Volkswagen separates from Bugatti, maker of extravagant sports cars

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Volkswagen is relinquishing control of Bugatti, a legendary automaker whose absurdly expensive hypercars are revered by aficionados but seemed incongruous in a company best known for its budget Golfs and Passats.

Bugatti, whose Chiron model starts at nearly $ 3 million, will be part of a joint venture between Volkswagen’s Porsche unit and Rimac, a young Croatian company that has made a name for itself carrying out design projects and engineering for major car manufacturers.

Rimac will own 55% of the joint venture, known as Bugatti-Rimac, and Porsche will own 45%. Mate Rimac, the 33-year-old founder of Rimac, will be its CEO. The companies did not disclose the financial terms.

The deal reverses a major legacy of Ferdinand Piëch, who dominated Volkswagen for two decades and turned the company into a global empire. Volkswagen’s purchase of Bugatti after bankruptcy in 1998, long before he owned Porsche, was widely viewed by Piëch as an indulgence with questionable business logic. On his own, Piëch, then CEO of Volkswagen, came up with the idea after one of his sons admired a vintage Bugatti model in a souvenir shop while the family was on vacation in Spain.

Porsche CEO Oliver Blume acknowledged on Monday that the deal removes a distraction for Volkswagen and allows the company to focus on more important tasks. These include switching to electric vehicle production and overcoming the effects of an emissions scandal.

Despite prices that could exceed $ 10 million for limited edition models and despite celebrity owners such as Portuguese football star Cristiano Ronaldo and artist Jay Leno, Bugatti has chronically lost money.

“This is the only way to develop Bugatti for a profitable future,” said Lutz Meschke, chief financial officer of Porsche, of the joint venture.

But the company allows Porsche to keep control of the business and benefit from technological innovations, Blume said. Porsche itself is a legendary sports car brand, but many of its models sell for under $ 100,000 and it’s a constant source of money for Volkswagen.

Rimac said Bugatti will start to switch to electric vehicles, but will continue to sell internal combustion engine cars for years to come. Bugatti’s current flagship is the Chiron, which is equipped with a 16-cylinder, 1,500 horsepower petrol engine and has a top speed of 300 mph.

Rimac founded the company that bears his name in 2009 with the idea of ​​building a sports car, he said on Monday. The company has become a technology provider for the biggest automakers in order to survive. Porsche is also a shareholder of Rimac, as is Hyundai.

Rimac has only sold a few prototypes so far, but is set to market the Nevera, an electric sports car that will be able to go from zero to 100 km / h in less than 2 seconds.

Future Bugattis will be vehicles completely different from the Nevera, Rimac said, with more emphasis on features like the plush leather interiors that Bugattis are known for. “We haven’t figured it out ourselves,” he said.

Bugatti has a long history of losing money. The company was founded at the start of the 20th century by Ettore Bugatti, who studied the art and learned automotive engineering on his own. One of the company’s most famous cars was the Bugatti Type 41 Royale. First sold in 1926, it was powered by a modified aircraft engine and had a top speed of 100 mph – unheard of at the time. But only a few were built and they weren’t profitable, a chronic problem for the company. Bugatti went out of business a few years after Bugatti’s death in 1947. There were short-lived attempts to revive production in the decades that followed, but Bugatti was little more than a brand name when Volkswagen bought it.

Bugatti-Rimac will be based in Zagreb, Croatia, but will retain a presence in Molsheim in Alsace, France, where Ettore Bugatti’s former villa and estate serve as the company’s showcase and workshop.


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