The top honcho of Mercedes-Benz, Dieter Zetsche has announced that the company won’t be increasing its stake in MV Agusta. The German manufacturer had acquired 25 per cent of the Italian manufacturer last year.
This announcement was made at the ongoing North American International Auto Show in Detroit. He said that Mercedes has always been in favour of using the cross-branding strategy with a motorcycle manufacturer. It used the same strategy with the Ducati few years ago, however, the experiment was discontinued as its biggest rival, Audi acquired the Italian manufacturer.
We can expect both the brands to cross-market each other’s products, in order to offer a great deal to the motorcycle and car enthusiast. This development is good deal for MV Agusta, who will get to keep the majority stake and the risk of brand dilution will be eliminated.This reminds us of the famous Bajaj-KTM alliance, with the former one not wanting to increase its stake from 49.2 per cent to more than 50 per cent as it wanted to keep the KTM as a premium motorcycle brand. Going for the majority stake by Bajaj could have hurt KTMs brand equity.
Few days ago, we reported about MV Agusta had secured €15 million (Rs 110 crore) loan to pursue international development. This is sure to provide a major breakthrough for the Italian manufacturer as now they have enough cash flow to develop new products and expand to international markets.
“Again, we have established a cross-branding strategy between AMG and MV Agusta and we believe that the two brands are complementary. However, to avoid what happened with Ducati we point out that we have no intention to take over the business or produce motorcycles. MV Agusta can do it better than us," said Zetsche.
