Lamborghini bracing for a tough 2010; China revs up

Next year will remain challenging for the maker of supercars graced by a charging bull logo, a unit of top European car-maker Volkswagen, though bright spots such as China may help salve the pain.

Chief Executive Stephan Winkelmann said on Wednesday Lamborghini was on track to end 2009 with about 80 cars sold in China — a sliver of the company's annual 2,000-odd production but a market that should rank among its biggest in coming years.

Lamborghini sold 70 cars in China in 2008.

“It was tough, it's still tough,” Winkelmann told Reuters in an interview in Los Angeles before opening the company's first fashion and accessories boutique outside China.

“2011 will be a recovery, but we first have to see, if the year 2010 will be another very tough year for the industry.”

Known for low, sleek designs and eye-watering top speeds, Lamborghini and rival Ferrari, owned by Italy's Fiat, have remained resilient through past downturns. But the severity of the current recession has walloped their business.

Lamborghini posted a 37 percent drop in sales in 2009's first 10 months, Winkelmann told Reuters. Executives nonetheless expect to achieve a full-year pre-tax profit. It sold 2,430 cars in 2008 with prices ranging from 170,000 euros to 360,000 euros (US$256,000-US$542,200). In the first half, it managed a 5.4 million euro profit on revenue of 223.7 million euros — a drop of more than 43 percent.

Winkelmann would not forecast 2010 sales.

But “everything you see has been much worse than forecast,” he warned, referring to the industry and economic data.

All that gloom was set aside briefly on Wednesday. In a nod to the city's reputation as a luxury motorists' haven, about a score of brightly hued Lamborghinis powered their raucous way from Santa Monica through winding canyon roads to the suburb of Topanga, drawing envious stares.

Winkelmann and a number of executives from Lamborghini's Sant'Agata Bolognese headquarters then presided over the low-key launch of a fashion boutique outside of Los Angeles, near the upscale beachfront community of Malibu, selling branded products from jackets and trousers to bags.

The boutique bore more than a passing resemblance to outlets bearing Ferrari's prancing stallion logo, but executives downplayed comparisons.

Founded in 1963 by Ferruccio Lamborghini and now a unit of Volkswagen's luxury Audi brand, Lamborghini will remain focused on investing in technology and matching production with waning demand, Winkelmann stressed.

It has hemorrhaged customers in real estate and investment banking industries pummeled by financial market turmoil and the credit crunch. But many are simply postponing purchases as the decision to buy a Lamborghini was both emotional and financial, executives argued.

In response, the company has scaled back production, sent workers home temporarily and negotiated deals with suppliers to tide it through the difficult environment.

Lamborghini boosted pre-tax profit by 27 percent in 2008 to 60 million euros (US$84.66 million) on revenue growth of 2.5 percent to 479 million euros.

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