Searching for new supercar, Bugatti shielded from VW cost curbs

Fri Oct 3, 2014 7:52am EDT
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By Andreas Cremer

PARIS (Reuters) - Volkswagen (VOWG_p.DE: Quote) keeps lavishing money on supercar maker Bugatti, its most exclusive brand, even as the German group plans painful cuts in its core auto business.

Bugatti is working "very intensively" on a successor to the Veyron, a limited production line of 450 models that start at 1.46 million euros ($1.8 million), Chief Executive Wolfgang Duerheimer said in an interview at the Paris auto show.

"In terms of soundly developed vehicles that are also pieces of art, you won't find anyone else who can compete with us," said Duerheimer, who also heads VW's ultra-luxury Bentley brand.

The opulence at Bugatti, whose 1,200-horsepower models seek to appeal to the world's richest buyers, contrasts with a growing push for austerity at VW's passenger-car brand where management is seeking 5 billion euros of cost cuts by 2017.

"Of course, this can be painful," VW Chief Executive Martin Winterkorn said at the show when asked about the firm's efficiency drive. "At such a large company, there are always things to be found" where costs can be lowered, he said.

Bugatti doesn't seem to be on Winterkorn's agenda even as the Veyron, which previously claimed an industry record for speed, loses millions of euros per vehicle, Singapore-based Bernstein analyst Max Warburton said.

The Molsheim, France-based manufacturer enhances parent VW's technology skills and pushes engineering boundaries although many people don't associate the marque with the German group.

Earnings at VW and its flagship luxury divisions Audi and Porsche help to subsidize Bugatti. Neither VW nor Bugatti comment on development costs.   Continued...

A Bugatti hood ornament logo is pictured at the Jacob Javits Convention Center during the New York International Auto Show in New York April 17, 2014.  REUTERS/Carlo Allegri