Why Would Volkswagen Group Sell Its ‘Hero’ Brand?
Rumours have been circulating on the world wide web that Bugatti has been acquired by Rimac which is a boutique electric vehicle (EV) hypercar manufacturer from Crotia.
It seems that Rimac management have signed a deal with Bugatti’s parent company Volkswagen Audi Group to completely take over the Molsheim-based hypercar manufacturer.
Volkswagen’s rationale for divesting in the firm that produced the Veyron and Chiron is to free up resources that can be used for development of future technology like electrification and autonomous driving. In the eyes of the VAG group, selling these so-called hobby brands like Bugatti will free up much needed capital that could be better used in other departments.
Based on a scoop by Car Magazine, this deal was reportedly approved last week but has yet to be signed off by the top management at the German automobile conglomerate. Thus it remains to be seen if this deal that has been approved by VW executives last week will survive the scrutiny of the head honchos. Especially because the Piech family still owns 50% of the stake in VW.
It is because of the Piech family connection that complicates the sale of Bugatti to Rimac, as the boutique hypercar manufacturer was the jewel in the crown when Ferdinand Piech was on his buying spree in the turn of the millennium. Not satisfied with snapping up Bentley and Lamborghini, Bugatti was apparently always the Austrian patriarch’s favourite toy in his VAG empire that he controlled till 2015. It was him after all that was the driving force behind the record-smashing Veyron after all.
That said though, the deal does have a higher chance than usual of passing the Piech test. This is because it is alleged that as part of the deal for Rimac acquiring Bugatti, Porsche in turn will acquire a larger stake in the EV firm. Possibly increasing its already sizeable stake in the company from its current 15.5% to 49%. It will be a hard task seeing as Rimac is already heavily invested by other car companies. Hyundai, Jaguar, Koenigsegg and Magna to name a few, but if anyone can pull this feat off it will be the might of VAG.
The idea of Porsche owning this large chunk of a pioneering EV firm may sweeten the deal enough for Bugatti to be let go from the clutches of VAG. It is also worth noting that in a roundabout way that this deal is apparently conducted, Bugatti will still be within the wider orbit of VAG. Just that now it is just one more step removed.
Looking at this deal with the future in mind, it is probably right for Rimac to take over Bugatti. As much as petrolheads would not want to see it, it is an almost certain fact that if the next Bugatti will want to continue smashing records and be allowed on the road in a world with increasingly tight emissions regulations, electrification is the only way to do. And with Rimac’s expertise in electric drivetrain and power supply development, this acquisition seems like the right path for both boutique hypercar manufacturers.
In addition to that, if the deal is as alleged, Porsche (and in extension the wider VAG empire) having more access to Rimac through the increased stake will surely benefit the conglomerates electrification development efforts.
Thus far, there has been no official word yet on when this deal will be finalised from either party. Rest assured though that when this deal does go through, it will have massive implications on the whole auto industry. Watch this space.
Bugatti, which sold 82 vehicles last year, has long been viewed as a prime example of VW’s engineering extravagance. In 1998, it was revived under former Chairman Ferdinand Piech after the brand had largely faded from existence in the 1950s. Because of high development costs and low volumes, the 16-cylinder Veyron — Bugatti’s first model under VW control — was considered one of the biggest money losers in the auto industry. VW doesn’t break out financials for the brand.
Bugatti has recently pursued efforts to potentially survive outside the German auto group and head off the risk of being phased out once again. Since the 2015 diesel-cheating scandal, VW has been taking a closer look at its portfolio, with a particular focus on the expensive luxury-car brands amid the growing burden of investing in electric mobility and self-driving technology.
Research and Text by Joshua Chin
