Under former CEO Ferdinand Piech, Volkswagen pieced together a vast array of brands covering everything from entry-level small cars to ultra-exotic sedans and sports car but, now, it looks like current CEO Herbert Diess wants to unravel the empire and sell or spin off some of those marques.
According to various reports out of Europe, backed by several company sources, two of VW’s most exclusive automotive brands, Lamborghini and Bugatti, are in the crosshairs, as is the company’s motorcycle division, Ducati.
Shedding those brands could simplify Volkswagen’s management structure, reduce future investment needs and, equally important, such a move could raise cash to help fund VW’s aggressive electrification program. The German marque has laid out plans to launch at least 50 all-electric models by mid-decade and has allocated about $66 billion for that effort.
Lamborghini could be spun off on its own, along the lines of what Fiat Chrysler Automobiles did with Ferrari, reports Reuters.
Currently, under the peculiar structure of the broader Volkswagen Group, Lambo effectively reports to the semi-autonomous Audi brand. The news service quotes various sources indicating the Italian supercar company would become “a more independent unit,” making it easier to eventually stage an initial public offering.
“This is a first step which gives VW the option to list the unit further down the line,” one of the sources familiar with the discussions told Reuters.
Ducati, which is likewise based in Italy and also reports directly to Audi, seems destined to go through similar changes which could include a spinoff, a sale or simply operating more independently.
Audi had actually looked for a buyer for Ducati a couple years ago but eventually ended that quest unsuccessfully.
As TheDetroitBureau.com reported last week, the three brands are likely to go to different buyers – or possibly be spun off separately. Bugatti appears to be destined to go to Croatia’s electric supercar startup Rimac, according to London-based Car magazine.
Bugatti, whose products start around $3 million, is the most exclusive of all the VW brands, but with production running barely one a week, it generates little real cash and requires substantial investments to remain competitive.
It also faces the growing challenge of meeting global emissions and energy efficiency mandates that appear destined to force a shift from conventional gas engines – like the W-16 used in the current Bugatti Chiron – to electric assist or full battery-electric propulsion.
That’s where Rimac could be a solid fit, its own products, like the Concept_Two, running entirely on batteries.
Whatever happens to Lamborghini, it would face a similar challenge, however. And even in the motorcycle sector there’s a push to electrify, such traditional brands as Harley-Davidson launching battery-powered models.
If Volkswagen does move to sell or spin off these brands it would mark a dramatic reversal of the strategy implemented by Piech, heir to the family that founded both VW and Porsche.
After becoming CEO three decades ago, and then as chairman of Volkswagen’s all-powerful Board, he approved the acquisition of brands ranging from low-end Skoda and Seat to high-line Porsche and Bentley, as well as the revival of the Bugatti marque.
That strategy positioned VW in a three-way fight with Toyota and the Renault-Nissan-Mitsubishi Alliance for global sales leadership. But Piech was forced out in 2015 following VW’s disastrous emissions cheating was revealed. He passed away in August 2019.
Diess has been looking for ways to streamline the German giant and is aggressively shifting from the diesel technology that long propped up the automaker to electric propulsion. But that transition, along with the need to develop autonomous vehicles, is incredibly expensive, further encouraging the idea of paring down the corporate line-up.
Decisions on what to do Lamborghini, Bugatti and Ducati reportedly could come during a five-year planning meeting set to bring together VW’s separate management and supervisory boards in November.
Even if the Volkswagen Group does get rid of the three brands it won’t vanish from the highest regions of the automotive market. There appears to be no plan under discussion to shed British Bentley. And both Porsche and Audi remain secure in their roles within the company, as well.