Two or three times a year, Audi Chairman Franz-Josef Paefgen drives a Lamborghini Diablo to Sant' Agata Bolognese, Italy, to visit the Italian automaker's headquarters. He meets with Lamborghini Chairman Guiseppe Greco, then picks up a fresh Diablo off the assembly line, and drives it back to Munich.
Paefgen likes to portray himself as a sports-car enthusiast rather than the man who controls Lamborghini's fate. Ever since Audi AG purchased the company in 1998, Paefgen has left Italian managers in charge. A visitor can count the number of senior German executives in Bologna, on one hand.
This year, Paefgen will learn if his restraint paid off. In an ambitious effort to boost sales 400 percent, Lamborghini will add two models to its lineup. If the famed Italian automaker succeeds, its sales finally will approach 2,000 units, about half that of archrival Ferrari.
To catch Ferrari, Audi is counting on Greco, a veteran marketing guru who once worked for Ferrari. 'To take Lamborghini volumes five times up in three years will be the real challenge of my life,' the 53-year-old executive says with a gentle smile. 'Wish me luck!' Greco's plan is simple: Expand the model lineup. This summer, Lamborghini will launch its first new car - the L147 - since the Diablo in 1990. The new model will outperform the Diablo, which costs $160,000, and will cost 5 percent more, too. In 2003, Lamborghini will follow with the L140, which will compete with Ferrari's 360 Modena.
Lamborghini also will add 20 dealerships, mostly in the United States, Europe and the Persian Gulf. To sell these models, Lamborghini won't mount an ambitious advertising campaign. The company hopes to recruit buyers from an estimated group of 15,000 prospects per year. To appeal to them, Lamborghini will create a second one-make racing series for the L140, a series to be patterned after its Diablo GTR Supertrophy.
After the models are introduced, Lamborghini expects the United States to account for 30 percent of its sales, while Europe will deliver 40 percent. Outside of those markets, Lamborghini hopes to expand in Australia and Japan.
Until recently, the man who must carry out this ambitious plan enjoyed the carefree life of a luxury car dealer in prosperous Texas. Greco is a 30-year veteran of the auto industry, having worked for Fiat, Alfa Romeo, Ferrari and others. His biggest achievement? He managed to boost Fiat Venezuela's annual production from 3,000 units up to 10,000 in only two years.
Although he studied political science at the University of Naples, Greco never entered politics. Greco began his automotive career in 1970 at Fiat Auto headquarters in Turin, Italy, working in sales and marketing. After assignments in Canada, Venezuela, the United States and the Netherlands, he was named president of Ferrari North America. The job came at a difficult time for Ferrari. The Italian automaker continued to ship cars to the United States even as the recession of 1991 reduced demand. Greco frowns at the thought. 'It was a real nightmare. We didn't even have the space to store all the unsold cars.'
After enduring the U.S. recession, Greco returned to Ferrari headquarters to open subsidiaries in Switzerland and Germany. His wife, Pia, did not like Maranello, Italy, a tiny, agricultural town near Modena. Pia wanted to return to the United States, and in 1995, Greco agreed. This time, he decided to run a car dealership in Corpus Christi, Texas. His brands: Porsche, BMW and Volkswagen. In contrast to his days at Fiat, he had time to enjoy his family and hobbies.
Then, in the spring of 1999, Greco got a phone call from a European recruiter. 'Are you interested in running Bugatti?'
'Why not?' asked Greco. He took a plane to Europe to talk about it. He flew back to Corpus Christi with a signed contract in his briefcase. The employer? Not Bugatti, but Automobili Lamborghini. Moreover, he was to be president of the company - the bitter rival of Ferrari, the automaker he served for six years.
Audi bought Lamborghini in 1998 from Tommy Mandala Putra, the playboy son of former Indonesian Prime Minister Suharto. The German automaker has never disclosed how much it paid for Lamborghini. Nor has it acknowledged how much money it will spend to push production from 220 units a year in 1998 to a goal of 2,000 cars in 2004.
Despite the investment, Audi's Paefgen has said he does not want to make Lamborghini more German. In Lamborghini's headquarters near Bologna, German executives are a rare sight. Audi has placed two senior executives within Lamborghini: industrial director Rodolfo Rocchio and purchasing chief Luigi Monni. Both are Italian. True Germans? Only two work within the company, and both hold mid-level jobs. Thomas Mehringer is quality director; Dirk Isgen is project manager of the L140.
No identity crisis
In a variety of ways, Audi is trying to help Lamborghini without compromising its identity. To improve quality, the Italian automaker will buy components from Audi's suppliers. But Lamborghini will continue to produce its engine, drivetrain and car bodies. And when Audi authorized Lamborghini to expand its research and development staff from 65 to 130 people, the center hired Italians.
Who blocked an influx of Germans? Not Greco, but Paefgen. 'I faced queues of Audi engineers asking me to go to Lamborghini, but I said no to everyone,' he said. 'Lamborghini will hire the engineers it needs.'
Day-to-day, Lamborghini operates free of interference from Audi, Paefgen insists. Lamborghini must decide its strategy with Paefgen. Once the goals are set, the Italians are in charge. Just after the takeover, Paefgen said: 'Lamborghini can have access to anything of Audi, but we won't have any direct input into their day-by-day operations. I think they have to find their own streets. Lamborghini has to remain truly Italian.'
Paefgen has been a man of his word. When Greco was appointed general manager in 1999, Paefgen had just approved the exterior styling of the new L147. But Greco was not satisfied. During the Frankfurt auto show in 1999, he explained that he wanted a more controversial, edgier look.
'The current styling looks like Nicole Kidman - wonderful, yes,' he said, comparing the car to the actress. 'But I think from a Lamborghini the market expects something more bitch, like Sharon Stone.'
Later that year, Greco went to Audi's styling center in Ingolstadt, Germany. He met with a young Belgian, Luc Doncker-wolke, who created the original L147 styling. He asked Donckerwolke to add more Sharon Stone to it. Soon, sports car enthusiasts will judge the car for themselves.
Despite Lamborghini's product offensive, Ferrari appears unconcerned. The company makes more than 4,000 cars a year, while Lamborghini's annual sales are still at 300. The latest limited-edition Ferrari, the 550 Barchetta Pininfarina, was sold out before the company began production. And Maranello's latest model, the 360 Spider, has a waiting list of two to three years.
Still, Lamborghini must be taken seriously. Freed from the distractions of Tommy Putra's ownership - and backed by its discreet German owners - Lamborghini's raging bull seems ready to challenge Ferrari's prancing horse.
E-mail writer Luca Ciferri at [email protected]