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 luxury sports car maker, its CEO said in Frankfurt today.

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 Audi AG division had a pre-tax 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 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 Murciélago 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.

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 colour 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.

Winkelmann said Lamborghini was looking to add a motorsport aspect to its business by hosting races among its own cars. "We want to have a kind of a gentlemen's society cup," he said, explaining how it could involve dealers by allowing them to lead teams comprised of the best owners and drivers. "We want to have Gallardo racing against Gallardo -- this is something which is on our agenda for next year," he said.

But the idea would only come to fruition if Lamborghini could make money from it by collecting fees for the race or payments for spare parts, he said. Winkelmann denied any interest in joining the Formula One. He said it was too expensive to invest the necessary funds to succeed in a sport dominated by four main teams that plough hundreds of millions into developing cars.

Given the interest in cutting CO2 emissions, Lamborghini is looking at reducing the weight of its cars without compromising the power of its engines, he said. Its cars emit more than 400 grams of CO2 per kilometre.

report & photo courtesy of Reuters