Lamborghini faces uphill battle as big wallets slam shut

Lamborghini released a new Murcielago variant at Geneva - now it just needs to sell some. Photo / AP

GENEVA - As stock markets started to crash in October, some worried financiers and entrepreneurs thought it prudent to cut back on excesses - starting with their orders for Lamborghini luxury super sportscars.

Suddenly, the Italian automaker's key clients either didn't have the cash to spend on the speedster or thought better of such conspicuous consumption amid news of bank failures, mortgage foreclosures and job losses.

CEO Stephan Winkelmann confirmed that the company has started to receive order cancellations. He declined to say how many, suggesting that in some cases dealers were able to find other buyers, but it was a sharp shift. Even during the softening of the US market in early in 2008, Lamborghini customers were proving durable.

Still, the car company based in Sant'Agata Bolognese, Italy, ended 2008 with a small rise in sales - 2,430 cars compared to 2,406 in 2007. Winkelmann said it was still a record year for Lamborghini, which broke the 1,000-car barrier in 2003, but nothing like the 15 per cent annual increase in sales in 2007.

The United States - which includes Lamborghini's single biggest market, California - took the biggest hit, dropping from 40 per cent of Lamborghini sales to about 30 per cent.

"I always said there is no immunity for luxury brands. It was only a matter of time," Winkelmann said in an interview on the sidelines of the autoshow. And projecting where the market will go is extremely difficult, he said.

Lamborghini forecasts that the luxury market was off by 40 per cent in the first two months of the year. "We're not there, but close," he said.

Lamborghini introduced the Murcielago LP 670-4 SuperVeloce at the Geneva Auto Show this week, which along with the Gallardo Spider launched earlier at the Los Angeles Auto Show, fulfills the company's strategy of offering new products every year.

But this year the focus is less on increasing sales than on maintaining the brand and remaining profitable, Winkelmann said. The company, which is part of the Volkswagen group, will report its 2008 earnings in mid-April.

"It's about keeping the brand pure, not having it diluted," Winkelmann said.

Winkelmann said he is keeping a tight eye on costs and production, noting "we need to cut spending without affecting investments. ... We will keep investing in products."

While most Lamborghinis are made to order, there is still some production to maintain stock in dealerships.

Lamborghini put 200 of its 1,000 workers on temporary layoffs for two weeks in February. Under the Italian scheme, workers are paid part of their salary from a joint industry-government fund.

The sexy SuperVeloce introduced in Geneva is 100 kilograms lighter than the standard Murcielago, the higher-end of Lamborghini's there-car portfolio. And it is faster - Superveloce means super fast in Italian - accelerating from 0 to 100 km/h in 3.2 seconds.

The car will sell for US$455,000 and be limited to no more than 350 vehicles. Winkelmann said they have orders for 100.

Such innovations are key for the brand because Lamborghini customers expect both inventiveness and exclusivity, he said.

"Even as things go down, down, down, you have to show you are there and strong and keep momentum," Winkelmann said.

-AP