Cash-strapped Volkswagen Thinking of Dropping Ducati: Report

After history’s largest and most expensive automotive scandal forced a sudden pivot at Volkswagen Group — from expansion-minded to profit-focused — the German automaker might let go of a cherished toy.

According to insider sources who spoke to Reuters, VW is exploring the sale of Italian motorcycle manufacturer Ducati as part of a company-wide streamlining effort. After shoveling over $20 billion to the United States in a bid to end its diesel debacle, the company is in full penny-pinching mode.

The revered boutique motorcycle company was a long-awaited feather in ex-VW chairman Ferdinand Piëch’s hat, but after just five years of ownership, it may be time for Ducati to find a new home.

Two sources claim VW has hired investment banking firm Evercore to look at money-saving options, including a Ducati sell-off. This shouldn’t come as a major shock. One year ago, the company admitted in its annual earnings report that unexpected expenses could lead to a sell-off of one or more of its many holdings. (The brief mention was subsequently downplayed by VW’s chief financial officer.)

While no decision has been made on the divestment, VW has already reached out in search of potential buyers, the sources claim.

Volkswagen Group’s Audi brand purchased Ducati for just under $1 billion in 2012, 18 years after Piëch, a motorcycle enthusiast, passed on an earlier chance. Ducati began manufacturing its own motorcycles in 1950 after first selling small engines for bicycle conversions. The company was founded in 1926 as a radio component manufacturer.

In recent decades, Ducati became something of a foster child. After being sold to Italian motorcycle manufacturer Cagiva in 1985, the brand fell under the control of private equity firm TPG Capital in the late 1990s. The following decade, it changed hands again, this time to Investindustrial Holdings.

Both VW and Audi refused to comment on the report. Should the company decide to let the storied brand go, it could prove a lucrative move — one of the sources estimates Ducati’s value at 1.5 billion euros ($1.63 billion), 15 times what the sportbike builder earns every year.

[Image: Audi AG]