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Ferrari, Lamborghini avoid auto sales slump thanks to China, Middle East

By Marco Bertacche
Bloomberg News / October 3, 2008
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Ferrari, Lamborghini and other luxury carmakers say they're faring better than mass-market producers as sales to the super-rich in China and the Middle East sustain demand even as world auto sales fall the most in at least a decade.

Ferrari sales in China rose 25 percent to 200 cars in the first nine months, Chief Executive Officer Amadero Felisa said in an interview at the Paris Motor Show. Lamborghini's Chinese orders jumped 60 percent to 45 cars and sales in the Middle East grew 52 percent. The US showed a 5 percent decline.

"The Middle East and China are where demand is stronger," Lamborghini Chairman Stephan Winkelmann said yesterday in an interview at the Paris show. "Network expansion is one of our main objectives, taking into account where new wealth islands are and making sure demand always outstrips our offer."

Ferrari's success in emerging markets means the maker of the 205 mile per hour 599 GTB Fiorano is headed for a record profit this year, Chairman Luca Cordero di Montezemolo said. The Maranello, Italy-based company is now the fastest-growing unit of parent Fiat SpA, with sales up 21 percent in the second quarter and trading profit jumping 50 percent to 105 million euros ($145 million). Volkswagen AG's Lamborghini, whose cheapest Gallardo model starts at 150,000 euros, aims to lift deliveries 5 percent this year. Global auto sales may fall 0.9 percent, according to JD Power & Associates.

Annual economic growth of more than 10 percent for 10 straight quarters in China has boosted the ranks of the newly wealthy. Ferrari's sales to East Asia will account for about a quarter of total deliveries next year, matching the US for the first time, CEO Felisa said. The company's busiest Asian outlet, and ranked fourth overall, is in Macao, the only place in China where casinos are legal. The busiest dealership is in Las Vegas.

Russia, India

Lamborghini began sales in Russia in 2005 and its two stores there have already won more orders this year than in the whole of 2007, Winkelmann said. The Sant'Agata Bolognese, Italy-based company delivered 2,406 cars worldwide last year and aims to balance its markets equally between the U.S., Europe and Asia.

Ferrari is also planning to open stores in Russia in coming months. While the manufacturer, known for its "prancing horse" logo, has yet to establish a dealership in India, chairman Montezemolo yesterday announced his Tata Motors Ltd. counterpart Ratan Tata as the first Indian customer for the new California model, unveiled in Paris this week. The car starts at 179,000 euros and Ferrari already has sufficient orders to sustain production for the next two years, Montezemolo said.

Build Rates

Supercar companies also have longer order backlogs than the average automaker thanks to the traditionally low build rates that help guarantee the exclusivity of their models.

Rolls-Royce, Britain's best-know prestige brand, is in "a much better position than most everybody in the industry," relying on a six- to nine-month order book rather than trying to keep pace on the showroom floor, Chief Executive Officer Tom Purves said in an interview with Bloomberg Television in Paris. Luxury cars fare better at the start of sustained industry slumps but sales may tail off later, he said. Crewe, England- based Rolls is a unit of Germany's Bayerische Motoren Werke AG.

Modena, Italy-based Maserati, also a Fiat unit, boosted deliveries 40 percent in the first eight months, CEO Harald Wester said at the car show. Chinese sales more than doubled to 281 cars, while the Middle East showed similar growth. Demand has been led by the GranTurismo, which sells from 114,100 euros, and the Quattroporte, available from 116,400 euros.

While mass-market carmakers are generally refining their product lineups to focus more on smaller, less costly models to meet demand in the U.S. and Europe, they, too, are benefiting from robust sales of more upscale autos in emerging markets.

Volvo Car Corp., the Swedish unit of Ford Motor Co., was the top-selling high-end brand in Russia in August in what Chief Executive Officer Stephen Odell said was a "positively surprising" development.

"Volvo is an aspirational brand that is getting closer to becoming a premium brand," Odell said in an interview.

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