VW's focus on EVs, not selling Ducati, though dieselgate costs could be $25B
23 August 2017 - Autoblog
Volkswagen is more focused on its multi-billion-dollar shift towards electric vehicles and transport services than any potential sale of motorcycle brand Ducati or transmissions maker Renk, its head of strategy told Reuters.
Analysts and bankers have been expecting Europe's biggest carmaker to sell assets soon to help meet the cost of its diesel emissions test cheating scandal, which has already reached as much as $25 billion.
But Thomas Sedran said the German company was in no hurry to make divestments, which are opposed by its powerful labor unions, pointing to the group's strong financial performance despite the "dieselgate" scandal.
"It's much more important to discuss which new business fields the company will enter. Divestments are less relevant," he said in an interview.
"Big decisions like how to expand or optimize the business portfolio of a global company need time and have to be developed by consensus. For Volkswagen, the topic of the business portfolio is very important but not time critical," he said.
Volkswagen has asked banks to examine options for Ducati and Renk, including selling the two divisions, sources have said, as it reviews its businesses after announcing a major push into electric cars and services such as ride-hailing a year ago.
Five bidders have been short-listed for Ducati, including Italy's Benetton family, with offers ranging from 1.3-1.5 billion euros ($1.5-1.8 billion), a separate source said last month.
But the potential deal currently does not have the support of a majority on Volkswagen's supervisory board, with labor leaders — who occupy half the board seats — resisting a sale unless there are compelling financial reasons.
"Top management has a clear idea of what belongs to core business and what doesn't," Sedran said, without elaborating. "It is now a question of how the supervisory board will assess this and what one wants to do."
He said the range of possible changes was "far greater than just the things that are seized on in public discussion", adding the money to pay for the emissions scandal had to be found somewhere.
"So it's perfectly plausible that we consider whether the time may have come to find a more suitable owner for certain business areas," said Sedran, a former head of General Motors in Europe who joined Volkswagen two months after the scandal broke.
Since then, Volkswagen management has had to deal with an ever-growing number of "dieselgate" probes in Germany and abroad, as well as a new investigation into potential collusion among German carmakers.
On the group's long-running effort to produce a low-cost car for emerging markets, he said Czech brand Skoda would try to develop such a vehicle for India by 2020, one year later than planned after cooperation talks with Tata Motors collapsed.
Skoda has developed "a series of ideas" for a cheap car for India that could then be used in other markets such as Brazil and Iran, Sedran said.
The 52-year-old also poured cold water on union calls for production of a new model to be assigned to one of three German auto-making sites to boost plant utilization.
"Short-term displacements of vehicles are always difficult at production peaks," he said. "To take cars out of one plant for the short term and give production to another plant doesn't achieve much."