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Lamborghini unscathed by covid-19, just 5% of parts made in China, CEO says

Lamborghini sales still intact despiteCOVID-19
Jordan
Major
2 years ago
5 mins read

On June 1, Lamborghini’s chairman and chief executive Stefano Domenicali said that the brand’s supply chain is fully functional now. While speaking to Financial Express, Stefano said that when the company restarted operations on May 4, it managed to make all deliveries despite the current coronavirus crisis.

Lamborghini started with 75% capacity in May, but currently, it has reached 100% capacity utilization. In 2019, the company sold 8,205 cars globally, accounting for 0.01% of global car sales. 

Stefano Domenicali, the CEO of Lamborghini. Image: Charitystarts.com

The car manufacturer has three model lines, including Urus, Aventador and Huracán, with the fourth in the pipeline. After Covid-19 hit Italy, Lamborghini supported ventilator manufacturers and manufactured medical shields and surgical masks.

On May 4, car productions resumed after being suspended on March 13. This week, the company aims to regain its operations at 100% utilization. Stefano said that there is a lot to learn from and during the coronavirus lockdown. He added:

“A lot of global orders have been delayed, but there is no cancellation due to Covid-19.”

Social distancing effects Lamborghini operations

Currently, when the mood is not upbeat, there is bound to be an impact on the company’s market since their cars are meant to be enjoyed emotionally. Stefano said that the current measures due to the health crisis are transitional.

Lamborghini customers remain as before and will emerge better when the social distancing measures are lifted eventually.

Looking at track experiences and launches, the company decided to stop all events in the short-term since there was no positive mood to enjoy the cars. But, many activities and events were shifted to the digital platform.

The car manufacturer even launched the new Huracán EVO RWD Spyder via augmented reality recently. Through that strategy, Lamborghini can keep its users, fans, and customers engaged, who they expect will return to physical events once normalcy returns.

In general, Stefano is convinced that their sector will suffer less in the near term since customers are not majorly affected by the pandemic.

Lamborghini car sales forecast for 2020

For several years now, Lamborghini car sales have been growing with 2019 setting a new high of 8,205 units sold. But, 2020 is different by all means so far since the production plant was shut down for seven weeks resulting in production loss.

Some of the production can be recovered through extra working hours, but not all cars can be recovered, according to Stefano. Consequently, the sales forecast for the year has been slashed, but it is not yet possible to predict the new number.

The new forecast also depends on how the new order log resumes. But, the CEO said that the company had not received any cancellation of the pending orders. Customers and dealers said that they still want their cars with some saying that there is no rush to the delivery.

In 2019, Lamborghini sold over 50 cars in India. For 2020, the number appears like it will be lower, but the car manufacturer aims to remain as the best super-sport brand in India. It is even making strategies to enable it to grow in the Asian country.

Lamborghini supply chain amid Covid-19

Lamborghini’s chief executive underlined that the supply chain is currently unaffected. The company managed to restart operations immediately at 75% capacity utilization on May 4 after the 7-week lockdown. Stefano expects that 100% capacity utilization will be achieved this week, which is possible since the company’s supply chain is working.

The supply chain is globalized, but the Lamborghini team has managed it efficiently. The pandemic showed that the world is interconnected, which means that it is disadvantageous to reply to sourcing from a single place.

Stefano said that they source below 5% of their parts from China, which means that the month-long lockdown in China did not significantly affect their operations.

New models’ development and motorsport

The CEO said that the company’s goals remain the same until 2026. New products are in the pipeline, and some facelifts will also happen along the way.

Thus, their portfolio strategy has not been affected by the current health crisis. Only the timing of the products’ release is affected, although nothing has changed in the long-term.

Additionally, the developments of Terzo Millennio, a futuristic car model for the new millennium that is made using a unique propulsion system and innovative materials, won’t be affected in any ways.

Lamborghini Terzo Millennio Concept. Image: Autoconception.com

Using this model, Lamborghini aims to move away from traditional batteries and use supercapacitors to equip future cars. Hence, Terzo Millennio is a long-term plan that may happen in the next 5-8 years.    

Regarding the motorsport, Stefano believes that the pandemic has provided an opportunity to reshape the Formula 1 business model. The FIA World Motorsport Council has agreed to regulation changes for 2020, 2021, and 2022 seasons marking the first step to the reshaping. Hence, all motorsport needs to become more sustainable in the future.

Lamborghini’s revenue from merchandise

According to the chief executive, the company’s extension activities are still unaffected. Stefano alleged that their merchandise collection is sold out within minutes of launch.

The company is now expanding in new markets like eSports with ‘The Real Race‘. The race is a blend of the real and virtual racing worlds. These activities account for around 5% of the company’s revenues but are expected to snowball in the coming years.

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Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.

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