Faced with the possibility of astronomical costs due to the emissions fraud scandal, Volkswagen may have to consider downsizing their 12-brand empire built over the past two decades, which produces from cars to motorcycles to trucks. Bugatti, Lamborghini, and Ducati might be some of the “expendable” brands for not having such satisfactory profits.
Although in the past the German group could afford to sustain these superfluous assets, this money will now be needed to help cover the costs of their financial crisis.
“VW has several brands that fall into the ‘nice to have’ category,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany, estimating the scandal will cost VW as much as 30 billion euros ($34 billion). “Bugatti, Lamborghini, Ducati too — they’re not core to the company in terms of making money.”
Although VW did not yet disclose the specific financial figures of Lamborghini and Bugatti, neither contribute significantly to the final results of the group.
“Bugatti is among the most superfluous things in the Volkswagen Group,” said Frank Schwope, a Hanover, Germany-based analyst with NordLB. “It’s an image enhancer in good times, but in bad times like now, people are likely to point their finger at the brand wondering what VW seeks to achieve.”
In addition to these brands, analysts also point to the sale of Scania in Sweden or MAN in Germany, both of which are also struggling to show significant profits.
Last week, the automaker announced that it will recall 8.5 million diesel vehicles in Europe to rectify diesel engines affected by the fraudulent software. Chief Executive Officer Matthias Mueller says the scandal consequences will cost much more than the 6.5 billion euros that the automaker has already made available to cover the costs.
Source: interestingengineering.com
