans had already stalled in the summer when Volkswagen's powerful labour unions, backed by the controlling Porsche-Piech families, opposed the logic and need for asset sales given the group's financial resilience.

Investors and potential Ducati buyers, however, expect that Volkswagen could change its mind again and opt to sell the asset which they say has least strategic importance to Volkswagen.

Investors have long favoured divestments to simplify Volkswagen's group structure and to strengthen its management's ability to push through structural changes against the unions' wishes.

Audi, which owns Ducati and Italian supercar maker Lamborghini, last month reported higher operating profit and revenue for the first nine months, helped by growing vehicle demand in the higher-margin western European and United States markets.

While pushing the costly shift to zero-emissions and autonomous technologies, holding on to the profitable Ducati division and the lucrative Lamborghini brand has become more important, Mr Stadler said.

"Looking after a premium bouquet is as difficult as the work of a gardener. Therefore, I am pleased with every new flower, with every promising new branch," he added, predicting Lamborghini's sales would double on the back of its new sport utility vehicle.

He also said Audi will spend nearly €500 million over the next eight years on training staff for the digital age, with steps to develop as well as hire experts such as car robotics specialists. To rein in costs, Audi wants to keep headcount stable in the near future, even as it plans to have more than 20 electrified vehicles on the market by 2025 and pushes into digitised mobility services, he said.

With two-thirds of Audi's 60 or so models by 2025 still slated to be combustion-engine cars, tightening carbon dioxide (CO2) rules will pose the "biggest risk" in coming years, he said, adding that Audi would face €1 billion of fines if its average fleet CO2 emissions exceeds EU limits by no more than 11g a kilometre.

The carmaker has overhauled its whistleblower system to letstaff flag illegal conduct more easily.

It also plans to dissolve a task force set up to monitor fixes for 850,000 diesel-fuelled cars that the carmaker said in July needed updates with emissions-control software to help avoid potential driving bans.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 16, 2017, with the headline 'Audi to keep Ducati for now'. Print Edition | Subscribe