Incorporated: 1963
NAIC: 336111 Automobile Manufacturing; 333618 Other Engine Equipment Manufacturing; 551112 Offices of Other Holding Companies
SIC: 3711 Motor Vehicles & Car Bodies; 3519 Internal Combustion Engines Nec; 6719 Holding Companies Nec
Automobili Lamborghini Holding S.p.A. is one of the world's most renowned manufacturers of high-performance sports cars. The company sells only a few thousand cars in a given year (more than a third of them in the United States, its largest market), but the hefty price tags, upward of $300,000 for the limited edition Diablo GT, make up for small volume. Despite a troubled history and multiple owners, including the Chrysler Corporation and an Indonesian consortium, Lamborghini was bought by Audi AG in 1998. Audi, itself owned by Volkswagen AG, has allowed the luxury carmaker to enjoy renewed success and worldwide recognition for its latest models, the Murciélago, the Gallardo, and the newest to the bull stable, the Superleggera, a lighter-weight, faster version of the successful Gallardo product line.
The Road to Car Making
Ferruccio Lamborghini was born in 1916 in the village of Renazzo, near Bologna, Italy. As a boy he was fascinated by the mechanics of revolutionary machines including the automobile and airplane. He went to Bologna, where he completed studies in mechanics just before the advent of World War II. During the war, he worked as a supervisor of the Italian army's vehicle maintenance unit in Rodi, Greece.
Lamborghini's experience in the motor pool prepared him to assume the role of entrepreneur when he returned to Italy after the war. He immediately purchased old military vehicles and collected abandoned German tanks in order to reconfigure them and produce tractors, equipment essential for Italy to rebuild itself after the destruction of the war. The young businessman was so successful in this enterprise that he purchased a large factory and workshop in Centro in early 1948.
During the 1950s, Lamborghini focused on his tractor business. Sales expanded rapidly, not only in Italy, but in other war-ravaged European countries. As revenues increased, he traveled to the United States to acquire technology for the manufacture of heating systems, air conditioners, and automobile parts. During the latter part of the decade, the company's most innovative product was an air-cooled automobile engine. The company's financial stability provided Lamborghini with the opportunity to pursue one of his lifelong ambitions: the manufacture of helicopters. Unfortunately, the Italian government refused to grant him a license.
A well-circulated tale (even on the company's web site) describes the genesis of Lamborghini's sports car company during the early 1960s: as he grew more interested in automobiles, Lamborghini purchased a Ferrari, one of the most prestigious, high-performance sports cars in the world. One day, while taking a pleasure drive, he heard a strange noise and discovered a faulty part. He drove the car to Modena, Ferrari's headquarters, and asked them to repair or replace the faulty part. He was kept waiting for so long he finally demanded to see Enzo Ferrari, the company's founder. Ferrari, already a great man in the international race car circuit, also kept Lamborghini waiting. Angry and frustrated with the way he had been treated, Lamborghini decided to establish his own high-performance sports car company.
Successful Early Years, 1963-72
Situated in Sant'Agata, near Bologna, the Automobili Lamborghini S.p.A. car factory began operations in 1963. Lamborghini hired a brilliant automotive engineer by the name of Paolo Stanzani and asked him to establish one of the most technologically advanced car-making facilities in the world. The first Lamborghini sports car was delivered in 1964 and created a sensation in automotive circles. The 350 GT, an aerodynamic sports car with a four-cam V12, five-speed transmission, four-wheel disc brakes, and four-wheel independent suspension, was soon competing for customers who had previously purchased Porsches and Jaguars. Especially gratifying to Lamborghini was that his cars were as well received by automobile critics as those of rival Enzo Ferrari.
In 1966 the company produced the 400 GT, while at the same time building its own transmissions. During the same year, Automobili Lamborghini produced the Miura P400, which created a buzz at the Geneva Motor Show due to its compact 3929 cc transverse V12 powertrain and bare chassis. In 1968 the Islero 400 GT was introduced, featuring a luxury interior, four-wheel independent suspension, disc brakes, and an all-aluminum quad cam V12 engine. Also in 1968, Lamborghini produced the Espada, a four-seater engineered with a one-piece, solid steel body. Within a short time, the Espada became one of the most popular of all the Lamborghini models, and sales remained brisk for years. The company was known worldwide for its sleek, low-slung sports cars, selling models to celebrities including Grace Kelly and Frank Sinatra (who ordered a custom-made Lamborghini and requested the interior include genuine leopard skin).
