COLUMNS: Fast Times at Lamborghini

By Ezra Dyer - August 4, 2008
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By 1980, Lamborghini was considered finished." This is not the sort of statement you'd expect to read in a car company's official account of its history. But Lamborghini's own sixteen-page guide to its museum at the Sant'Agata Bolognese headquarters is refreshingly candid about the storied company's many missteps and the periodic behind-the-scenes chaos that defined Lamborghini prior to Audi's ownership. The brand survived long enough to reach prosperity because it managed to dream up charismatic cars, but for many years those iconic models - Miura, Countach, Diablo - were bred in an environment of utter corporate dysfunction
It's telling that founder Ferruccio Lamborghini himself left the company only nine years after its inception, when labor strife challenged his control of the factory. Since then, Lambor-ghini has passed through many hands, some more capable than others. Over the years, owners have included a Swiss financier, the Mimran brothers (owners of a sugar empire in Senegal), Chrysler, and a group of Indonesian investors. Longtime Lamborghini test driver Valentino Balboni, who joined the company in 1968, says that while some owners provided the proper resources for a period of time, the regular transfers of ownership thwarted product development. "The Mimrans invested a lot of energy and money developing the Countach," Balboni says. "The four-valve version was a development of the Mimrans. They were very proud and happy with the company. But around the first development of the Diablo, Chrysler became interested, so the Mimrans didn't want to invest more." Current owners turning off the financial spigot in anticipation of a sale is a running theme in the Lamborghini drama, and one that has both prolonged product cycles and killed development altogether.
The acquisition of Lamborghini by an actual car company in 1987 seemed promising, but then again, that company was the 1980s Chrysler Corporation. Balboni credits Chrysler with helping to modernize Lamborghini's production capability, saying that, "We started to use equipment and computer aids that were quite unfamiliar in those times, especially at Lamborghini. [Lee] Iacocca was a very good man in terms of helping Lamborghini. He was almost Italian." (In fact, Iacocca was, and is, Italian, at least by descent. His parents emigrated from Italy to the United States.) The official Lamborghini account of Chrysler's stewardship is slightly less positive, noting that "development time . . . ballooned due to the interference of too many aspiring designers" and "the Americans would never produce . . . the interesting 'baby Lamborghini' designed during this period." Chrysler also made an ill-fated foray into racing, and a Formula 1 car commissioned by a Mexican businessman fell through when said businessman "mysteriously disappeared" and was never heard from again.
While Lamborghini worked tortuously in Italy on a replacement for the aging Countach, its dealers in America created their own roadblocks for the company. Naveed Khalidi grew up in Florida and remembers his father's entre into Lamborghini ownership in the 1980s. "He wanted a Countach, but the dealer told him that he couldn't have one unless he bought an LM002 four-by-four at the same time," says Khalidi. "The cars would come back from the dealership with oily fingerprints all over the interior. And the dealership itself was straight out of Miami Vice - I was just a kid, so I took it for granted that people walked into dealerships carrying suitcases full of cash, and you didn't expect your car's air-conditioning to work."
The basic contradiction of the Lamborghini dealer experience was that people with enough money to afford such a car expect a certain level of service, but Lamborghini dealers seemed to treat their customers with disdain. "The dealer was selling this Lamborghini lifestyle," says Khalidi. "Like, on the Diablo, the only option was a Breguet clock for $12,000, and they just expected you to order it. And if you bought a car, they'd want to refer you to their sister dealerships that sold Cigarette boats and Learjets."
After buying a Diablo (without the Breguet option, incidentally), Khalidi's father swore off Lamborghinis. "I think there are three distinct periods of Lamborghini owners," Khalidi says. "There are people who owned the early cars, like the Miura, who were turned off by the Countach. There are people who've owned Lamborghinis only since Audi bought the company. And then there are people like my father, who bought cars during the '80s and '90s and were so alienated by the dealers that they never bought another one."
Tom Kowaleski was in charge of Chrysler public relations during the company's ownership of Lamborghini and thus faced the challenge of improving the brand's perception in its largest market, the United States. To that end, in 1990, Kowaleski pushed the Italian management to let American journalists have the first crack at the new Diablo - on a racetrack, where the car could really stretch its legs. "It was the last guy to drive the car, on the last corner of the last lap," Kowaleski says. "I saw him start to lose it, and he did a tank-slapper into the wall, grinding the car along the barrier until it stopped. The car was totaled." Despite Chrysler's resources, Lamborghini was still a small company, and the crash didn't help Italian/American relations within the company. "That was the only Diablo we had," Kowaleski says. "The Italians were nice to the guy [a Car and Driver editor] who crashed it - comrades in bent metal - but in private, I got called into the office and got thoroughly chewed out."
A new nadir in Lamborghini's fortunes began in 1994, when Chrysler passed ownership to a group of Indonesian investors. According to Lamborghini's historical account, "The new owners recruited a number of English and American executives who gradually proved to be less and less suitable for their positions. The oddest ideas started to pile up during the months that followed, calling to mind - for those who had already lived through the history of Lamborghini - the years of great psychological confusion between 1974 and 1980." The Indonesians wanted to put the LM002 off-roader back into production, even though it sold only 301 examples. They froze development of the "baby Lamborghini," only to restart it and then cancel it again. Even the indefatigably positive Balboni says: "The Indonesian management and ownership wasn't a great experience for us. They didn't put a lot of money into development. We were surrounded by people who weren't experts."
Barry Toepke was Lamborghini's public relations man in the United States from 1994 to 1997 and witnessed firsthand the corporate disarray that extended from the showroom floor all the way to the upper echelons of management. "There was an amazing lack of direction," Toepke says. "Lamborghini didn't have vast sums of money. There'd be a board meeting in Bali, and they'd say, 'We'll provide $2 million to fund this,' and then they'd change their minds. You can't do that and succeed in the marketplace, obviously.
"Meanwhile, the factory was building cars and stuffing them into the U.S. without orders. There were a lot of accounting games going on. In 1994, we inherited a lot of 1992 and 1993 models that were still sitting around and were inferior to the 1994 Diablo VT."
Compounding the sales woes was a dealer network that was still primitive in its approach to customer relations. "I walked into a couple of dealerships that actually had yellow caution tape around the cars, so nobody could touch them," Toepke says. "I asked, 'How do you sell cars like that?' and they said, 'We don't.' "
Back in Italy, the international factions within the company protected their turf at all costs. Toepke himself once set off a firestorm when he was inadvertently admitted to a room where he spied a prototype car in the works. "The Italians were livid that the American saw the model," he said. "It was a big state of distrust. Everyone was looking over their shoulders." Another time, Toepke witnessed an argument between executives at the factory that required police intervention to break up.
Finally, in 1998, Lamborghini came under the control of Audi AG. The Germans brought much-needed management discipline, welcome access to the latest technology, and - most important - deep pockets to fund product development. The company's recent success has been well-documented, with record sales and pretax profits last year. Lamborghini is opening a U.S. distribution headquarters for the first time ever, in Los Angeles. The Gallardo has a waiting list through the end of the year. Considering that the Lamborghini corporate environment looked like an Ultimate Fighting Championship cage match less than fifteen years ago, the company's current challenges - primarily, maintaining profitability without diluting brand image - seem almost quaint by comparison. Current CEO Stefan Winkelmann, speaking on the subject of balancing profit with product purity, makes a comment that also applies rather well to Lamborghini's unlikely perseverance since 1963: "So far," he says, "it's worked out."

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