Despite Conditions, Lamborghini Is Cruising: Q&A With CEO Stephan Winkelmann

Last week, in New York, Lamborghini Chairmanand CEO Stephan Winkelmann was on hand to present the company’s newest model, the Huracán Tecnica. Born in Germany and raised in Rome, Winkelmann returned to his current posts at the end of 2020, to the Italian headquarters in Sant’ Agata Bolognese where he had previously headed the company for more than a decade. The global luxury brand thrived through the second year of the Covid crisis, posting record sales and profits for 2021 and the first quarter of 2022. He sat down with Global Finance Editor Andrea Fiano to talk about current events in Russia, ongoing supply chain strains and the future of globalization.

Andrea Fiano: The world knows Lamborghini as a top-end brand. Looking at your results for 2021, with total sales at €1.95 billion [about $2.1 billion], 19% growth over the previous year and an operating margin of 20.2% on 8,405 cars sold worldwide, one wonders if you are immune from the slowdown of the economy and recession-proof. Is this because it is the luxury segment?

Winkelmann: We had experienced slowdowns before—in 2009, for example. It is true that we have a strong image, and the strong tie with Italy’s image, but we are not immune. We are subject to production cycles. A customer, even if he is not in a financial crisis himself, might be the owner of a company and in a situation where it doesn’t seem right to reward himself. Then they just don’t buy. So we are not immune to financial crises. At the moment—knock on wood—we are in a very lucky situation.

After the first lockdown, we had the market come back very strong in an unexpected way already in the second part of 2020. And this is ongoing, despite all that is happening around us. I think that, in general, we have reached a plateau in terms of demand. Now we have to see where growth will be.

AF: You have not experienced any issues with respect to the supply chain?

Winkelmann: The chip shortage—which is still ongoing—is not affecting us in a dramatic way, because we are a small manufacturer inside a big group [Volkswagen]. We have high margins, so we get a priority in terms of supply; but it’s clear that this cannot last forever—and not all our cars are, in terms of purchasing, linked to the group. So we have cars which are done by us, where we have to buy [components] outside, and we have all the bottlenecks of the market. We are at constant attention when it comes to the war in Ukraine; because we have an important supplier for the wire harnesses, especially for our Huracán—and we did have brief periods of shortages. At the moment, there is no danger to our production, and we are waiting to see how this specific situation develops.

AF: You have closed your business in Russia. Will that have much of an effect?

Winkelmann: We put it on hold. The Russian business is a world of around 200 cars, so it’s quite an important market (for us). But since we have an order bank which exceeds the one-year waiting time, we have no issues in redirecting production for Russia to other markets. Last year, China was the second market in the world for us.

AF: Your Urus super SUV has become a big, important part of your total sales. So it looks like it was a very successful addition to your lineup of high-performance sportscars. Are we going to see that percentage maybe even increasing?

Winkelmann: The reason why we did it is because the history of Lamborghini allowed us to do something more than super sports cars. At the beginning of the last decade, we saw there was an opportunity in the SUV market; because even premium brands were stopping at a certain level, so there was nobody present [at the ultra-luxury level].

And so we developed a car, and it’s more successful than we expected; say the ratio inside Lamborghini today is 60/40 between the SUV and the other models. I think that it will stay also after the renewal of all the lineup. When all our models will be renewed—say, by the beginning of 2025—I think we will be at the ratio of more or less 50/50. And then we are planning, in the second part of the decade, the first fully electric car.

AF: Do you already see demand for electric models? Are there customers who step down or wait because you’re not there yet?

Winkelmann: No, not yet. We have one-year wait times, or even more, on all our cars; so we have more demand than we can produce. Every day we sell more than we can put into production. It’s a very lucky position, I have to admit. There is nobody pushing us; but I know that things are changing, so the younger generations are stepping in. We are forecasting that, by 2025, 70% of our customers worldwide will be younger than 40. As you can imagine, these people are growing up with a different mindset. Today we are also realizing that sustainability is one of the main drivers for the future; and it has to be—it’s a must. But it is always linked with performance. So these two things are growing together: performance and sustainability.

AF: Should we expect an annual report on sustainability from Lamborghini?

Winkelmann: We are not ready to do this yet, but we are working on all the things which matter. In comparison with a lot of Italian companies, we are really ahead, because we are CO2 neutral in our plant in Sant’Agata Bolognese. We started in 2009 with solar panels on top of our roof in Sant’Agata, and we will continue. We are planning to reduce the emissions of our cars by 2025 by at least 50%. But we are a small company. Therefore, the results are easier at first sight. But then you have to work a lot more; because it’s about compensating, reducing and avoiding. These are the three magic words now.

AF: What do all the current events, and I’m talking particularly about the conflict in Ukraine, mean for globalization?

Winkelmann: I’m pretty optimistic, despite what is happening. Without globalization, Lamborghini would not have the success we’re having, period. Globalization is the basis of our success, because we have high investment and small volume. We cannot focus on one market and think that the rest of the world is not important.

The new normal, the new geopolitical situation, is going to change somehow. We don’t yet know how. It’s also clear that it is important how we distribute and also how we buy (our components). One insight: If you want to stay global, you cannot act only local when it comes to supply. On the other hand, it is also true that we are linked to the Volkswagen Group; so we are getting an advantage in synergies of scale. We’re getting better quality, lower prices and things like this.

We are refocusing on certain dependency [with respect to] key elements for the production of our cars and all the parts. We have to act maybe a bit more locally in some circumstances, but there is a limit how much you can onshore.

AF: So you are not particularly pessimistic, but actually optimistic.

Winkelmann: I believe today we are in a very lucky situation, given all the things which are happening around us: the chip shortage; now the war; all the things which are then linked to this. I don’t know how long this is going to hold. We have to be prepared in every sense. It’s clear that a company like ours has a life cycle of eight years and a development time of four to five years. This means we cannot just stop and go; it is impossible. So we have to continue to do business, but we have to be prepared to adapt.