Intrigued by the rumours of Royal Enfield’s plan of buying Ducati abounding the web space, we try to analyze the outcome of this acquisition.
Recent reports suggest VW Group may sell Ducati. Dieselgate has cost the group quite a bit and it is planning to focus mainly on its car business. As a result, it may sell off the Italian motorcycle maker, Ducati, which was acquired by Audi in 2012. Among the interested parties are two that draw interest and both come from India. These two parties are Hero MotoCorp and Royal Enfield. It’s said that of these two, the latter has a better chance of buying Ducati. But what happens if all these reports of Royal Enfield buying Ducati are as true as they claim to be? Let’s decode from all the available facts.
Royal Enfield Buying Ducati – Who Gains What?
Upon buying Ducati, Royal Enfield will get access to technologies such as traction control. This is crucial for Royal Enfield as it looks to sell more bikes in markets around the world. Since its sales are going great, money will not be a problem for Royal Enfield. If acquired, Ducati will get access to Indian market like never before. It can start making its motorcycles here. This will bring its manufacturing costs down and increase margins. Need an example? Look at the success KTM has had since Bajaj acquired a stake in it.
Reports suggest that Ducati wishes to develop a small engine. For this purpose, it is open to working with Indian motorcycle makers. Working with Royal Enfield means it can develop a small capacity engine with ease. After all, the smallest engine Royal Enfield develops displaces 350cc. If Ducati makes a bike with engine displacement of 300cc or higher, it will be able to sell more bikes. That will result in more cash inflow and help in sustaining Ducati’s operations in future too.
Also Read: A lowdown on 2017 Ducati 1299 Panigale
Royal Enfield Buying Ducati – Wrinkles
Right out of the gate, both parties will not gain much. The biggest challenge for Ducati is that of brand dilution. This is a brand known for its great design and engineering. Royal Enfield is known for its design in a very different sense. While Ducati’s design is ever-evolving, Royal Enfield’s bikes carry the pre-War era heritage look. Also, both brands target audiences are different. Ducati has a wide target audience. Royal Enfield has a small but dedicated target audience. Hence, expect some fireworks to take place if the acquisition goes through.
Also, Ducati making bikes in India is no guarantee they will cost less than before. To improve its financial situation, Ducati may be reluctant to sell its bikes at a lower price point. However, that is all just speculation. The real trouble is that Royal Enfield has neither confirmed nor denied the report. Should we take it as a yes or a no is a big question.
Would you like to see Royal Enfield acquire Ducati? Please weigh in with your thoughts in the comments below.