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Good reading on Lambo!!

Discussion in 'Lamborghini Discussion (not model specific)' started by 6.0 se, Jul 19, 2004.

  1. 6.0 se

    6.0 se Formula 3
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    Mar 26, 2004
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    A.J.
    In Forbes.

    Vehicles Feature
    Forty Years Of Lamborghini
    Dan Lienert

    As Lamborghini's head test driver and a 37-year veteran of the company, Valentino Balboni is quite a character, as you would imagine.

    Between laps at Le Belle Macchine d'Italia, an exotic car show in late June at Pocono International Raceway in Pennsylvania, Balboni is polite and obliging to the autograph- and photo-seekers who treat him as a celebrity.



    But when he gets behind the wheel of the 571-hp Lamborghini Murciélago coupe, he adopts a cavalier, devil-may-care charm. He makes me wear a helmet but doesn't use one himself. He takes laps at terrifying speeds with his cell phone between his thighs--and checks it for messages from time to time. As he drives out of the pit lane, he leaves his seat belt off and the famous vertical "Lamborghini door"--as in you pull the handle and the door rotates 90 degrees toward the hood--open and pointing toward the sky. Only at the last second before entering the track does he close the door and buckle up.

    Suddenly, we're going 160 mph. "I would go faster but we're not allowed to pass here," he says. The course starts with long straightaways on the NASCAR track, then diverts into a smaller street course with tight turns. At each corner I think, "There's no way we're going to make it," especially in the narrow corners of the smaller course, where the tires squeal during every second of a turn.

    At the end of the run I ask, "Would you have been able to take those corners that fast without four-wheel drive?"

    "No no no," he laughs. "No no no no no."

    Balboni, who wears his racing suit half-unzipped down his chest, exposing chest hair and a gold chain, says that, in fact, four-wheel drive and "more modern technology" now make his company's cars easier to drive than Fiat's (nyse: FIA - news - people ) Ferraris. Like Lamborghini, which put its first car into production 40 years ago, Ferrari until recent years had a history of struggling to make money and of having bouts with quality problems. But Lamborghini's problems were much worse.

    Over lunch at Pocono, Onofrio Triarsi, president of Lamborghini Bergen County, the newest Lamborghini dealership in the United States, pays the company's past a backhanded compliment: "Lamborghini in the old days used to be a sculpture."

    "Yes," agrees Ehren Bragg, Lambo's area manager for North America. "All show, no go."

    All the more surprising, then, is Lamborghini's turnaround under Volkswagen, which bought the company in 1998 and handed over ownership and management to its upscale Audi subsidiary. Since then, Lamborghini's young designer, Luc Donckerwolke, has used the company's two current models, the Gallardo and Murciélago coupes, to usher in an era of controversial, space-age looks for Lambo. The public has responded by buying more and more Lamborghinis, and the company is now turning a tiny profit.

    Let's be clear about this, however. Since the two cars are fairly new--the Murciélago arrived in 2001 and the Gallardo late last year--they are not yet profitable in and of themselves due to the high cost of bringing new supercars to market. According to Bragg, the Gallardo will take at least four more years to turn a profit and the Murciélago will take about five. But because the accounting for the company's bottom line is different from the accounting on a per-car basis, and because Lamborghini dealers have other sources of revenue such as used cars, parts and service, the company overall is making money.

    Lamborghini's current profits are nothing to brag about, but the fact that they exist is a dramatic change for the company. When Balboni, during lunch, waxes nostalgic for the enthusiasm that founder Ferruccio Lamborghini, who died in 1993, brought to the company when he was running it ("Today, who is the owner?" he complains. "It's Audi, but who is he?"), I counter with, "Yes, but Lamborghini never made any money, did he?"

    "Absolutely not," says Balboni.

