Analysts say that Audi’s acquisition of Ducati raises risk of overreaching

Article by Christian A., on April 19, 2012

Ferdinand Piech, who is the current chairman of the supervisory board at Volkswagen, is adding a new brand in the automaker's lineup with the acquisition of Ducati, an Italian motorcycle manufacturer. On Wednesday, the VW supervisory board approved the agreement, which is worth 860 million euro or $1.1 billion, bringing the number of VW brands to 11.

The deal also expanded the company's product offerings from 195-horsepower motorbikes to 50-ton trucks. During the time when he was leading the automaker, Piech has added six brands. However, many in the industry think that he is risking overreaching with the Ducati purchase. The inclusion of the motorcycle brand in the automaker's lineup is not likely to add much to Volkswagen's outcome. It may also pose a distraction for Piech, who is currently in the works with the merging of Porsche AG. 

The purchase revealed that Piech is "an engineer and engineers are sometimes like little babies," commented Director Ferdinand Dudenhoeffer from the Center for Automotive Research from the University of Duisburg-Essen. "It's a new toy," he added. 

Having Ducati brings another project for the VW management, which is loaded with several assignments including the developing a truck alliance with affiliates MAN SE and Scania AB, integrating the car manufacturing operations of Porsche SE and barring the attempts of Suzuki to force it to return 19.9% share in connection with their botched alliance. Moreover, VW is aiming to become the top vehicle manufacturer in the world, surpassing GM and Toyota. 

The diversification and accumulation of new brands that VW has engaged in contradicts the strategy at its largest rivals. Last year, Fiat spun off its Iveco truck unit into Fiat Industrial in order to push its incorporation with Chrysler Group. Also, Ford dismissed Jaguar, Land Rover and Volvo in order to become more economical.

On the other hand, General Motors Co. closed down the Hummer, Saturn and Pontiac brands. It also sold Saab in line with its bankruptcy reorganization. Frankfurt-based analyst Christoph Stuermer at IHS Automotive commented that with the addition of motorcycles as well as the heavy trucks, VW "may be coming to the limits" of the product types it understand with their car way of thinking. He further explained that unlike cars, how the transmission and the motor are placed inside the truck matters, but not the packaging. [source: Autonews]

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