For the thousands of motorcycle enthusiasts, it’s hard to say who is doing well in the global market as sales data is usually not readily available.Most of the motorcycles are produced by companies not solely focused on such production. However, when we think of Ducati which is a visible player in the luxury range its sales data is readily available as it’s owned by Audi which is owned by Volkswagen (VLKAY, Financial) which is publicly traded on the NASDAQ. So, let’s delve into Audi’s financial playbook and find out if the purchase of Ducati in 2012 for nearly $1 billion has helped in rebuilding the latter’s reputation in the past two years. Here’s the entire story.
A glance into the past
Ducati motorcycles have enjoyed the reputation for being one of the world’s fastest, best-designed and most exciting two-wheeled machines. However, unlike their fellow Italians in the Ferrari Motorsports, Ducati has seen limited success on the track in recent years. Since the victory of Casey Stoner for Ducati in 2007, the company has not witnessed much of success stories in six years. Hence, to turn the motorcycle company into a profitable enterprise once again, Audi purchased it in 2012 and made certain changes in the company’s racing program. Audi, a luxury segment player that generated revenue of nearly $44 billion in 2012 pledged to change Ducati’s fortunes soon after the acquisition got completed.
So, let’s have a look at the Volkswagen moves after the acquisition in 2012 to undermine how it’s trying to reshape Ducati’s fortune.
Imperative changes in top management
One of Volkswagen’s primary moves was to bring in the BMW former superbike program director, Bernhard Gobmeier, replacing Filippo Preziosi as general manager of Ducati Corse. The new general manager commented last year, “Audi, like Ducati, are fully committed to achieving success on the track. Ducati can utilize Audi’s and VW’s laboratories and facilities for research and testing and in the future there could also be collaboration in the field of materials like carbon fiber, where Audi has considerable experience.”
But within a month’s span after having made this comment, Gobmeier was replaced by Luigi Dall’Igna and Ducati’s CEO said of this sudden management move, “I am certain that his solid experience combined with our technology and R&D and the technical support supplied by the Audi/VW Group, will help us restore Ducati to the level of racing excellence it had in the very recent past.”
After such vital management changes, Ducati recorded annual sales of 44,287 motorcycles, up from 44,102 in 2012. However, this number was rather paltry in front of market leader Honda (HMC, Financial) which sold around 17 million motorcycles in 2013-2014, up 9.8% from the year earlier.
Explaining the results, Ducati’s CEO commented, “Results for 2013 also confirm positive sales trends in emerging markets such as Asia, which grew by 26% compared to 2012 with 5,200 motorcycles sold, and Brazil, where Ducati only started sales activities in the second half of 2013 and already delivered 700 motorcycles in that period of time. The United States, accounting for 24% of sales, continues to be our largest market followed by Italy with 11.3% and Germany with 10.7%.”
New initiatives to capture market pulse
So far Ducati's success has been more in the showrooms than on the racing track. But the company is on its endeavor to create its own niche and to help Ducati relive its past days by revving up its market presence. News sources have confirmed that the company would be launching a new model, the Scrambler, in 2015 for diversifying its market base, and this launch could aid in broadening the market segment reach for Ducati.
In fact, the Scrambler is being re-launched after almost four long decades. Just recently, the management has announced the launch of the Scrambler that’s bringing the 1960s and 1970s up to speed with a completely modern version of the cult legend. The bike’s attractive outline stems directly from the original Scrambler right down to the teardrop tank, though the engine and the technology that would run the machine is completely new.
Also with the sticker price around $8,595, the iconic Scrambler could become Ducati’s cheapest and most accessible bike for several bike fans.
Last word
Ducati is confident that continued development of new models and the success in the new markets will make its targets easily achievable, and thus the company is slated to see better days. Let’s keep watching silently how Audi progresses further in its mission of reshaping Ducati’s future in the long run.
