Should sports car brand go public ?: VW is working on a spin-off from Lamborghini

Rumors have been around for a long time: Volkswagen wants to spin off its Italian luxury brands Lamborghini and Ducati in order to make them chic for the stock market. So far, such plans have failed because of the works council and owners. Now VW boss Diess is making a new attempt. He desperately needs money.

Volkswagen is making initial preparations for a spin-off of its Italian holdings Lamborghini and Ducati. The company is working on the legal structure of the investments, which also includes the Italdesign design studio, said CEO Herbert Diess at a conference call with analysts. It is about bringing the Italian subsidiaries belonging to Audi into a structure so that they can act. Nothing has been decided yet. CFO Frank Witter also said that management would not have proposed such a step to the Supervisory Board if certain options for action were not in mind.

VW St. 161.70

In October, Reuters reported from financial circles that VW was preparing a possible spin-off from Lamborghini with the aim of bringing the manufacturer of luxury sports cars to the stock exchange. Volkswagen wants to remain involved in Lamborghini. Analysts see the separation of peripheral areas as an important step in increasing the group's market capitalization. Volkswagen would thus open up further sources to finance the enormous investments for the switch to e-mobility and self-driving cars.

Because of the power constellation in the Wolfsburg-based company, the topic is considered extremely sensitive. Not only the works council has to be brought on board, there are also different views on the part of the capital representatives as to which investments the group could and which not. Volkswagen had already failed some time ago when it tried to part with Ducati. The works council and parts of the owner families had resisted. VW therefore wants to continue to generate the money for the enormous future investments both through the inflow of funds from current business – initially primarily through the sale of combustion engines – and through savings itself.

Preparing the VW workforce for the change

Diess sees the goal he has set for a market capitalization of 200 billion euros more as an attempt to motivate employees to convert to a software-driven provider of electromobility. Witter said it was a "wake up call" to prepare the organization for change. Analysts have repeatedly warned that VW must do more to at least get in the direction of this brand. Volkswagen is currently worth around 78 billion euros on the stock exchange. Tesla, by which the Wolfsburg-based company is measured, is worth four times as much at 326 billion euros.

The VW supervisory board has approved investments of 73 billion euros in more climate-friendly drives, the conversion of the plants and digitalization for the next five years. This means that the group spends every second euro of its total budget of 150 billion euros on future technologies during this period. Volkswagen aims to become the world's leading supplier of e-vehicles and self-driving cars over the next few years. In software development, the Wolfsburg-based company wants to compete with the big players in the industry such as Google's sister company Waymo and Tesla with annual spending of over 2.5 billion euros in autonomous driving.

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