From 1970 to 1972 the company was at the height of its success. A new version of the Miura, the P400 SV, was introduced in 1971 and featured a completely redesigned suspension system and leather interior. Another new prototype, the Countach LP500, had its debut at that year's Geneva Motor Show. The design included a handmade aluminum body, aerodynamic contours for performance, and a dramatic new "wedge" look. In 1972 the company introduced the Urraco P250 at the Turin Motor Show, and later introduced the Jarama 400 GTS. With a unique hood scoop, five bolt wheels, and significantly increased horsepower, the Jarama was the last Lamborghini sports car to exhibit a front engine. With such new and exciting models, the company seemed destined for even greater financial rewards and international recognition.
The Fall and Recovery, 1973-87
Unfortunately, 1973 was a turning point for the company: Automobili Lamborghini was hit hard by the oil embargo and by the worldwide recession. The market for high-speed, gas-guzzling sports cars suddenly dried up, and the firm was confronted with rapidly decreasing sales. Disappointed, Ferruccio Lamborghini decided to sell his shares of the company and retire to a 740-acre estate on Lake Trasimeno. In 1974 he sold his remaining 49 percent stake to Ren Leimer, friend of Swiss businessman Georges-Henri Rossetti, who had previously purchased a majority stake in Lamborghini. Business continued to decline and Lamborghini Automobili was controlled by the government for a short time, then suffered the indignity of compulsory liquidation.
Yet due to the determination of the carmaker's remaining employees, the company continued to manufacture sport cars. In 1974 the Countach LP400 went into production with a 3.9 liter V12 engine and a tubular chassis. In 1975 the Urraco 300 debuted and a year later, the Silhouette was introduced at the Geneva Motor Show. In 1977, in an attempt to revive the company's profitability, production of offroad vehicles for the military was initiated. The design of the prototype was altered, however, when management discovered the general public was more interested in the vehicle than was the military.
Despite the seemingly fast-paced production schedule, the company's fate remained uncertain. In 1980 the Bologna Court sold the firm to the Mimram brothers, young entrepreneurs in the food industry who had a passion for sleek sports cars. They immediately started a comprehensive restructuring program, including the infusion of large amounts of capital to rehabilitate the dilapidated manufacturing facilities in Sant'Agata, and initiated a worldwide search for highly qualified automotive engineers and designers.
Results from the investment made by the Mimrams began to pay off immediately. In 1982 the Countach LP500S was introduced with a new 5-liter, 375-horsepower engine. A brand new model, the Jalpa, was also introduced the same year. The Jalpa, a two-seater, included a five-speed transmission and a new transverse-mounted V8 engine. In 1985 the Countach underwent its third major redesign and was renamed the LP500S QV. Unfortunately, the rapid production pace did not generate increased income and the Mimram brothers soon realized their capital expenditures were beyond the means of individual investors such as themselves. Looking for an experienced and financially stable partner, they met with representatives of the Chrysler Corporation.
The Chrysler Era, 1987-93
The Chrysler Corporation was attracted to Lamborghini's committed management, its ability to introduce new models in a relatively short time, and the mystique of its sports car. Chrysler paid approximately $25 million for Automobili Lamborghini and took control in April 1987. Chrysler management immediately poured $50 million into the Italian automaker, to increase production and expand into the United States.
Under Chrysler management, the most popular and successful of all Lamborghini models, the Countach, went out of production in 1988 after 25 years and a total output of 1,997. The Countach was replaced by the Diablo, the fastest car in the world made on a production line (202 mph) at a base price of $239,000. In 1990 sales of the car were so brisk Lamborghini showed a profit. At the same time, Chrysler established a U.S. branch to sell the new models. Chrysler developed Lamborghini's U.S. network from a disorganized and loosely connected jumble of private distributors into a highly efficient franchise with support services such as maintenance and service agreements and spare parts distribution. Under Chrysler's direction, Lamborghini also began to manufacture marine engines for the offshore racing circuit. In addition, a new factory opened in Modena, Italy, called Lamborghini Engineering to design and produce Formula One race cars. For its diligence, Chrysler saw Lamborghini production rise to 673 cars in 1991 and profits increase to $1.32 million.
