Volkswagen sheds Bugatti, maker of over-the-top sports cars

Volkswagen said on Monday it is giving up control of Bugatti, the automaker whose absurdly expensive hypercars are worshiped by aficionados but seem inconsolable at a company known for affordable Golfs and Passats.

Bugatti, whose Chiron models start at around $3 million, will form part of a joint venture between Volkswagen’s Porsche unit and Rimac, a young Croatian company that has made a name for itself to do design and engineering projects for large carmakers. has made.

Rimac will own 55 percent of the joint venture, known as Bugatti-Rimac, and Porsche will own 45 percent. Rimac’s 33-year-old founder, Mate Rimac, will be chief executive. The companies did not disclose financial terms.

deal. destroys a major legacy of ferdinand picho, who dominated Volkswagen for two decades and built the company into a global empire. The purchase of Volkswagen out of bankruptcy in 1998, long before it was owned by Porsche, was widely seen as indulgence with questionable business logic by Mr. By his own account, Mr. Piech, the chief executive of Volkswagen, got the idea when one of his sons admired a model of a vintage Bugatti in a souvenir shop while the family was vacationing in Spain.

Porsche chief executive Oliver Bloom acknowledged on Monday that the deal removes a distraction for Volkswagen and allows the company to focus on more important tasks. In those . involves the transfer of electric vehicles and an. overcome the effects of emission scandal.

Despite a price tag that can reach as high as $10 million for a limited edition model, and celebrity owners such as Portuguese soccer star Cristiano Ronaldo and entertainer Jay Leno, Bugatti chronically lost money.

“It’s the only way to grow Bugatti for a profitable future,” Porsche’s chief financial officer Lutz Meschke said of the joint venture.

But the venture allows Porsche to keep its hand in the business and benefit from technological innovations, Mr Bloom said. Porsche is a storied sports car brand in its own right, but many of its models sell for under $100,000 and it has been a steady money-maker for Volkswagen.

Mr Rimac said Bugatti would begin the shift to electric vehicles, but would continue to sell cars with internal combustion engines in the coming years. Bugatti’s current flagship is the Chiron, which is equipped with a 16-cylinder, 1500 horsepower gasoline engine and has a top speed of 300 mph.

Mr Rimac founded the company in 2009 with the idea of ​​making a sports car that is named after him, he said on Monday. The firm became a supplier of technology to large car manufacturers in order to survive. Porsche is also a shareholder in Rimac, like Hyundai.

So far, Rimac has only sold a few prototypes, but is preparing to start selling an electric sports car called the Navara that will go from zero to 60 mph in less than two seconds.

Future Bugattis will be a completely different vehicle from the Navera, Mr Rimac said, with a greater emphasis on features like the luxurious leather interior that Bugattis is known for. “We haven’t figured everything out ourselves,” he said.

Bugatti has a long history of losing money. The company was founded in the early 20th century by Ettore Bugatti, who studied art and taught himself auto engineering. 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 were not profitable, a chronic problem for the company. Bugatti went out of business in 1947, a few years after Mr. Bugatti’s death. Short-lived efforts were made to revive production in the coming decades, but Bugatti was little more than a brand name when Volkswagen bought it.

Bugatti-Rimack will be based in Zagreb, but will maintain a presence in Molsheim, in France’s Alsace region, where Ettore Bugatti’s former villa and estate company operates as a showcase and workshop.

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