Audi CEO Drops Plan To Sell Ducati

Germany's Audi has abandoned plans to sell its Italian motorcycle brand Ducati, its chief executive Rupert Stadler said, in a sign of confidence that the carmaker expects to be able to carry the costs of its transformation. Steps to reduce costs by 10 billion euros ($11.8 billion), cut red tape and deepen ties with fellow Volkswagen-owned brand Porsche are "gradually increasing our financial and organizational leeway for the strategic realignment," chief executive Rupert Stadler told reporters.

Also Read: Ducati Will Not Be Sold To Royal Enfield Or Anyone: Unions

There is therefore no economic need to sell Ducati, Stadler said. Volkswagen asked banks to evaluate options for Ducati and transmissions maker Renk earlier this year as seeks to become more nimble in its shift towards electric and self-driving cars following its diesel emissions cheating scandal.

"I can assure you that Ducati belongs to the Audi family," said Stadler. "Ducati is the perfect implementation of our premium philosophy in the world of motorbikes."

The plans had already stalled in the summer when VW's powerful labour unions, backed by the controlling Porsche-Piech families, opposed the logic and need for asset sales given the group's financial resilience.

Investors and potential Ducati buyers, however, expect that VW could change its mind again and eventually opt to sell the asset which they say has least strategic importance to VW.

Also Read: Volkswagen Puts $1.8 Billion Ducati Sale On Hold After Trade Unions Resistance And Internal Rifts

"For Volkswagen's powerful works council it could be an easy bargaining chip they could offer to push through something completely different," a person close to the matter said.

Investors have long favoured divestments to simplify VW's group structure and to strengthen its management's ability to push through structural changes against the unions' wishes.

Audi, which owns Ducati and Italian supercar maker Lamborghini, last month reported higher operating profit and revenue for the first nine months, helped by growing auto demand in the higher-margin western European and U.S. markets.

While pushing the costly shift to zero-emissions and autonomous technologies, holding on to the profitable Ducati division and the lucrative Lamborghini brand has become more important, Stadler said.

"Looking after a premium bouquet is as difficult as the work of a gardener," Stadler said. "Therefore I am pleased with every new flower, with every promising new branch," he added, predicting Lamborghini's sales would double on the back of its new sport-utility vehicle.

Separately, Stadler said Audi will spend nearly half a billion euros over the next eight years on training staff for the digital age, with steps to develop as well as hire experts such as automotive app-designers and car robotics specialists.

Also Read: Volkswagen Considering Possible Sale Of Ducati

To rein in costs, Audi wants to keep headcount stable, at least over the next 2-3 years, even as it plans to have more than 20 electrified vehicles on the market by 2025 and pushes into digitised mobility services, the CEO said.

With two-thirds of Audi's 60 or so models by 2025 still slated to be combustion-engine cars, tightening carbon dioxide (CO2) rules will pose the "biggest risk" in coming years, he said, adding that Audi would face 1 billion euros of fines if its average fleet CO2 emissions exceeds EU limits.

Audi has overhauled its whistle-blower system to allow domestic and international staff to flag illegal conduct more easily and it has set up a permanent investigation office.

Audi plans early next year to dissolve a task force set up to monitor fixes for 850,000 diesel-fuelled cars that the automaker said in July needed updates with emissions-control software to help avoid potential driving bans.

"It's a sign that we can slowly shift from crisis mode back into standard operation," Stadler said, predicting the check-ups to be completed by the end of the first quarter.

(Additional reporting by Arno Schuetze; editing by Alexander Smith)

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