[AMG1]

According to reports from CAR Magazine, the famed EV maker Rimac is all set to buy Bugatti from VW.

According to a new report in Car Magazine, VW executives approved the sell-off last week, and the proposed takeover by the Croatian electric tech purveyor is currently awaiting sign off from the supervisory board.

According to a new report, VW has approved a deal that will see the Bugatti brand taken under the wing of Croatian firm Rimac

But how can VW sever ties with Bugatti without losing the support of the surviving Piech family members, which owns 50 per cent of the controlling interest in the group? The answer is simple: by putting their beloved Porsche at the heart of any deal, and acting to the mutual benefit of all parties.

Read the full story here:
https://www.carmagazine.co.uk/car-ne...w-group-rimac/
https://www.motor1.com/news/444410/v...o-rimac-rumor/
https://www.carthrottle.com/post/rim...from-vw-group/

VW seems to be on a selling spree! After the Bugatti deal with RIMAC, VW may be looking at selling Bentley, Lamborghini, Ducati and Ital Design too.

VW Group is reportedly keen to cast off, along with Bentley, Ducati and Ital Design.

Also under investigation are – in this order – Lamborghini, Seat (to be repositioned by merging with Cupra which is due to become the lead marque), Ital Design, Bentley and Ducati.

But wait, there’s more. Bugatti is apparently not the only brand under the VW Group’s huge umbrella that could be sold. The report goes on to say Lamborghini, SEAT, Italdesign, and Ducati are all “under investigation.” It is believed VW has already had negotiations with potential investors, but the coronavirus pandemic slowed things down.

Read Reports here:
https://www.carmagazine.co.uk/car-ne...w-group-rimac/
https://www.motor1.com/news/444410/v...o-rimac-rumor/
https://in.reuters.com/article/us-vo...-idINKBN2681GZ.

The plan to sell the marques supposedly started in 2019, but the pandemic had slowed down the process. It seems the Group may be quite serious in its plans and these are much more than rumors. Read a news from Oct'19:
https://www.financialexpress.com/aut...rsche/1733723/

[ArjunPadmakumar]

Surprising to see VW selling their flagship brand to Rimac of all companies! For Rimac it looks like a good deal unless they over-payed. IMO, there's a better chance of expecting an electric or partly-electric derivative of the Bugatti since I have always felt the VW group was lukewarm to the idea of electric hypercars due their cost and niche.

Purely Hypothetical but there could be a delicious hybrid between the Chiron and the concept 1!

[AMG Power]

This really isn't an outright sale because part of the deal envisages that 49% of Rimac be transferred to Porsche. This would help VW retain some control over Bugatti if the deal were to go through.

VW have been in talks to sell Lamborghini since September 2019 but nothing has materialised as yet. This deal may also take a long time, if at all it goes through, as the supervisory board hasn't agreed and it will take quite a bit of convincing at that level for approvals to be cleared.

[GTO]

These are the crown jewels of the family. I vehemently disagree with putting them on the block, or even selling any stake in them. VW has enormous revenues & should think long-term. It takes 100 years to build a brand like Bentley, Lamborghini or Ducati. Stop pleasing your shareholders! Plus, some of them (especially Lamborghini) are doing rather well.

Short-term gain or long-term? Sadly, we see a lot more of the former with today's "share price" obsessed managements.

Ask Tata if they ever regret buying Jaguar-Land Rover? No way. It's a family jewel for life. Ask Fiat if they regret hiving off Ferrari.

[Red Liner]

Originally Posted by GTO

Ask Fiat if they regret hiving off Ferrari.

Hiving off ferrari was a smart move. It was publicly listed as opposed to a sell off which VW is planning. Public listings are much better for such strong brands considering what Ferrari have achieved. VW could still be a majority shareholder. Am sure a lot of employees at these brands themselves will buy into the company they work for.

Publicly listing Ferrari, helped FIAT move towards a mass market car merger synergy like with chrysler and now with the French.