    But now Lamborghini is taking off. The company's sales in the United States, via 19 dealers, increased to 308 last year from 144 in 2002, thanks to the Gallardo's introduction, and Lamborghini expects the presence of the Gallardo to boost American sales to 800 this year. The most Lamborghini sales by region happen, in order, in California, the New York metropolitan area and Florida. Returning Lamborghini customers currently account for 80% of Lamborghini sales, although Donald Trump, a former Lamborghini Diablo owner, has said he will not buy the Murciélago because it does not look as good.

    Bragg says that the typical Lamborghini buyer is a male entrepreneur in his forties who has "new money" and is a gregarious "people person." Just how much "new money" is required to be a Lamborghini owner? With prices of about $171,000 for the Gallardo and about $286,000 for the Murciélago, you will understand why one overhears at Le Belle Macchine d'Italia lines such as "Oh, I don't make that kind of money. I'm only a doctor" and "He only makes about eight or nine hundred thousand dollars a year. He's not Lamborghini material."

    Lamborghini customers not only have newer money than Ferrari customers; they are also showier. While Ferraris tend to be blue, red or titanium, the best selling colors for Lamborghinis are orange, yellow and lime green. When Lamborghini has a black car in a showroom, says Bragg, it won't sell.

    Ferrari, since Lamborghini's beginnings in 1963, has been the company's main rival. Ferruccio Lamborghini got his start by going out at night after World War II, stealing old military vehicles left by the Italian roadside and putting their engines into tractors. After manufacturing tractors had made him wealthy, he met Ferrari founder Enzo Ferrari and complained that the clutch on his Ferrari did not work.

    "You cannot complain about my cars," Ferrari told him, "because you are a tractor driver."

    Enraged, Lamborghini said, "I will show you how to make a sports car."

    "I heard him tell this story 100 times," says Balboni. "If it's true or not, I'll never know."

    Lamborghini began building cars which were beautiful but not durable, such as the Miura two-door, which is still considered one of the high points in the history of automotive design. The problem in the early years of Lamborghini was that the company had few dealers, and therefore lousy service and a lack of parts. The cars were not very user-friendly, either. Triarsi recalls how early Lambos had such poor visibility that "you had to sit on the ledge to go in reverse."

    But these days, Volkswagen has made Lamborghini much larger and more organized. Now that the Germans are calling the shots, they are sidestepping the notorious Italian reputation for lousy quality by sending Lamborghini many parts which are pre-assembled by Audi and Audi's suppliers so that Lambo can't mess with them. The quality of Lamborghini cars has improved so much under the extra attention that the company encourages buyers to use their Lamborghinis every day, not just at special track events. The Gallardo comes with optional all-season tires.

    Many people have bought both the Gallardo and the Murciélago. The price difference of over $100,000 between the models is due to the fact that the Murciélago is larger, and a considerably more able performer. While the Gallardo has a 493-hp, 5.0-liter V-10 engine and a top speed of 192 mph, the Murciélago creams it with a 571-hp, 6.2-liter V-12. It has a top speed of 205 mph and, most importantly, over 100 lb.-ft. more torque, 479 vs. 376.

    Dealers let the two models play off each other in the showroom. While Lamborghini spends no money on advertising (most of the company's marketing budget goes to races and special events such as Le Belle Macchine d'Italia), some Lamborghini dealers do advertise in specialty publications. When they do, they often show only a photo of the less expensive Gallardo. According to Triarsi, the Gallardo brings customers into the showroom--then they can't resist buying the Murciélago.

    In fact, Triarsi says that when his dealership sees that a customer can afford only the Gallardo, "we don't take them out in the Murciélago, because once we do it's all over."

    Because Lamborghini never builds a car that it has not already sold to a dealer, the factory in Italy always runs at capacity--but more models are on the way. A convertible version of the Murciélago will arrive in October, and a convertible Gallardo is coming in January 2006. An entirely new Lamborghini model line is due out around 2008 or 2010. It could be a sport-utility vehicle, which would not be a first for Lambo; the company's LM002, which it built from 1986 to 1992, was the only example in automotive history of an SUV built by an exotic automaker.

