What happens when two iconic brands with rich motoring heritage come together? We could be a witness to that bankable collaboration if it materializes in future. The two brands here in question are Royal Enfield and Ducati. While Ducati, owned by German conglomerate, VW’s luxury arm Audi is allegedly seeking a new owner, the Indian origin Royal Enfield is showing interest in sealing the deal.
Media reports suggest that investment banking boutique Evercore is in charge to evaluate possible options for the sale of Ducati brand, as directed by Volkswagen. The company’s valuation is estimated at a whopping $1.5 billion Euros. While Hero MotoCorp and Royal Enfield are among the top contenders from India for the possible acquisition, other suitors include firms like Polaris, Harley Davidson and Suzuki, report opines. Read – Volkswagen Mulls Sale of Ducati, Hero MotoCorp Among Top Contenders
Media reports also suggest that Ducati officials hinted at the possibility of forming a partnership in India to build small-capacity engine motorcycles, early this year. Considering that India is the largest two-wheeler market globally, Ducati could seek aide to penetrate deeper in the market and hence partnering with an Indian firm makes sense from this perspective.
Currently partnerships like BMW-Motorrad-TVS and KTM-Bajaj exist in the two-wheeler Indian market, wherein both benefit mutually. On the contrary, Royal Enfield and Ducati symbioses will let the Chennai based manufacturer have a complete ownership of the latter. This collaboration will however aim at benefiting from each other’s strengths like Royal Enfield commands an aggressive network in India whereas Ducati excels in technology and engineering departments. It is unlikely to be looked upon as a partnership wherein the controlling firm sells products under its brand.
As for Royal Enfield, this could be an opportunity to tap into the global markets with higher capacity motorcycles. Furthermore, RE could benefit from Ducati’s extensive global network, manufacturing facilities and advanced technologies.
Similarly, Ducati could also look at expanding its product reach in India with lucrative pricing. If RE buys Ducati, it is likely to utilize Thailand manufacturing unit for the high-end Ducati bikes, hinting at lower pricing. Another possibility is having an Indian based production unit, which will further cut down on pricing. RE is currently one of the largest money minting motorcycle companies globally and has the capability to provide financial aid to Ducati for developing a new product. While, it remains a possibility until the deal happens, the Eicher Group owned Royal Enfield and the Audi owned Ducati have a similar history of changing hands. RE on the contrary enjoys a wide popularity in the Indian market, Ducati’s apparent sale on the other comes at a time when Volkswagen is reeling from the brunt of diesel engine scandal and is planning to fund its multi-billion Euro shift to develop electric vehicles.