Business Times - 23 May 2009
Bad boys having it good
CEO Stephan Winkelmann explains why Lamborghini is a serious business and not a Mickey Mouse factory. By SAMUEL EE
STEPHAN Winkelmann looks a little tired after having arrived on the red eye flight from the Shanghai Auto Show. But the president and CEO of Automobili Lamborghini SpA is still sharp, both sartorially and mentally, and apparently, good humoured enough to rib his local dealer.
'We always tell him he is the best Lamborghini dealer in Singapore,' he relates with a smile. 'And he will say, 'But I am the only dealer in Singapore!' Then we all laugh at him.'
It is a bit more than a running joke though - the republic is the only market where Lamborghini has managed to outsell Ferrari, its traditional Italian super sports car rival. In 2006, the charging bull delivered 29 cars to the prancing horse's 26, and in 2007, 49 to 45. Ferrari regained the lead in 2008.
Nevertheless, it was an achievement considering that Lamborghini's volume is only about a third of Ferrari's - Lamborghini sold 2,430 cars worldwide last year against Ferrari's 6,587.
Still, Singapore can't come close to China, which is the fastest growing market for the Italian car maker. At No 9, Mr Winkelmann says China is now in its Top 10.
'Soon it will be in the Top 5. We had the biggest growth in China compared with the other markets - we rose from 28 cars in 2007 to 72 in 2008,' he explains in his lyrical Italian accent.
So it is no surprise to learn that Lamborghini is opening up new dealerships on the mainland faster than it can zip from zero to 100 kmh. The four new showrooms opening up this year will take the total to seven - all in the eastern part of China.
With the infrastructure slowly being set up, Mr Winkelmann says 'below-the-line' activities like driving events have to follow.
'We have to improve the driving skills of our customers. The car is seen as something which is beautiful to look at but they don't have, in my opinion, the driving skill or the attitude. It is a very different approach from a limousine. They are still more into the chauffeur-driven cars.'
Another feature of the Chinese customer is that he is younger than those in the US and Europe - '30-plus and business people . . .from the new money'.
'And they want the car immediately. They are not willing to wait.'
He says the situation is similar in Europe, although over there, buyers want to see that there is a waiting list but that they are at the top of it.
'But in China, there is not even the mentality to wait - I give you the money and I need the car tomorrow.'
Overall though, Lamborghini's buyer profile is 'pretty much the same around the world'. On average, the Asian customer is a bit younger but all of them are usually men and entrepreneurs, as well as 'lovers of Italian luxury or luxury in general'.
'The analysis seems to be a bit superficial but it is exactly like it is. They are people who want to reward themselves and they are not shy.' They cannot be because a Lamborghini, with its conspicuous styling, is an attention-grabbing car.
'The Lamborghini product is perfectly matching with the image and core values of the brand, which is uncompromising, extreme and Italian. Our cars are larger and lower, and stronger, in terms of the engine, and the design is very distinctive, something which no other manufacturer in this environment is showing.'
So is it all right if someone buys one of his cars precisely because it is ostentatious? 'Yes,' he replies emphatically, 'because we are the bad boys and we want to keep this image in a world that is very socially responsible.' This is also something which makes a Lamborghini 'sexy'.
'If you buy something like a Lamborghini, you want to fulfil a dream, a dream which is always coming from childhood. This is a car which you are not using to drive from A to B. It is not the first car in your garage. Whoever owns a Lamborghini is never using the Lamborghini as the only car.'
But the strength of the Lamborghini brand also means there are those who would buy it even if it was more sedate-looking. As far as Mr Winkelmann is concerned, though, that is unlikely to happen. 'We never have to get tired about showing new ideas and being always a step ahead of the others. Yes, they would buy less extreme cars because now they buy the brand, they are not buying the product anymore. This is a good point for any manufacturer.'
There is a flip side, however. 'If you succeed, your customers are going to buy the brand and not the product anymore. But if you rely on this, and you get lazy, you risk destroying the brand.'
He says there are some manufacturers who are diluting the value of their brands because they are selling the myth of the brand.
'This is selling out the brand. You can do this for a certain time but sooner or later it has a boomerang effect and you will not be happy about what you did maybe 10 years earlier because you started to make the cars differently from what they should have been to match the DNA of the brand. It's all about keeping the brand promise.'
For him, Lamborghini has to be the trendsetter although it's not only about reinventing. 'It's about reinventing but by sticking to the basics of what you are communicating.'
Another fact that he is proud of is that Lamborghini cars are in normal production despite being 'a niche in a niche'.
'We are not an exotic manufacturer producing 10 to 20 cars a year. We are a real manufacturer and at the same time we are very, very exclusive and this is what we want to continue to have in the future.'
Profitability is high on the list of priorities of the marque, which since 1998 has been part of Audi AG which, in turn, is owned by the Volkswagen Group.
Last year, Lamborghini reported a pre-tax profit of 60 million euros (S$120.5 million) from a turnover of 479 million euros, or a return on sales of 12.5 per cent.
'For car manufacturers, the return is rarely in the double-digit region. It is a good achievement. So we do not see it as just a hobby. We are building dream cars. We are not a Mickey Mouse factory. It is a serious business.'
President and CEO, Automobili
Born in Berlin in 1964 and grew up in Rome.
Education: Studied political science in Rome.
Career: Started at a German finance company in Munich, then moved to Mercedes-Benz.
In 1994, became area sales manager for the Alfa Romeo brand within Fiat Automobil AG in Germany. Later became Fiat's head of marketing, Southern Region.
In 1996, handled marketing and sales management for Alfa Romeo in Turin, where he was responsible for the launch of the Alfa 156. Became area manager for European markets.
Became board member for sales at Fiat Auto Austria, then appointed chairman of the board at Fiat Auto Austria and later, Fiat Auto Switzerland.
In 2004, named chairman of the board of Fiat Automobil AG in Germany.
In 2005, appointed president and CEO of Automobili Lamborghini SpA in Sant'Agata Bolognese, Italy
Whither the luxury market?
ONE does not need the Lamborghini boss to tell you that the state of the high-end luxury market is currently bad.
"In the car business, it is down 40 per cent, globally, for the luxury auto segment," says Stephan Winkelmann. "I know from watches, jewellery and even fashion that it is more or less on this level. There may be some exceptions but it is a tough time. We are a bit better than others but this is not changing the fact that it is much worse than last year." So how long is it going to last? "I would be happy to tell you, then I will know exactly what to do. But at least this year, I'm sure about that, and we have to face another year in 2010."
And it is daunting. "It is the first time after many years that we don't have a certainty about the size of the market, so we are working on different scenarios," he says. "What you read in the newspaper is not enough to understand what is going on in the high-end luxury automotive market, which is very distinct from the rest of the automotive industry and different from the global economy. But we are affected - we are not immune to the economic crisis."
Yet he believes Lamborghini is "less affected because we are a niche in a niche".
"We have a very distinctive market, so this is helping us even in tough times," he explains, adding that this is thanks to big investments both in the image and product.
"We have to have very flexible production. On the dealer side, we have to constantly talk to them and not over-stock. It's a constant dialogue." In 2011, he is hoping for a rebound, which he expects will be stronger for Lamborghini than for others.
"People want to reward themselves. Once you have bad times, then you want to have good times again and you want to give gifts or reward yourself and this is going to affect us positively in years to come.
"It is very important, therefore, to keep the brand very pure. Do not discount the investments for future products because it is all about fulfilling dreams."