Lamborghini Chief Looks to Expand - WSJ.com

Lamborghini Chief Looks to Expand - WSJ.com
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Lamborghini Chief Looks to Expand
Italian Sports Car Maker Says Its 'DNA' Will Let It Make More Models
By GILLES CAST ONGUAY
Feb. 17, 2014 11:22 a.m. ET
Automobili Lamborghini Chief Executive Stephan Winkelmann poses for photographers during the inauguration of a dealership in New Delhi in this September file photo. Agence
France-Presse/Getty Images
SANT'AGATA BOLOGNESE, Italy—The head of Volkswagen AG 's Lamborghini brand says he wants to increase production and is looking at
ways to expand the Italian exotic sports car maker's two-model lineup.
"Now that we have established the brand, we want to expand it," Automobili Lamborghini SpA Chief Executive Stephan Winkelmann said in an
interview with The Wall Street Journal ahead of the Geneva Motor Show, which takes place in early March. Lamborghini plans to show its new
Huracan model at the show.
Lamborghini has confirmed plans to come out with a sport-utility vehicle in 2017. Mr. Winkelmann declined to divulge what else was in store. But he
said Lamborghini had more experience than its rivals in making cars of various types, pointing to the Espada, a four-seater built in 1968, and the
GT 350 front-engine model introduced in 1964.
"There is in the DNA of Lamborghini opportunities that go far beyond two models," he said.
Mr. Winkelmann said Lamborghini has received 700 preliminary orders for the Huracan LP 610-4, the successor to the Gallardo. That is
equivalent to a third of Lamborghini sales for all of last year. Like Lamborghini's other current model, the Aventador, the Huracan is a
high-performance two-seat sports car.
The Huracan production line will have the capacity to build 13 cars a day, three more than the production pace for the Gallardo.
Introduced in 2003, the Gallardo, and later the Murcielago, Aventador's predecessor, helped set the tone for Lamborghini's image as the maker of
brash roadsters. Vehicle sales soared in the ensuing years from a couple hundred a year to 2,121 in 2013.
The market for luxury sports cars—Lamborghinis start at €150,000 apiece—hasn't fully recovered from the slump suffered after the 2008 crisis.
Sales in the segment shrank in 2013 to 13,180 vehicles, down 4% from the prior year, mainly because of weaker demand in Europe, according to
IHS Automotive. Those sales are tiny compared with the estimated 71 million in world-wide cars sold last year.
The niche is also becoming more crowded.
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Lamborghini Chief Looks to Expand - WSJ.com
http://online.wsj.com/news/articles/SB100014240527023048997045793...
Brands in the segment include Aston Martin Lagonda Ltd. and Mercedes-Benz of Daimler AG with models that cost more than €100,000
($137,000).
McLaren Automotive of the U.K., known for its Formula One race cars, entered the retail market in 2011 and will be presenting its fourth model at
the Geneva Motor Show.
Tesla Motors Inc. 's successful electric cars have also become an alternative to supercars with noisy, gas-guzzling engines.
Mr. Winkelmann said he is confident Lamborghini will grow thanks to demand from the U.S., Japan and the Middle East.
He didn't disclose any targets.
Rival Ferrari, the leader in the supercar market segment, made a point of selling less than 7,000 cars last year and reported an operating profit of
€364 million on revenue of €2.3 billion. Ferrari is controlled by Italian auto maker Fiat Chrysler Automobiles NV.
Some industry analysts see Lamborghini as a vanity project for its mass-market German parent, Volkswagen, much like sister brand Bugatti
Automobiles SAS, which sells far fewer cars but for much more money—up to €1 million apiece.
Mr. Winkelmann disagreed, saying Lamborghini had to have a business case to support its investment.
Mr. Winkelmann declined to say how much money was spent on the Huracan, but it was "much more" than the €1 billion that car makers usually
spend on models for the mass market.
Belonging to Volkswagen is a big help because Lamborghini can share development costs. Sister brand Audi codesigned Huracan's 5.2-liter V-10
engine and supplied the aluminum part of its body.
In 2012, Lamborghini reported €469 million in revenue, but other numbers are hard to come by. Metzler Equities analyst Jurgen Pieper estimates it
contributes about 1% to Volkswagen's earnings.
In the third quarter, Volkswagen posted a net profit of €1.86 billion on €47 billion of revenue.
Mindful of the regulatory pressure to reduce carbon-dioxide emissions from cars, Mr. Winkelmann said he was prepared to consider other
technologies as long as they didn't diminish Lamborghini's image.
Lamborghini has already incorporated different materials such as carbon fiber and aluminum to reduce body weight.
Mr. Winkelmann played down the impact of Tesla, saying it serves a different clientele: one attracted to the environmental idea behind it.
"It isn't a sports car—it's the opposite," he said.
Write to Gilles Castonguay at [email protected]
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