(Bloomberg Gadfly) -- For a company the size of Volkswagen AG (more than 10 million vehicles sold each year and 625,000 employees), motorbike maker Ducati (55,000 unit sales) is almost a rounding error. With several bidders reportedly in the running, selling it should be easy.
Indications that the sale process has stalled should therefore make VW investors worried and angry.
The German autos giant has put the sale on hold after resistance from trade unions and disagreements over strategy, according to a Reuters report on Monday. Bloomberg News warned earlier that internal divisions were impeding a transaction.
That's bad, but not for the reason you might think. Though VW faces more than $25 billion in costs and penalties related to the diesel emissions scandal, selling Ducati isn't crucial to meeting that bill.
VW's automotive business has almost 24 billion euros ($28.5 billion) in net liquidity so the roughly 1.5 billion euros in anticipated proceeds from selling the Italian motorbike unit are hardly a game changer.
Yet Ducati matters not for its size but its symbolism. It's hard to imagine there are big industrial synergies from keeping the prestige brand, acquired by VW for 860 million euros in 2012 when horsepower fanatic Ferdinand Piech was still chairman.
Ducati is a trophy asset and if VW can't bring itself to part with it, any lingering investor hope that the group will consider more substantive changes to its sprawling portfolio of 12 brands would be severely undermined.
VW's financial performance has been pretty decent lately and its leaders have been making the right noises about cost cuts and a pivot towards electric vehicles. But amid almost daily headlines about diesel-related recalls, court cases and allegations of possible collusion with rivals, the VW share price remains well below its level when the emissions scandal erupted in 2015. On current form, VW would need less than six years of earnings to generate its entire market capitalization.
Its management has a responsibility to do something about that and the excuse that “investors simply don't ascribe much value to car companies” no longer holds water.
Ferrari NV, spun off from Fiat Chrysler Automobiles NV barely a month after VW's emissions cheating came to light, has more than doubled in value since then. Tesla Inc.'s enterprise value is broadly the same as VW's, even though Elon Musk's yearly vehicle sales are less than 1 percent of VW's total.
There's plenty of things VW could do to unlock value, from separating its truck operations to spinning off Porsche. Indeed, the latter's operating margins are nearly as good as Ferrari's and its sales volumes are far higher. If investors valued Porsche operating profits the way they do Ferrari's, it would be worth almost double the entire VW group, by my calculation.
The trouble is that the people who count at VW -- the Porsche and Piech families, trade unions and the State of Lower Saxony -- still seem to believe that bigger is better. Selling Ducati would signal that they're not wedded to their past empire-building. In the meantime, investors can be forgiven for thinking VW hasn't really changed.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Chris Bryant is a Bloomberg Gadfly columnist covering industrial companies. He previously worked for the Financial Times.
VW's Audi brand is the exception: China sales have been falling and the management board has been overhauled
And that's before adjusting for VW's more than billion euros of pension obligations.
To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net.
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