[SaiSW]

Will another set of companies now fall into Chinese ownership? Since they have pretty deep pockets. I hope better sense prevails for VW because as GTO said, it takes a LONG time to build brands like Lamborghini and Bentley.

[AMG1]

Originally Posted by GTO

These are the crown jewels of the family. I vehemently disagree with putting them on the block, or even selling any stake in them. VW has enormous revenues & should think long-term. It takes 100 years to build a brand like Bentley, Lamborghini or Ducati. Stop pleasing your shareholders! Plus, some of them (especially Lamborghini) are doing rather well.

Short-term gain or long-term? Sadly, we see a lot more of the former with today's "share price" obsessed managements.

Ask Tata if they ever regret buying Jaguar-Land Rover? No way. It's a family jewel for life. Ask Fiat if they regret hiving off Ferrari.

I second you. But, VW for the longest time has been trying to drop Ducati plus the massive investments in EV by the group seems to be a major reason. Also, Bugatti, Bentley and Lamborghini may struggle to achieve the required 'European average fleet emissions' in future. They could have always bought CO2 Credits from Tesla ( a la FCA-Tesla way) to meet norms. Expensive but then these marques have a lot of margin per car.

Looks like just what you described- a classic case of Share Prices driven management!

[WD-42]

The devil is in the details as they say.

If you delve into the details this actually seems to be a reverse acquisition; one where VAG is buying Rimac but paying for it with (51% of) Bugatti instead of cash or stock.

Porsche currently owns 15.5% of Rimac
Mate Rimac owns 51%
Camel Group and a Chinese VC holding a majority of the remaining 33.5%, and JLR, Hyundai et. al. holding a minority of that.

So if Mate is paying for Bugatti either by diluting the shares or swapping his own shares in Rimac for those of Bugatti, either way he gets diluted to below 51% while Porsche ends up owning 49%, making them the majority owner of Rimac.

In essence VAG is buying Rimac shares by bartering for them with Bugatti. This is a bit like when VAG bought Porsche with Porsche's own money. You have to applaud the bean counters and deal makers at VAG for this.

This allows VAG to tap into all of Rimac's IP to deploy to their portfolio. They'll probably use it to create the next Bugatti, which will retain it's crown as the fastest car in the world, but electric this time.

Mate on the other hand no longer has to raise a Series C/D and get himself handcuffed to a VC or a PE Fund, he gets access to the entire VAG portfolio to deploy his tech. The rest of his Rimac shares go up in value as more of his tech is deployed in the VAG portfolio.

This is a win-win any which way you look at it, for both VAG and Rimac. In my humble opinion this is anything but short sighted share price driven management, and is rather a masterstroke of a deal.

[bigron]

Originally Posted by GTO

These are the crown jewels of the family. I vehemently disagree with putting them on the block, or even selling any stake in them. VW has enormous revenues & should think long-term. It takes 100 years to build a brand like Bentley, Lamborghini or Ducati. Stop pleasing your shareholders! Plus, some of them (especially Lamborghini) are doing rather well.

Short-term gain or long-term? Sadly, we see a lot more of the former with today's "share price" obsessed managements.

Ask Tata if they ever regret buying Jaguar-Land Rover? No way. It's a family jewel for life. Ask Fiat if they regret hiving off Ferrari.

It is not as simple as that.

Herbert Diess, who was the VW CEO and is now the Group CEO, is known in the industry as ' The Cost Cutter'. He was brought in after the whole Diesel gate scandal and VW having the need to streamline their operations.

With the Departure of Ferdinand Piech, the VW group was not keen on retaining the Bugatti brand and pump more money in it. However, since the Piech family has a controlling stake in the VW group and Porsche owns around 15/20% stake in Rimac, this was the only way they could have offloaded Bugatti with the Piechs on board. The ultimate goal is to increase Porsches stake in Rimac. Electric is future and not going anywhere.

