'We're not selling cars, we're selling dreams': Lamborghini Chairman & CEO Stephan Winkelmann on why he's betting on India

It is obvious that Stephan Winkelmann, 59, likes India. Its clear growth story can only lead to more demand for the luxury cars. As Chairman & CEO of Italian luxury sports carmaker Automobili Lamborghini, the auto industry veteran runs a company—owned by Volkswagen Group through subsidiary Audi—famous for its supercars. Sitting in a luxury car showroom in central Mumbai, a cheerful Winkelmann sounds optimistic about India and not without reason. Last year, his company got past the three-digit mark in sales volumes. It sells three models here—sports car Huracán, sports utility vehicle Urus, and Revuelto, a hybrid sports car. It is not easy to push luxury cars in India, though the numbers are now encouraging. In an interview with Business Today’s Krishna Gopalan, Winkelmann speaks about India, the need to have a specific strategy for the market, and what it means to sell dreams, among other things. Edited excerpts:

Q: What makes India an interesting market for you?

A: I have been to India five or six times. The first time was in 2005 and since then there have been dramatic changes—in terms of infrastructure, markets, [and] competition. Just look at the car market or, more specifically, the high-end car market. I think the economy looks very strong today and it’s the fifth largest globally. That is a very striking fact from our point of view.

That said, my view is a small one... I come here for a few days and there is a constant need to re-learn and reshape what we have done in the past. It is a very promising market and has clearly not achieved its full potential… for example, in the luxury car market around 1,000 cars are sold each year. That is inside a very large car market and luxury is only a small segment within that. We have a good business with about a hundred cars and that makes me happy. When I see other luxury markets like fashion, accessories, watches, all the big global brands are here and ready for growth. Obviously, everyone is convinced that the market will take off, but they are not sure how fast that will be and how steep… I believe we will continue to grow as a company unless there is some serious interruption in India and globally.

We are cautious and one must understand that one key element of the luxury business is to have an order bank that lasts. You must have residual values, which are high and more than the new cars. Plus, the brand value must constantly keep rising. That means there are always indicators to tell us if we are going the right way.

Q: You travel across the world. Which market does India remind you of and from what era?

A: It is an emerging market. It is one that is moving in terms of expectations and could be a bit slower than the others but remains consistent. We hope that will continue to be the case. The only one that is, maybe, close [to India] but also very different is the Chinese market—not just in terms of size, but also population and how they position themselves towards brands in the luxury business.

Q: For your business, does India remind you of China say 10-20 years ago?

A: Yes and no since the world has changed a lot with social media [and the] internet; plus, the language barrier in China is much bigger than it is here. For Westerners to come to India is a lot easier since you can speak to almost anyone, and that is a huge advantage.

Q: What are your top two or three priorities in the Indian market over the next three to five years?

A: Our strategy is to have all the products in the market… We have very complex cars, and it is good to have the full line-up [here]. We must also be careful to never overstock or oversupply. That is not specific to just India but a general rule. Plus, we need to understand the market very well… Predicting the future is very difficult in this market.

From what I can see, India is taking gigantic steps in a market filled with both opportunities and challenges. One can argue that some things move a little slower [here] than in other places, but one must also understand that getting 1.4 billion people to move in a particular direction is a major challenge (smiles). People speak of diversity in Europe, but this is very different. Given the complexity of the market, we must be patient and not overdo things. A lot of time goes into understanding the mentality of consumers to give ourselves a strong position. We have been here for a longer time than most others and our success is there [for all]to see... I am quite satisfied about being in India.

Q: How critical is it to have an India-specific strategy?

A: When I put my mind to that, I realise that 90% of the things apply to most markets around the globe. For sure, we reach out to the ultra-high net-worth individuals and that is a growing market. Indians might buy in other countries but not necessarily in India. It is a point we must take into consideration and perhaps the Indian footprint is much bigger than we know.

Other than that, it is important for us to get into the community. The thing is, they (the community) have to buy into the brand. There are a lot of activities that money can’t buy… [say,] it could be a motorsport event. And we meet a lot of Indians who ask us what Lamborghini is doing next. Proximity to our customers is important and that helps us understand what they want, what they like, and what we can improve. This community is one we must cherish. Plus, we have our partners, with whom we work very closely. The feedback comes from them and that makes a huge difference. It all comes down to customer satisfaction or customer delight.

Q: The automobile industry is about how the brands are positioned. What makes the process of owning your car unique?

A: We work a lot on awareness. You can’t leave anyone behind… For the people who buy our cars, they should understand there is no envy… We want to be a part of a very positive evolution and must continuously move in that direction. At the end of it, we are not selling mobility. We are selling dreams.

It’s about design, performance, and technical innovation. The way we go about it should be an example not only for those who are developing cars, but also for those in any kind of business. After all, we go the extra mile to do something, which is often difficult to get out of the latest technology. We work the brand around a few things, and these are some of the key elements. We cannot go wrong with any of them. One must understand that it is about limited volumes and high investment. Every model has to be a winner—else it will be difficult.

Q: You are selling dreams to the buyer…

A: You have to surpass what the buyer has in mind when he buys the car. The wow effect has to be multiplied each time and, therefore, it’s not about who owns the car. It’s about what you create as a community and that’s how the word spreads and helps in getting new customers.

Q: What are the interesting trends you see in the global luxury car market?

A: Apart from the mega trends, there is electrification, AI, and the piece on digitisation. These are not commoditised but will be taken for granted (or already are). Now, it will be about owning something that your neighbour does not [have] or having something different from the others. There are two ways of doing it. One is with the line-up of models in terms of colours or style. Then, there are the one-offs, where we create the ‘once in a while cars’. These are limited and a part of the history of Lamborghini since they are built maybe once, 10 times or perhaps 100-150 times. This is a trend that is increasingly becoming a part of the luxury business.

Q: What else will determine the form and shape of the luxury car market over the next four to five years?

A: I always try to classify this [business] into two [parts]. One is the classic luxury business. It is about ‘nice to have’ [cars] but they don’t give rise to emotions. Then, we have the sporty part of the business—[cars] that are attractive and make people dream. It is important to keep creating emotion around the brand.

Q: Speaking of segmentation, when do you decide the market is ready for a certain brand?

A: Usually, when we enter as a brand, the aim is to give you the full line-up. We have a portfolio consisting of SUV, XXL, LM, and GT cars and the 2+2 Gran Tourer. Take the example of markets like Vietnam, Norway and Argentina, where we looked at factors such as where the economy is placed. A lot of other elements are considered with the objective of making it a sustainable business. But once we enter, it has to be with the full line-up.

Q: What do you like about hybrids and why is it important?

A: It’s about combining reduced emissions and delivering a better performance. We don’t want to have heavy cars and power to weight ratio. Ultimately, it has to be a winner for the consumer. 

 

@krishnagopalan