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Mobility solutions: bridging the gap

V. Sumantran | Updated on November 06, 2014

Superbike manufacturer MV Agusta has been acquired by Diamler's Mercedes AMG


Can the potential for a hybrid product be the reason behind car companies acquiring motorcycle manufacturers?

Last week’s announcement by Daimler that their Mercedes-AMG division will acquire a 25 per cent stake in the exotic Italian motorcycle manufacturer, MV Agusta, is only the latest salvo by automakers, to claim a stake of the pie of high-performance superbikes. While BMW has been involved in high-performance motorcycles from pre-War years, rival German premium manufacturer Audi acquired the other prize Italian brand, Ducati, for 860 million Euros in 2012.

MV Agusta is arguably one of the most prestigious brands in the world of two wheelers, and yet has endured a troublesome history. Founded by Count Agusta just after the war, the bike maker has been owned by the eponymous aviation group. Ridden to numerous world-championships wins by the legendary Giacomo Agostini, the company has since seen ownership change many hands including the Italian two-wheeler manufacturer Cagiva, later Malaysian carmaker Proton and subsequently Harley-Davidson in recent years.

The reason for the acquisition, stated in Daimler’s press release, was to allow Daimler, access to small lightweight 3-cylinder engines. Yet this does not seem very convincing as the main objective. While rival Audi, belonging to the Volkswagen Group has also recently showcased a version of a Ducati 2-cylinder engine in their prototype Volkswagen XL, at the recent Paris Auto Salon, in reality the technologies and design features of motorcycle engines are very different from those of efficient city cars. At a time when fuel efficiency and increasingly stringent emission standards are forcing extreme levels of engine design optimisation, a transplant of this nature makes little sense.

Closer to home, we have also our own local example of Mahindra’s stake acquisition in Peugeot two-wheelers. Yet, this was less a deal for car-maker Mahindra and more for the Mahindra two-wheeler division. And this deal can offer each partner specific potential benefits. Peugeot benefits from needed cash injection at a very critical time and Mahindra gets a global portfolio of designs and know-how, together with a brand, for their nascent two-wheeler business that hopefully can be leveraged in ways similar to how Bajaj has successfully leveraged their stake in Austrian bike maker KTM.

Making the connection

So, are these developments unrelated?

In the 1960s, Honda’s big push in the US market was behind a tiny step-through moped called the Honda Cub, a model that remains the world’s best-selling vehicle with cumulative sales crossing a staggering 87 million units! Marketed under the highly lauded campaign that averred that “you meet the nicest people on a Honda”, it cleverly sought to dispel negative connotations about motorcycles and appeal to a broader cross section of customers. Today in many of the European capital cities like Paris, London and Rome, there has been a revival of sorts for trendy two-wheelers. After all, a personage no less than President Hollande was himself found to be an eager user of one for his rendezvous in Paris. Even a big bike market like USA has started to show a revival of sorts for commuter bikes and scooters. To further broaden appeal, many European scooter manufacturers have innovated to add a third wheel to their scooters for improved stability and make things easier for the novice commuter.

So there is more to automakers’ interest in two-wheelers than meets the eye. Demographers agree that one of the global mega trends we are witnessing is accelerated urbanisation – a realm where such machines make a lot of sense. In many scenarios of future mobility, the topic of micro-cars and micro-mobility has re-emerged. Like the Isetta of post-war Germany, incidentally built by BMW, there have been many recent design concepts of small single and two-seat vehicles that appear to bridge the world of small cars and two wheelers. Production vehicles like the Renault Twizy and concepts like the Volkswagen Nils are preparing for days when the growing urban trend in Europe towards fashionable motor-scooters will evolve to micro-cars.

Hybrids in the future

A hybrid of sorts between two-wheelers and cars seems likely to emerge in many future urban mobility scenarios. Manufacturers like Honda and BMW will parley their competence across these domains in looking at innovations for urban mobility. BMW’s C-Evolution electric scooter builds on their prior experience with the innovative C1 – a scooter designed for cars owners.

But an MV Agusta for urban commuting is akin to using your Ferrari for grocery shopping. Daimler already possess, through their investment in the Smart micro-car, enough technology and assets to address the urban commuter’s needs. More likely, the explanation by Mercedes-AMG CEO, that their MV Agusta acquisition provides his division, the perfect high-performance motorcycle brand partner and through this a link to a larger pool of affluent high-performance enthusiasts, rings truer.

With a 780 million dollar windfall from the profitable sale of their Tesla stake last month, Daimler’s CEO, Dieter Zetsche can allow himself a bit of indulgence. After all, in the high stakes battle between Audi, BMW and Mercedes for premium car leadership and bragging rights, one has to keep up with the Joneses and the Piechs.

The writer is Chairman of Celeris Technologies.

Published on November 06, 2014

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