For all Chrysler's efforts, however, its success with Lamborghini was brief. By 1992 production had dropped to 166 cars and the company lost nearly $19.3 million. Sales had dropped precipitously, in spite of an expanding franchise network in the United States. Americans just were not buying the $239,000 Diablo, so plans were initiated to develop an exotic car with a price of $100,000, a range more accessible to American sports car enthusiasts. However, development of the car lagged and Chrysler became more and more frustrated with Lamborghini production methods. Total production for the company amounted to just 215 cars in 1993, a figure that did not satisfy Chrysler executives; as a result, Chrysler began to look for an investor to take Automobili Lamborghini off its hands.
Asian Intervention, 1994-98
In late 1993 Chrysler reached an agreement with MegaTech, Ltd., to sell Lamborghini for approximately $40 million. MegaTech was a holding company registered in Bermuda and owned by SEDTCO Pty., a large Indonesian conglomerate. SEDTCO, headed by Setiawan Djody and Tommy Suharto, the son of the premier of Indonesia, had extensive worldwide holdings in mining, manufacturing, and shipping. The agreement, which was consummated in February 1994, included the sale of Automobili Lamborghini in Sant'Agata, Lamborghini Engineering (the Formula One manufacturer), and Lamborghini USA. Djody owned a 35 percent stake in Vector Automotive Corporation, a manufacturer of sports cars with an average sticker price of $450,000, and he thought Vector and Lamborghini might collaborate on the design and marketing of new models for the high-performance sports car market.
With Djody acting as chairman, the new owners hired Michael J. Kimberly as president and managing director of the company. Kimberly had worked with Jaguar, Lotus, and General Motors in Malaysia before being hired at Lamborghini. Kimberly began a comprehensive analysis of the entire Lamborghini operation. He concluded the company needed more than just one or two models to sell, and began to make plans for the development of Lamborghini cars at a price accessible to the American car enthusiast. At the same time, he implemented a marketing strategy to raise awareness of the attractiveness and mystique of Lamborghini sports cars.
By the beginning of 1995 sales of Lamborghini models had jumped 14 percent in the United States and 34 percent worldwide. During 1995 the ownership of Lamborghini was restructured. Suharto, through his company V'Power Corporation, held a 60 percent interest, with the remaining 40 percent owned by MyCom Bhd., a Malaysian company controlled by Jeff Yap.
Despite the improved sales, the company continued to operate deeply in the red. Vittorio Di Capua was hired in November 1996 as president and CEO to turn Lamborghini around. Di Capua was a veteran of the car industry, having spent more than 40 years at Fiat S.p.A. The new CEO immediately launched a major cost-cutting and restructuring program. A number of executives and consultants were let go, and the production process was overhauled to achieve a 50 percent productivity gain. In 1996 Lamborghini would have had to sell 450 Diablos just to break even (it sold only 211); the following year the break-even point had been cut to 196 units. Fortunately, 209 Diablos were actually sold, resulting in a net $120,000 profit, the first in years.
Di Capua also worked to leverage the well-known Lamborghini brand and image by taking a more aggressive approach to merchandising and licensing deals. Additionally, he moved forward with a $100 million development budget for both a high-performance version of the Diablo, nicknamed the Super Diablo, and a smaller version dubbed the Baby Diablo.
The Germans in Charge, 1998-2000
Di Capua's turnaround program set the stage, along with the Asian economic crisis that erupted in 1997, for another ownership change. The chairman of Volkswagen AG, Ferdinand Piëch, grandson of Volkswagen's founder, Ferdinand Porsche, decided to take his company upmarket through acquisitions. During a 1998 buying spree, Volkswagen (VW) acquired Lamborghini for about $110 million, which became a subsidiary of VW's luxury car subsidiary, Audi AG. Audi spokesman Juergen de Graeve told the Wall Street Journal that Lamborghini "could strengthen Audi's sporty profile, and on the other hand Lamborghini could benefit from our technical expertise." Lamborghini certainly needed a deep-pocketed owner if it was to successfully expand its line of products.
