VW, not just a funny little car anymore!
James the berzerk
James the berzerek
VW takes luxury road in Lamborghini
July 25, 1998 7:54 AM EDT
By Neal Boudette
FRANKFURT, Germany (Reuters) - Volkswagen AG Friday turned another
corner in its drive to expand internationally and build an image as a
producer of luxury vehicles as well as cars for the masses.
The signing of a contract allowing VW's Audi AG unit to take over 100
percent of Italy's Lamborghini SpA came only three weeks after Europe's
largest car maker closed a deal to buy Britain's Rolls Royce Motor Cars.
``Lamborghini is a symbol for performance on a very high standard,''
said Audi Chief Executive Franz-Josef Paefgen.
Lamborghini, whose models sell for $281,000 or more, will allow Audi to
push into the lofty market for super sports cars, competing with Italian
makes Ferrari and Maserati and the Viper from Chrysler Corp.
Audi acquired the Bologna-based group by buying out a 40 percent stake
held by Mycom Bhd., a Malaysian property developer and financial
services group, and a 60 percent stake from ``Tommy'' Suharto, the
youngest son of former Indonesian President Suharto.
A price was not disclosed, although analysts had estimated it to be
about 200 million marks ($112 million).
Like the Rolls acquisition, the latest deal broadens Volkswagen's image
beyond that of a mass producer of economy cars, family models and sedans
as is implied in its name -- which is German for ``people's car.''
Laborghini would maintain its own national identity, Audi said -- a
promise VW made in regard to Rolls Royce Motor Cars as well.
But also like Rolls, Lamborghini is unlikely to contribute much to VW
beyond image-boosting. The company sold only 209 cars in 1997, ringing
up sales of 74 billion lira, or about $42 million, and a net loss of 900
million lira, about ($506,000).
In contrast, VW had 1997 sales of 113 billion marks ($63.5 billion) and
after-tax profit of 1.3 billion marks ($731 million).
Earlier this week, VW said it delivered 2.3 million vehicles in the
first half of 1998, 4.2 percent more than last year. That included
303,000 Audis, a total that was 10 percent more than in the first half
of 1997, as well as models under the Seat, Skoda and VW brands.
The sale opens another chapter in a complicated history for
Lamborghini, whose flagship Diablo model streaks from zero to 100
kilometers per hour in a mere four seconds.
Founded by Italian industrialist Ferruccio Lamborghini, it produced its
first model in 1963, was sold to a Swiss group in 1972, went bankrupt in
1980, was bought by Chrysler Corp. in 1987 and sold to Tommy Suharto in
1993.