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Suits and Motorcycle Madness Take Over, Literally

iStock_000002580741Small.jpgRecently, while writing some upcoming pieces on how readers can best pick entry level bikes, I came across some really interesting daily motorcycle news. The newest rumor in Europe is that Hero MotorCorp (they built Hondas for nearly 26 years) is interested in purchasing Ducati. Ducati is currently owned by a private equity firm and in the last five years has completely revamped its entire line of bikes.

What is interesting is not that Hero might buy Ducati, but that Hero is the primary sponsor of EBR’s (Erik Buell Racing’s) Danny Eslick’s American Superbike team for 2012. Although the potential purchase news comes from Ducati, it is clear that Hero is sponsoring the EBR entry.

What does this mean for the future? Here are a few questions that need to be answered before we know what the future holds:

1) Hero signed up to sponsor the EBR race bike. What’s in it for them since they don’t really have an American market for their products?;
2) EBR is a small company that needs capital. Could Hero buy a minority stake in a privately held American motorcycle company?;
3) Could the combination of EBR and Hero lead to faster R&D (research and development) for EBR?;
4) Does EBR “need” small cc size bikes to complete and compete in the market place?;
5) Since Ducati sales in America are growing faster than the Asian bikes, is that what Hero is seeing if they acquire Ducati?;
7) Would this mean that the Monster line of motorcycles would be built in India?; and finally, the biggest question,
8) If Hero bought a minority stake in EBR and controlling stake in Ducati would they combine the engineering efforts and come out with Italian/American engineered L-twin 90 degree motors when (it is my understanding that) the EBR motor is 60 degrees of V-twin?

It is plausible that an India-based motorcycle manufacturer with money and resources can team with Italians and Americans to develop a “world” class motorcycle effort. This is just something to keep your minds churning.

02/12/2012 Update: It appears that VW owned brand Audi is leading the charge to aquire the Italian marquee. This makes sense, but raises a question as to the link with Mercedes Benz AMG tuner division. AMG signed up to be an associate sponsor of Ducati’s MotoGP effort.

There is much work to be done. Vetting companies in Europe is no short order. VW has tried for years to take controlling ownership of the Porshe brand and the deal keeps getting hiccupped in German courts for various reasons. It’s clear that VW wants into the motorcycle market. They clearly see that Honda, Suzuki, BMW are really enjoying the cross over technology benefit of R&D (research and development). Technology is an ever-evolving process in the auto and motorcycle industries.

In many cases, the R&D work that happens in two year cycles with motorcycles and cars bleeds directly into both products. For example, it’s amusing to think back about when ABS became standard on cars. That was in the late 80’s (optioned in the early 80’s). But my BMW K100RS had ABS in 1987 and that is cool science. Now, we have traction control, wheelie control (launch control for sports cars) and fly-by wire (no throttle cables just electric circuits telling the EFI what to do). Soon we will have direct injection replacing throttle bodies on most vehicles and technology marches on.

At the end of the day, Ducati could be set up for a bidding war between as many as four or five different companies. Considering that they were on the brink of extinction in the early 1990’s, this is a complete and fulfilled ressurection of one of the most exotic brands in the motorcycle industry.

We will keep you posted on the potential acquisition. Until then, safe riding!

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