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Ill wind of recession blows good for super rich

June 17, 2009

by Guy Dinmore in Rome

Published on FT June 17yj 2009

Thanks to the recession those surviving in the super rich category will not have to wait so long for their dream car as luxury sports producer Lamborghini cuts its delivery time in half.

Stephan Winkelmann, chief executive of the Italian car maker owned by the Volkswagen group, told reporters in Rome that sales so far this year were down 30 per cent, obliging Lamborghini to reduce the waiting period for buyers to six months from one year.Lamborghini, which built a record 2,430 cars in 2008, helps maintain its
brand prestige by deliberately keeping production levels below demand,
as does its main competitor Ferrari. Only a total of 11,000 Lamborghinis
are on the road worldwide.

“We always have to sell less than demand,” said Mr Winkelmann.

But he admitted that the recession was hitting the luxury sector hard,
particularly in its key US market where realtors and private bankers
have become “a lost slice”. Despite increased sales in “islands of
wealth” like China, “a lot of businessmen are saying this is not the
time to buy a car of such high visibility and luxury”.

The low-slung speedsters with the “bad boy extreme Italian” image cost
over 160,000 euros or as much as 1.2m euros for the 20 special Reventon
units built.

Established in 1963 in Sant’ Agata Bolognese by Ferrucio Lamborghini,
the Italian company produced an average of just 250 cars a year until
2002. In 1998 it became part of the Audi group but a minimum of 90 per
cent of components are used by Lamborghini alone. Introduction of the
10-cylinder Gallardo Spyder, with the latest model boasting a top speed
of 324 km/hour, has boosted production nine-fold.

Mr Winkelmann sees no “green shoots” or “light at the end of the tunnel”
yet. Already 2010 looks to be a difficult year and Lamborghini does not
expect to get back to pre-downturn levels of production until 2012.
Profits in 2008 were 27 per cent up at 60m euros.

Nonetheless the target for this year is to remain profitable and
investments have not been cut. The company has laid off some of its
1,000 workers.

Ferrari said its first quarter sales were down about 10 per cent, but it
would maintain its waiting list at 12 months.

Quoting Luca Cordero di Montezemolo, Ferrari president, a spokesman
said: “Ferrari is like a good-looking woman. You have to desire her.”

Lamborghini says all its buyers are men.

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