Royal Enfield and Hero have shown interest in buying Ducati

• Published On: 11 May 2017
• 1200 Views

VW is contemplating on selling the Ducati brand due to cash-crunch post Dieselgate.

Dieselgate, coupled with a move to focus more on EVs and other mobility solutions have strapped the VW Group for cash, which it plans to deal with by having what is essentially the corporate version of a garage sale. The first to go looks likely to be Italian bike-maker Ducati.

In April 2012, Ducati was acquired by Audi (which is owned by VW), a move attributed to then VW chairman Ferdinand Piech’s love for Ducati’s engineering and design. Piech is no longer chairman, so Ducati faces a sale.

A Reuters report shows that Ducati’s annual earnings before interest, taxes, depreciation and amortisation (EBITDA) is roughly 100 million euros (around Rs 765 crore). The company is currently valued at as much as 1.5 billion euros, if a multiple of 15 times its core earnings (similar to that of Ferrari) is applied. It also reported that a few Chinese two-wheeler makers and Indian bike maker Hero MotoCorp are interested in purchasing the Italian brand.

Purchasing Ducati allows Hero access to the company’s brand value and technology. Hero currently has no presence in the high-performance, high-capacity segment that Ducati deals in. Hero MotoCorp can increase its global footprint with this acquisition. According to The Times of India (TOI), Royal Enfield (Eicher Motors) has also expressed interest.

Speaking to TOI, Siddhartha Lal, CEO and MD of Eicher Motors, said, “We are today the most profitable motorcycle company in the world... We want to become a global leader in motorcycles, we want to become the No.1 in middle-weight markets around the world... Anything which de-focuses us from our idea, we will not do.”

Additionally, when speaking to TOI earlier this year, Ducati expressed interest in developing a partnership in India so it could make small-capacity powerplants. This worked for Bajaj and KTM - entering the small- to mid-capacity streetbike market changed the fortunes of the Austrian bike maker.

However, both companies said that there was no official statement regarding a bid to purchase the bike maker at this time. But neither flat-out denied the possibility either.