In the immediate aftermath of the acquisition, management changes and an organizational reorganization were the first orders of business. By early 1999 Lamborghini had been restructured into a holding company called Automobili Lamborghini Holding S.p.A., with Franz-Josef Paefgen, president of Audi, as chairman. The holding company controlled three subsidiaries: Automobili Lamborghini S.p.A., handling the manufacture of cars; Motori Marini Lamborghini S.p.A., taking over marine engine production; and Automobili Lamborghini Artimarca S.p.A., responsible for licensing and merchandising. These separately run companies were able to focus more completely on their specific duties.
Di Capua initially headed Automobili Lamborghini S.p.A. but resigned in June 1999. Giuseppe Greco was hired to take over, another automotive veteran with previous experience at Fiat, Alfa Romeo, and Ferrari. During 1999 Lamborghini increased its sales to 265 units, a 24 percent jump from the previous year. Helping boost sales was the introduction of the $308,000 Diablo GT, a high-performance version of the Diablo featuring a six-liter, 575-horsepower engine with a top speed of 210 mph, said to be the fastest production model on the market. The GT was limited to a production of 80; as a limited edition it was not exported to the United States because the low volume made it uneconomical to go through the process of gaining official emissions and crashworthiness approval. Nonetheless, the United States remained Lamborghini's top consumer market.
With the beginning of the new century came a five-year plan to retool and relaunch Lamborghini. The company planned to spend $161 million to overhaul its engineering and production facilities at Sant'Agata Bolognese over the next three or so years and to develop two new models: the Diablo's successor, and the former "Baby Diablo," code-named L140. The latter was considered a "more affordable" Lamborghini.
A Millennium Renaissance, 2001 and Beyond
For Lamborghini, 2001 marked its rebirth as a modern high-performance luxury carmaker. Not only did the company sever ties with its U.S. distributor in favor of an Internet-based sales and distribution system, but it opened a new subsidiary, Lamborghini Japan, and debuted its long-awaited heir-apparent, the remarkable Murciélago. Launched first in Europe then in the United States in October (shortly after the terrorist attacks of September 11), the new sports car provided a welcome diversion with a tubular steel alloy and carbon fiber frame and 575-horsepower V12 engine. The Murciélago was capable of a top speed of 202 mph and had a sticker price of about $275,000. The new speedster was a sensation, propelling sales of 424 units for 2002.
The next year, 2003, ushered in the Gallardo (named for a fighting bull), introduced at the Geneva Motor Show. With a lightweight aluminum body, 520-horsepower V10 engine, and top speed of 196 mph, it was the highly touted "Baby" Lambo designed to compete with rival Ferrari's F360 and Porsche's GT2. Sleek, fast, and affordable (under $200,000), the Gallardo and its sibling brought Lamborghini back to the forefront of high-performance luxury cars and profitability.
In 2004 came the introduction of the Murciélago Roadster followed by the Murciélago SE (Special Edition) and Gallardo Spyder in 2005. The new vehicles were particularly popular in the U.S. marketplace, representing more than a third of worldwide sales (over 1,400 units for 2004 and 1,600 for 2005), with Lamborghini dealerships opening across the nation. Demand mushroomed, outpacing supply, with prospective owners having to preorder models months in advance. While Lamborghini upped production, the company looked for ways to expand, including additional dealers in the United States (notably the sunshine states where owners could drive year-round) and new dealers in the untapped markets of Africa, China, India, Russia, and the Middle East.
In 2006 Lamborghini celebrated the 40th anniversary of its Miura model with a snazzy, updated concept car, but there was far more buzz about its Murciélago LP640, the LP640R, and its newest model, the Gallardo Superleggera, set to debut in 2007. Sales for 2006 climbed to a stunning 2,087 units and Lamborghini once again carried the cachet and mystique of its glory days. While Lamborghini remained third in the high-performance luxury car segment, behind leader Ferrari and second place Maserati (and their impressive F430 and GranTurismo models, respectively), the House of the Raging Bull continued to make its mark.
