So how has Bugatti evolved in the last 20 years after VW’s acquisition, and what role did Stephan Winkelmann take in this development despite his relatively short time in the company?

23 YEARS OF BUGATTI

It was in 1998 that the VW Group acquired Bugatti along with other luxury brands, after its ‘Italian period’ under the management of Romano Artioli.

The modern company as we know it today was born with the reveal of its first modern hypercar after the Italian EB110 almost ten years earlier, the Veyron EV 16.4.

The car entered production a few years later, in 2005, and in around 10 years of production 450 Veyrons were made. Despite the company making substantial losses, at the time it was claimed that the car was more of a testing vehicle to push the boundaries of what they could achieve. Regardless of the actual losses (different outlets claimed numbers varying from €2 to 6 million at the time), the car almost instantly became the quintessential symbol of extreme performance in automotive. Much like the McLaren F1 had done in the 90s.

The Veyron, taking from Italdesign's late 90s concepts, defined Bugatti’s modern design language as well as its brand image.

Fast forward to 2016, and after three iterations of the Veyron, the successor and new flagship Chiron that is now nearing the end of production was unveiled. Since then, for a total of 500 units, the model has seen seven special limited editions, Sport, Sport 110 Ans, Sport Les Légendes du Ciel, Super Sport 300+, Super Sport, Pur Sport, and Noire.

There is not much financial information available about Bugatti, but now former CEO Winkelmann claimed that 2019 was a record year in terms of production, turnover, deliveries, and financials results overall. 2020 too was the third record-breaking year in a row for the brand in terms of operating results, and 2021 after a record Q1 seem on track for a similar result. Looking at its sales it seems evident how its model has got more consistent. The first phase, clearly identifiable as the Veyron lifecycle, was likely affected by the 2008 financial crises, imbalance in regional markets, and possibly production efficiency.

BUGATTI CAR DELIVERIES BY YEAR (2005-2021)

*2021 deliveries are up to Q3

From the top line, we can observe all of Rimac’s major shareholders, and there is no real surprise there. Mate maintains a 35% stake in his company, so does Porsche at 22% and Hyundai at 11%. The remaining 32% sees other automakers such as Kia, Chinese battery manufacturer Camel Group and more.

In the next row of the chart, things start to get more interesting. We see, in fact, the entity called Rimac Group now, where Rimac Automobili stood. The group then splits into two separate units that despite remaining distinct from one another, will maintain their synergies where necessary.

The first one is Rimac Technology. This division will remain completely under the Rimac Group, and independent. This is, in the words of its founder, the initial and biggest competitive advantage the company had and perfectly complementary to the automotive business.

He spoke frequently about how the technological know-how has been the real game-changer that allowed the company to flourish and establish itself as a major player in this market, before the car itself. Rimac’s current model Nevera, whose production is set to start in the coming weeks, is in fact, entirely produced in-house. This expertise in EV battery and drivetrain manufacturing, as well as software development its components’ management is what brought in the partnerships with Pininfarina, Aston Martin, Koenigsegg, and many more. Expertise that without the opportunity for economies of scale with these deals, would be extremely difficult to maintain with Rimac’s low production number.

Most importantly in this case though, this is also what initially captured the interest of Porsche and ultimately led to the present partnership.

On the other side of the graph appears the real news. Bugatti-Rimac. The Joint Venture between the two automakers should bring together the best of Bugatti’s century-old history and automotive heritage with Rimac’s unprecedented boost of innovation.

The majority stake in Bugatti-Rimac will also stay under Rimac Group with 55%, the remaining 45% will be held by Porsche. Both the divisions then will be run by Mate Rimac himself, who stays as the CEO of Rimac Group. Porsche will have a role in the company support as an advisor.

The mission is clear. To bring Bugatti into its new century and secure its future, but it doesn’t end there. While both Rimac and Bugatti will keep producing their own hypercars, at their own headquarters near Zagreb, Croatia and Molsheim, France respectively (except for EV-related components for both brands that will be entirely developed and produced in Croatia), the strategic JV will combine the companies’ R&D efforts and other areas of development.

Being under Porsche, naturally, the German automaker will benefit as well from a consistent know-how and technology transfer that will help the development of future high-performance electric models.

WHY THIS JOINT VENTURE IS IMPORTANT

The shift toward electric mobility is happening faster than many predicted. The reasons are many, not just restrictive Governments’ environmental regulations. On the customers’ side, the novelty, performance, and features enabled by digitalisation, connectivity, and OTA updates have created a stronger appetite for electric vehicles and they are changing the customers’ preferences. According to a survey by McKinsey 45% of current car owners will consider buying an EV as their next vehicle.

*Monday’s presentation participants. In order from the left, Oliver Blume, CEO of Porsche AG, Mate Rimac, Founder and CEO of Rimac, Lutz Meschke, Deputy Chairman and Member of the Executive Board Finance and IT at Porsche AG

So, is VW just getting rid of the automaker or accelerating its transition into electrification, or they have other reasons (financial difficulties after the crisis)? Is the same going to happen to Lamborghini and Bentley, the other luxury manufacturers under the VW umbrella?  

SOME BACKGROUND ON BUGATTI

With regard to Volkswagen Group’s expansion in the luxury segment, its most important year is 1998. It is in 98 in fact, that with Ferdinand Piëch and his aggressive expansion strategy VW completed the acquisition of Bugatti, Rolls-Royce Bentley, and Lamborghini. You can check the article How VW turned Lamborghini into the success it is today? to know more about the latter.

Later, after a few concepts commissioned to Giugiaro at Italdesign, in 2005 the company finally began the delivery of its first production model, the Veyron 16.4. After that, the Chiron followed in 2016, and various limited editions, such as Grand Sport, Super Sport, and Pur Sport.