Here's Why Royal Enfield May Not be Revving Up to Buy Ducati
There have speculations that Ducati may be sold off by the Volkswagen Group and Royal Enfield could be one of the probable buyers of the brand.
The Ducati badge as seen on a Multistrada Enduro. Image used for representative purpose. (Photo: Siddharth Safaya/News18.com)
The troubles which started ever since Volkswagen accepted that it had cheated its way through emission tests using a defeat device has not gone away even today. The entire scandal has cost Volkswagen a lot in terms of compensations, fines and buybacks. Following which, reports have emerged that Ducati Motor Holding, the premium Italian bikemaker owned by German automaker Audi through its Italian subsidiary Lamborghini, all of which is owned by the Volkswagen group might be sold off.
But here's the thing, even the original report which was published by Reuters says that Volkswagen has tasked investment banking boutique Evercore with evaluating possible options including a sale of the Ducati brand.
The report further states that while Wolfsburg-based VW has started reaching out to potential buyers to sound out their interest, no decision has been taken on whether the brand will be sold.
Following which, when asked for a comment, VW referred to Audi which along with Evercore declined to comment.
The report also cited a source saying that the Ducati brand could fetch a value of up to 1.5 billion euros.
Now, a Times of India report says that Royal Enfield is 'is examining the terms related to the acquisition, possible asking price, and how Ducati could fit within its own fast-growing operations' based on its own sources.
While that may be believable, the surprising fact is that within the same report TOI has quoted Siddhartha Lal, MD & CEO of Eicher Motors (Royal Enfield is a subsidiary of Eicher Motors) saying 'We can't talk to you on (about) such things; we are so zeroed in on our own opportunity that we do not want anything to distract us'.
The take away from these reports from these reports can be several. One of them is the fact that while Ducati is expected to fetch a value of up to 1.5 billion euros (around Rs 10,500 Crore), Royal Enfield had a reserve at the end of fiscal 2016-17 of about Rs 3,500 Crore, as per TOI's report.
Also, while Royal Enfield may be enjoying its best ever sales numbers in its history, there is no denying that despite working at its full production capacity, there is still a long waiting period if you want to get your hands on some of the models in its portfolio like the Classic 350 for example. So if RE were to spend that amount of money, then perhaps it would be spent on increasing the production capacity?
To top it all, the Volkswagen group has not yet decided to sell off the Ducati brand in the first place so the question of which automaker is keen on buying it may seem irrelevant at this point of time.
When contacted, Royal Enfield declined to comment on all these speculations.
Watch this space for updates.
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