As for Ducati, it is a well known fact that ever since VW bought the Italian bike maker in 2012, there have been problems between the top level management of the two marques. That loss of synergy continues till today. Plus the acquision was more as getting leverage over other German Brands particularly BMW ( has its own motorcycle range) and one of those ' we also own and sell exotic motorcycles' bragging rights. It does not fit in the VW group of things.

With Lamborghini, VW is in a conundrum. One side, the Italian brand has done wonderfully well in the last few years. On the other side, VW wants to stream line their operations and going in for a complete overhaul by 2030 and want to focus on core brands like VW, AUDI and Porsche. What the industry is talking about is that present success of Lamborghini makes it a great contender for an IPO.

Plus, with that kid Greta Thunberg shouting through the megaphone where every she goes, the days for high performance v12 engines with massive capacities are numbered. Almost every manufacturer has started incorporating some sort of Hybrid tech to reduce the carbon foot print. The European emission norms are only going to get stricter. And VW has its hands in way to many things from passenger cars, to supercars, to exotic bikes and even Trucks.

[ajmat]

Mass market brands end up getting distracted or mishandle high end brands unless they give them total autonomy

Ford were so so with JLR, Tata allowed full autonomy
GM and Saab - less said the better
BMW - Rolls - a lot of autonomy was given slowly ( again BMW is a premium brand)

Bugatti was a mere vanity project. The sheer production volume of cars in line with the engineering input does not justify its existence. Only the pre-dieselgate bottomless cash reserves kept it going.

Lamborghini is run by Audi - it generates decent returns, I would keep retain a significant stake. It was a basket case which Audi spent a lot of effort turning around

Bentley should do well, their sales numbers have not dropped and the margins are good, they need to keep their cars special. Maybe sell a stake if cash is required.

None of these brands will survive on their own and again they need the right owner who will understand them and allow autonomy. Bentley and Lamborghini ended up becoming "Greenfield" projects as they were so antiquated in operation. It takes a long time to get there.

If I were VAG - drop the A8, waste of effort when production volumes do not justify it except China

[AMG1]

A good article that explains the Porsche-Rimac-Bugatti situation in a lucid way. Looks quite a win win deal for the 3 partners involved.

To enable Rimac to finance the purchase of Bugatti, Volkswagen Group-owned Porsche is expected to boost its current 15.5% shareholding in the Croatian company to as much as 49%

Below paragraph bothers me. I wish they retain Bentley and Lamborghini atleast. They did quite a good job with these brands albeit at the loss of some individuality post large parts sharing.

One thing is for sure: VW groups' EV revolution is coming at the cost of its many legendary traditional brands!

The futures of its upper luxury car brands, including Bentley, Bugatti and Lamborghini, as well as motorcycle manufacturer Ducati and design studio Italdesign, are all said to be under scrutiny as the company seeks to cut costs in order to fund the electrification plans of its volume brands – Audi, Seat, Skoda and Volkswagen – and an extension of Porsche's EV operations in co-operation with Rimac.

Read Here : http://https://www.autocar.co.uk/car...rimac-end-2020

[motor spirit]

Originally Posted by GTO

These are the crown jewels of the family. I vehemently disagree with putting them on the block, or even selling any stake in them. VW has enormous revenues & should think long-term. It takes 100 years to build a brand like Bentley, Lamborghini or Ducati. Stop pleasing your shareholders! Plus, some of them (especially Lamborghini) are doing rather well.

Short-term gain or long-term? Sadly, we see a lot more of the former with today's "share price" obsessed managements.

Ask Tata if they ever regret buying Jaguar-Land Rover? No way. It's a family jewel for life. Ask Fiat if they regret hiving off Ferrari.

