Royal Enfield may be planning to buy Italian motorcycle brand Ducati, a latest report has indicated. German auto conglomerate Volkswagen owns Italian brand Ducati, and has reportedly approached Royal Enfield to acquire Ducati, a report in the ‘Times of India’ has stated. Volkswagen is considering options to fund its multi-billion Euro shift to develop electric vehicles following the emissions scandal and one of those options is to sell the Ducati brand. According to recent reports, VW has already hired investment bank Evercore, possibly to evaluate the current market value of Ducati. So far, there’s been no confirmation, either from Royal Enfield, or from Ducati.
Ducati’s parent company Volkswagen has reportedly approached Royal Enfield.
A part of Eicher Motors, Royal Enfield is one of the most profitable automobile brands in the world. Royal Enfield is expanding aggressively in overseas markets with direct sales and distribution subsidiaries in North America and Latin America, and a strong presence in Europe and even Australia. The Times of India reports sources as saying that Eicher Motors is already examining terms related to the Ducati acquisition and possible asking price.
“I have a general view on such things. We are always open to thoughts and ideas. But as you know, we are the most focussed and selective company… So basically, without saying absolutely no to anything – because we never say never – we are zeroed in on our own opportunity that we do not want anything to distract us,” Siddhartha Lal, MD & CEO, Eicher Motors is quoted by the Times of India.
In 2016, Ducati posted sales of 593 million Euros (over Rs 4,000 crore), selling over 55,000 motorcycles worldwide. Ducati’s annual earnings for VW are estimated to be around 100 million Euros (nearly Rs 700 crore), and the Italian brand’s current market valuation is estimated to be over 1.5 billion Euros (over Rs 10,000 crore).
Royal Enfield has been growing exponentially over the past decade. In April 2017, Royal Enfield posted its highest-ever monthly sales of over 60,000 bikes in one single month. In 2016-17 Royal Enfield sold over 6.6 lakh motorcycles, a growth of nearly 32 per cent over the previous year. Royal Enfield claims a market share of 96 per cent in the mid-size motorcycle segment and has a market capitalisation of over Rs 52,000 crore.