The VW Group appears to be tired of these niche brands.
The Volkswagen Group currently has a total of twelve brands from seven European countries under its stewardship, among them Audi, Bentley, Bugatti, Porsche, and Lamborghini. Audi and Porsche remain its two biggest stars aside from the namesake VW brand, while Bentley has successfully managed to turn itself around financially.
As for Bugatti and Lamborghini, it appears their fates will soon be decided. Reuters has learned from inside sources that VW's management board and other top executives will more closely examine the company's overall strategy at next month's board meeting. The main goal is to more than double its overall value to $235 billion. Tesla, in comparison, is now valued at over $400 billion.
VW realizes it needs to free up cash to help fund new EV-related technologies. One way of doing so is to sell Bugatti and Lamborghini.
This isn't entirely breaking news. Just a few weeks ago came word VW was in talks to sell Bugatti to Rimac. Both sides refused to comment further. Also, Lamborghini CEO Stefano Domenicali is leaving to be the new CEO of Formula 1. One reason he could be doing so is that he's uncertain about Lamborghini's future under VW, although this is purely speculation.
"Brands must be measured against new requirements," said VW Group CEO Herbert Diess. "By electrification, by reach, by digitalization and connectivity of the vehicle. There is new room for maneuver and every brand must find its new place."
Last year, Lamborghini and Bugatti sold a total of 4,554 and 82 vehicles, respectively. The Lamborghini Urus was and continues to be the brand's best-seller, contributing 60 percent of total sales in 2019.
Still, it begins at about $200,000 while a new Bugatti costs seven figures. Even when Bugatti and Lamborghini are profitable, they still increase VW's overall costs. Why? Because the more brands VW has, the less efficient it is, and efficiency is the name of the game when transitioning to electromobility. Combined with the economic issues brought on by the coronavirus pandemic, VW Group is being more financially cautious than ever.
While EVs represent a small slice of the market, VW is betting this will soon change. Being left behind is not an option. Bugatti and Lamborghini, with their combustion engine focus, could sink the ship and might ultimately have to be let go.