Lamborghini sees margin increase

By Gilles Castonguay and Christiaan Hetzner

FRANKFURT (Reuters) - Italy's Lamborghini should be able to raise its operating profit margin to at least 10 percent this year in its drive to become the world's most profitable maker of luxury sports cars, its chief executive said on Tuesday.

"We think that we can do double digit (margins) this year for the first time," Stephan Winkelmann told the Reuters Autos Summit.

The unit of Volkswagen's (VOWG.DE: Quote, Profile, Research, Stock Buzz) Audi AG (NSUG.DE: Quote, Profile, Research, Stock Buzz) division had a pretax profit margin of 5.2 percent last year, and widened this to 10.4 percent for the first half of 2007.

A comparative figure at the operating level was not immediately available.

As for the future, Winkelmann said: "The sky's the limit."

Its rival Ferrari (a unit of Fiat (FIA.MI: Quote, Profile, Research, Stock Buzz)) is aiming for a profit margin of 15 percent this year.

Although the weaker dollar was hurting sales when converted into euros, the pricing position of its cars had insulated Lamborghini from any further repercussions, Winkelmann said.

"For the time being, margins (in the United States) still compare with the European region," he said.

Winkelmann has been boosting sales and profitability by cutting costs, widening its dealer network, licensing the brand and merchandising.

In the last two years, the number of showrooms displaying models like the Murcielago LP640 has risen from 86 to 110. In the same period, annual sales have grown from 1,600 units to a record 2,400 forecast for 2007.

CHARGING BULL

Lamborghini has been cutting production costs by procuring parts such as air and oil filters from Volkswagen.

It has also tried to get more money from each car by offering options including color and trimming to its customers.

Apart from selling accessories with its charging-bull logo through its showrooms and other channels, Lamborghini plans to follow Ferrari's example and open its first retail stores in Europe and elsewhere next year.

"We have a lot of important possible partners which are talking to us in the next weeks and months," he said.  Continued...