Vw Buying Spree Leads To Bugatti

July 05, 1998|By Bloomberg News.

WOLFSBURG, Germany — Volkswagen AG is close to buying sports car brand Bugatti, a German newspaper reported, paying an estimated $50 million as it completes its push into the top end of the car market weeks after acquiring Rolls-Royce and Lamborghini.

VW and Bugatti International declined to confirm details in the report by Germany's Bild-Zeitung, which cited people close to the company. VW acknowledged it's in talks, while Bugatti said it has other suitors. The bankrupt Italian carmaker stopped producing cars in 1995.

Bugatti would give Europe's largest carmaker eight brands, including Seat, Skoda, Audi, Rolls-Royce, Bentley and Lamborghini, ranging from about $10,000 to $300,000. Known for the Beetle and Golf, VW is buying the luxury brands as rivals BMW AG and Daimler-Benz AG introduce cheaper cars.

"Bugatti had a very elegant range of cars in the '30s and '40s and certainly has a history," said Christopher Will, a Lehman Brothers analyst. "It is a very strong brand, much stronger than Lamborghini, which has only been around since the '70s."

VW models range from the $10,000 Lupo city car to the $300,000 Rolls-Royce. Volkswagen last month won a bidding war with BMW to buy Rolls-Royce Motor Cars Ltd. from Britain's Vickers PLC and signed a letter of intent to buy Automobili Lamborghini S.p.A.

"Volkswagen is trying to add brands that are known worldwide and have a certain image," said Georg Stuerzer, an analyst at Bayerische Vereinsbank AG in Munich.

Jean Marc Borel, president of Bugatti International, a Luxembourg-based holding company that owns the Bugatti brand, said he is in talks with several potential buyers for the name, though he declined to name them.

Bugatti is likely to mark the end of Volkswagen's luxury acquisitions, Stuerzer said.

Volkswagen is also considering developing luxury versions of Volkswagens and Czech-based Skoda cars while looking at smaller, more fuel-efficient cars. Chief Executive Ferdinand Piech has set a goal of increasing unit sales to about 6 million cars by 2000 from 4.3 million last year.

Bugatti is likely to fill the gap between the $75,000 Audi S8, previously VW's most expensive car, and Bentley and Rolls cars selling for more than $150,000.

No Bugattis have been made since the company went into receivership in 1995. Bugatti's assets, including its Italian factory and a number of uncompleted cars, were auctioned off, and only the brand name remains.

Bugatti was founded in 1910 by Ettore Bugatti. A year later, he sold the design of a small car to Peugeot. From there he went on to develop racing cars, which gained renown in the 1920s and were characterized by a horsehoe-shaped grille.

Bugatti died in 1947 and his son Roland took over the business. After a series of racing failures, the company was sold, ending up in the hands of investors before going bankrupt in 1995.