    This idea has more logic behind it than you might think. Given the success of the Porsche Cayenne and Ford Motor's (nyse: F - news - people ) Range Rover, an expensive sport-ute that combines performance and refinement could be a money machine--especially if it sells for $120,000 to 190,000, as would be likely for the Lambo.

    While Lamborghini does need another new nameplate, a high-performance sedan--perhaps a more natural choice for a sports car maker than an SUV--could be more trouble given that it would step on the toes of two other Volkswagen brands, Bentley and Audi. Consider the value of an exotic sedan, though: Lamborghini's Gallardo competes against Ferrari's 360 Modena, and the Murciélago takes on the Ferrari 575M Maranello. But Ferrari also owns Maserati, which is scheduled to have more volume than Ferrari. Lamborghini might do well with a sedan to compete against Maserati's forthcoming Quattroporte.

    In either case, Volkswagen is likely to want the next new Lambo to cost somewhere below $200,000. Lamborghini might want to make something more expensive than the Murciélago, but such a car could encroach on yet another VW luxury brand, Bugatti. While Bugatti is now scheduled to release its million-dollar Veyron (see: "Million-Euro Bugatti") supercar in September 2005, their next car will have to cost less if the company wants to be anything other than an oddity. A $300,000 or $700,000 Lamborghini could get in Bugatti's way.

    However Lamborghini proceeds, Volkswagen will want them to collaborate more with the other brands in the group, as VW is on a cost-cutting mission. Bragg says that Audi could use a de-tuned Lambo engine in the future. Now is the time for Volkswagen to borrow from Lamborghini considering that the company is building the best cars in its history.

    This means it's a golden age for Lamborghini fans who can afford to buy their dream cars, which is exactly what the vehicles are. As Bragg points out: "They're buying the poster that was on their wall in the eighth grade."





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  2. SupercarGuru

    SupercarGuru Formula Junior

    Dec 14, 2003
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    John Temerian
    Thanks AJ,

    Do you know if its in the Magazine hardcopy? what month?

    -jt
     
  3. 6.0 se

    6.0 se Formula 3
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  4. dmcgill

    dmcgill Karting

    Apr 16, 2004
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    Thanks for posting 6.0 se, i enjoyed the read.
     
  5. ryalex

    ryalex Formula Junior
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    Interesting to see they came right out and said that. Not that it was a secret, but how open they say, "this is our target segment."
     
  6. tbakowsky

    tbakowsky Formula 3
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    Sep 18, 2002
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    The Cold North
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    Tom
    Note the gold chain comment :)
     
  7. ryalex

    ryalex Formula Junior
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    Aug 6, 2003
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    Ryan Alexander
    And chest hair!
     
  8. ralfabco

    ralfabco F1 Rookie
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    Mar 1, 2002
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    Israel Beiteinu
    Only Farrah was on my wall.
     
  9. ryalex

    ryalex Formula Junior
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    Aug 6, 2003
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    I only had a Star Wars poster and a Jaws poster.

    Unfortunately, the market for Great White Sharks isn't good right now. And Star Wars was so long, long ago that everything's really been used. X-wings are hard to find in good shape.
     
  10. RAYMAN

    RAYMAN Karting
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    Mar 10, 2004
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    Raymond Santilli
    Don't skip over the part where Valentino expresses his displeasure with Audi. He knows things are going in the wrong direction!
     
  11. 6.0 se

    6.0 se Formula 3
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    Mar 26, 2004
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    He also said they were making money!! Coincidence?lol
     
  12. Pong

    Pong Rookie

    Nov 5, 2003
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    Pong
    A very good read...Thanks a lot...

    I always have to think hard when buying a Ferrari (the latest one took me almost a year to finally buy it), but if I ever can afford a Lamborghini, I will never think too long.
     

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