Unless it is a family business & the patriarchal family members feels to protect their business for a long run , The appointed modern day CEO's doesn't care for the lineage, history & legacy of a brand. They know they walk on a thin line & life can be short .
what matters to him is the fat paycheck, the power, the designation to satisfy his ego & the bottom line of balance sheet along with the shareholder's smile to keep him afloat.
Coming to the family members of the family business , their one eye is always on their ancestral business because of their name involved & other is on any new acquisitions .
These acquisitions are always a business venture , where they want to sell it someday & make profits based on a good valuation. unless they get emotional about the acquisition & keeps it as a jewel .
In the VW case , All the brands put on the block are acquired . They may be crown jewels in terms of global brand perception. But are they helping the bottom-line of the namesake brand. Most of them are burning cash .
With the diesel gate losses & electric revolution , I don't think VW has options to gather finance other than selling few of them to protect itself for the rainy days ahead.

[AnAvgJoe]

Originally Posted by Red Liner

Hiving off ferrari was a smart move. It was publicly listed as opposed to a sell off which VW is planning. Public listings are much better for such strong brands considering what Ferrari have achieved. VW could still be a majority shareholder. Am sure a lot of employees at these brands themselves will buy into the company they work for.

Publicly listing Ferrari, helped FIAT move towards a mass market car merger synergy like with chrysler and now with the French.

Couldn't agree with you more.

Having publicly listed Ferrari as a separate company on the Stock Market helped infuse some much needed cash into FIAT during a precarious financial period.

Also, Hiving off Ferrari into a separate company kept Ferrari under Italian Control (Agnelli?), a lot of nationalistic pride is associated with Ferrari (Enzo famously refused to sell Ferrari to the Americans).

The talk of VW selling off "NON CORE" brands first made its rounds during the time of the infamous dieselgate scandal.

VW as part of the settlement for the 'Emission Cheating' had to commit to a accelerated time frame to reduce greenhouse gasses (Decrease emissions across the whole group) in addition to the huge fines. This is one reason for the VW group shying away from diesel engines even in a diesel centric market like India.

Also, those niche marques like Bentley, Bugatti or Lamborghini have bigger engines (more emissions) by virtue of their Brand identity. This skews the emission scale for the rest of the VW group (Audi, Porsche, Seat, Skoda, VW and probably another I might have missed) who make up the bulk of the sales (and hence the bottom line).

All car makers (at least those who sell in Europe) have committed to decreasing greenhouse emissions YoY of their group, the reason for most car companies having Hybrids (even Maruti as they are part of Suzuki). However, stand alone 'Niche' car makers (like Koenigsegg, Maclaren, Morgan and many others) who sell only a limited number of cars do not have to comply with these norms (Ferrari benefits from this as well as they are no longer part of FCA).
VW unfortunately hasn't got this exception as all their niche marques are very much under the VW umbrella. Therefore their decision to sell off 'non core' brands; helps both meet emission and financial (fines) requirements.

[Spaced Out]

Originally Posted by GTO

Ask Tata if they ever regret buying Jaguar-Land Rover? No way. It's a family jewel for life. Ask Fiat if they regret hiving off Ferrari.

Not sure if Tata acquisition of JLR was the the best or if they just have done bad job of it post-acquisition. Geely got a better deal with Volvo.

Tata should have gone back to their own history to rethink what and when they buy. In the 1920s Depression, they acquired the latest machines from UK on the cheap and that set them on a massive growth trajectory during WW2 when the Brits decided to source locally in India.

Currently, the Tata have a tendency to buy a higher values: e.g., Corus, and not do a great job of integration.

[volkman10]

VW board announces reforms; retains Lamborghini and Ducati

Volkswagen chief has board’s backing in pivot towards increasing electrification; halo brands remain.

A round of cost cutting is also part of the measures announced, with material costs being reduced by seven per cent over the next two years. The separation of the procurement and component departments is confirmed, while VW’s HQ at Wolfsburg will become the electric factory hub for Volkswagen.

As a result, VW’s flagship electric car will be built at the headquarters in Wolfsburg.

Link