With the U.S. West Coast its strongest area of sales, Lamborghini prepared to segue onto the silver screen. The Murciélago LP640, with a $350,000 price tag, was set to star alongside Batman in the caped crusader's newest movie (tentatively titled The Dark Knight) due out in 2008. Other marketing gambits included a deal with Nokia for a Lamborghini-branded cell phone and branded apparel, though the company still refrained from traditional advertising venues. Automobili Lamborghini CEO Stephan Winkelmann, who joined the company in early 2005, told Brandweek's Steve Miller (February 26, 2007), the salespeople needed only to "get interested people into the car--then it sells itself."
The much heralded Gallardo Superleggera, Lamborghini's 54th sports car, debuted in 2007 and did not disappoint: it had an aluminum body, carbon fiber bonnet, fixed-wing rear spoiler, weighed considerably less than the Spyder, and came equipped with a 520-horsepower engine for a top speed of 196 mph. Sales for 2007 were expected to top $400 million, with profits doubling over the previous year. While Ferrari sales were closer to $2 billion, Lamborghini's explosive growth was expected to continue into the next decade. With price tags ranging from $165,000 to $500,000 (for custom editions) and a substantial waiting list for its Murciélago and Gallardo supercars, Lamborghini remained among the world's finest purveyors of automotive excellence.
Principal Subsidiaries
Automobili Lamborghini S.p.A.; Motori Marini Lamborghini S.p.A.; Automobili Lamborghini Artimarca S.p.A., Lamborghini Japan.
Principal Competitors
Bayerische Motoren Werke (BMW) AG; Daimler AG; Ferrari S.p.A.; Fiat S.p.A.; Ford Motor Company; General Motors Corporation; Porsche AG.
Further Reading
Automobili Lamborghini News, Number 17, 1994.
Box, Terry, "Lamborghini Readies for Growth," Dallas Morning News, November 12, 2003.
Ciferra, Luca, "Lamborghini Nearing Decision on Third Model," Automotive News Europe, May 19, 2003, p. 6.
------, "Lamborghini to Handle Its Own U.S. Distribution," Automotive News, January 8, 2001, p. 6.
------, "Lamborghini to Revisit Diablo Successor's Styling," Automotive News, October 11, 1999, p. 32+.
------, "VW Group Combines Its Activities in Italy," Automotive News, October 9, 2000, p. 24H.
Cowell, Alan, "Ferruccio Lamborghini," New York Times, February 22, 1993.
Edmondson, Gail, "A Burst of Speed at Lamborghini," Business Week Online, January 5, 2007.
Hamprecht, Harald, "Lamborghini Continues Growth Curve," Automotive News Europe, February 5, 2007, p. 22.
Kurylko, Diana T., "Chrysler Sells Lamborghini to Indonesian Group," Automotive News, November 22, 1993, p. 18.
------, "Lamborghini Slows Its Sale Pace," Automotive News Europe, October 31, 2005, p. 20.
Lamborghini, Tonino, Onora il padre e la madre: storia di Ferruccio Lamborghini, Venice: Editoria Universitaria, 1997, 140 p.
Lapham, Edward, "The Lamborghini Miracle," Automotive News, August 28, 2006, p. 46.
Massaro, Sergio, Lamborghini: le granturismo, [Milan]: Ediauto, [1991], 126 p.
Miller, Steve, "Lamborghini Signals Batman to Sell $350k Cars," Brandweek, February 26, 2007, p. 16.
Pasini, Stefano, Automobili Lamborghini: catalogue raisonn, 1963-1998, Milan: Automobilia, 1998, 271 p.
Rechtin, Mark, "Lamborghini Seeks Growth in Emerging Markets," Automotive News, August 21, 2006, p. 18.
------, "$100,000 Lamborghini Due in '96," Automotive News, June 20, 1994, p. 36.
Rive Box, Rob de la, and Richard Crump, History of Lamborghini, Isleworth, England: Transport Bookman Publications, 1980, 173 p.
Shari, Michael, "Has Lamborghini Landed on Its Wheels?" Business Week, October 24, 1994, pp. 92D+.
"The World's Fastest Car Is Now--A Chrysler?" Business Week, February 12, 1990, p. 44.
— Thomas Derdak; Updated by David E. Salamie, Nelson Rhodes
