Deep Dive: Is Ducati's Future in the Four Rings?

Ferdinand Piech's dream may be on the verge of coming true: Audi is reaching out to potentially buy Ducati to bring Piech to the pinnacle of his entrepreneurial career with "Project Eagle." As you read these lines, the integration of Porsche into the Volkswagen empire is nearing completion, and also due this year is the further consolidation of the truck business with increased synergy between Scania and MAN. And had it not been for General Motors' unexpected rise to its former glory, the VW Group would have climbed to the global top of the sales chart long before its 2018 target date.

Just about the only element missing from Herr Piech's dream of masterminding a world-beating motor vehicle manufacturer is -- you guessed it -- a prestigious motorcycle brand. According to the Wolfsburg grapevine, that brand may be Ducati, and a takeover deal engineered by the Audi division may be a lot closer than the parties involved would have us believe.

Not the First Time VW Has Eyed Ducati

The Ducati name was mentioned in Volkswagen circles for the first time when Bernd Pischetsrieder was still in charge from 2002 to 2006, but at the time motorbikes were only a secondary or tertiary priority. First, the string-pullers wanted to get the truck and bus business in order. Next, they were forced to fend off Porsche's David versus Goliath attack. Then, in 2010, Ferdinand Piech briefly contemplated reviving the Horex brand, sources claim. Horex, a renowned German motorcycle manufacturer, built sturdy single- and twin-cylinder bikes from 1936 until 1956; the new Horex company will begin producing the VR6 Roadster powered by a 1218cc narrow-angle V-6 engine rated at 161 hp.

But instead of starting from scratch by backing the new kid on the block, Piech zoomed in on Ducati again. Even when the Bologna, Italy-based manufacturer struck a cooperation agreement with Mercedes-Benz's AMG brand -- and thus, with Audi's arch-enemy from Stuttgart -- the Austrian tycoon kept a close eye on the marque.

A Troubled History

Founded in 1926 by the Ducati brothers Bruno, Adriano, and Marcello, the company soon built up a reputation for sporty high-performance bikes featuring such unusual solutions as desmodromic valve train, water-cooled direct-injection four-valve twin-spark engines, and, most recently, carbon fiber frames. In 1985, Ducati was taken over by the rivaling Cagiva Group -- which now goes under the more widely-recognized MV Augusta Motor name. Eleven years later, Caviga filed for bankruptcy. Since 2005, Ducati has been run by the Italian Investindustrial Holding SpA; between then, U.S.-based Texas-Pacific Group held control of the storied manufacturer.

According to The Financial Times, Ducati's combined debt burned is significantly higher than last year's revenues - which would explain why the bike maker is up for grabs again. Ducati's chairman, Andrea Bonomi, has even gone as far as to tell FT that, "Ducati is now a perfect company but the further growth it requires needs the support of a world-class industrial partner. This year, we will work toward that partner."

FT goes on to claim that the Bonomi family -- the owners of Investindustrial -- expects to get up to one billion Euro for their ailing asset, which currently sells around 40,000 motorcycles per year and claims a nine percent market share of the segment it competes in.

Piech Has Competition

India's Mahindra, Daimler, and Volkswagen are all said to be among the leading suitors for Ducati. We don't know how serious the Mahindra offer is, but AMG has reportedly pulled out of the bidding with parent Daimler stating that motorbikes are not part of its core business. BMW, too, has denied interest.

Audi did, however, form a small task force to mastermind Project Eagle. In early March, a delegation from Ingolstadt travelled to Bologna for a preliminary meeting. According to a member of the Eagle project team, there is no way Audi will pay telephone numbers for Ducati -- instead, the Germans will probably put no more than 50 to 100 million Euro on the table; the benefit of such a low number for Ducati is that Audi would then take on its substantial liabilities.

Bonomi has repeatedly pointed out that he views 'Ducati as the two-wheel equivalent of Audi,' a perception Ferdinand Piech would likely agree with. In 2008, Piech said it was a mistake not to have bought Ducati when the company was on the brink of bankruptcy. Four years later, Volkswagen is now closer than ever to making the chairman's vision complete. But first of all, the Audi delegation must take a deep dive into the Ducati research and development department and check out the Borgo Panigale, Italy production facility. After all, it takes more than a strong name like Piech's to make Project Eagle fly.

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