Born in Italy, Andrea served Ducati for almost a decade before joining Lamborghini two years ahead of the bike maker being brought under the VW Group umbrella in 2012.
We met at the grand opening of the newly renovated Lamborghini Bucharest showroom (yes, that's in Romania), which meant our discussion was occasionally interrupted by the V10 heart of the Huracan Evo being brought to life. Needless to say, none of us was bothered.
So, without further ado, here's an edited transcript of our conversation:
autoevolution: How did you come to your current short term annual sales target of 8,000 vehicles? What was the role of factors such as exclusivity and the 10,000 vehicles per year upper limit of the SMV (Small Vehicle Manufacturer) emission exemption?
Andrea Baldi: Sure, those elements are important, but sitting below the 10,000-unit level was more of a coincidence. I'll get into the details.
Let's go back to 2012, when the Urus Concept was presented at the Beijing Auto Show. We were far from the gaining of the approval from the VW Group at the time. So we really wanted to go for a third model thanks to the possibility of having a sustainable life cycle for three models. If you only have two, there will be peaks and gaps between new model launches, but with three, you can balance it better.
The mindset we had involved doubling the sales number at the time, which sat well below 2,000 cars. Back then, the Huracan project had been three years in the making, while we had been working on the Aventador for two years [the typical development cycle takes five years].
The Aventador became a big success and it continues to be so, since it's now sold out for two years [this involves both the Aventador S and the Aventador SVJ, which have apparently found owners through 2021].
Back then, we knew what the life cycle of the Aventador and the Huracan would be, while we were already at out maximum annual production capacity of approximately 1,000 vehicles and we really wanted to build more vehicles. Given the expectations for the Huracan (you can now see the numbers and about 2,500 units of the V10 sell each year), we were already preparing a scenario with 3,500 vehicles.
Given the segment in which we operate, we couldn't imagine more than doubling the sales with the help of the Urus. Later on, we reached the conclusion that 8,000 vehicles is a reasonable yearly target for the short term.
Meanwhile, the ambition grew. However, we made sure the production capacity of the Urus was not something we were going to regret. It's always better to build one less car rather than one extra car. Well, we're still regretting, since the Urus now has a waiting time of ten months after about two years from the presentation [this actually translates into about one year of market presence].
AE: If the demand is sustained or accelerated, would it be possible to ramp up production? For instance, you now have two shifts, could you add the third?
AB: Quickly adding a third shift could risk affecting the build quality we desire. One of the aspects of the Lamborghini brand that has changed starting with the debut of the Aventador and even more so with the introduction of the Huracan and once again with the Urus is that the quality of the product is sky-high. Back in the day, supercars were only used for a few thousand kilometers per year, but now we have customers who daily drive their Huracans, for example.
With this idea in mind, if you really want to make every detail perfect and long-lasting, we don't want to go to a higher number if we are not 100 sure we can maintain the quality. So if you want to have an extra shift, you won't find the perfect people to do this immediately, because you need to source them and train them.
When I joined the company back in 2010, we were about 1,200 employees and now we are 1,800, so we have to take things step by step. Producing about 4,000 units of the Urus per year is already a challenge. And if you look at what we are offering now, this is still a small part of the vehicle's potential - I'm talking about [color and material] customization.
AE: Speaking of which, would it be reasonable to expect a range diversification, with various Urus versions and special editions? For one thing, Maurizio Reggiani [Lamborghini's Chief Technical Officer] has already talked about a hybrid Urus coming in the next 16 months.
AB: The most recent statement from Stefano Domenicali [Lamborghini's CEO] was that hybridization would arrive first on the Aventador and Huracan successors, with the Urus receiving it a bit later.
As I mentioned, we want to focus on customization for now. For one thing, we work with 32 different suppliers for the interior, we need to have everything synchronized, so we're currently making efforts to reach the point where the customer can have the cabin in whatever color is desired. We've already achieved this desire-to-production status with the Huracan, so, for instance, you can walk into the showroom and show us the cover of your phone and we'll replicate it for the vehicle. For now, the Urus customers are happy to simply get the car, but we know the configurations will become even more refined.
Of course, we have to observe the life cycle of a product and, as you've noticed with the Huracan and the Aventador, there are plenty of derivatives and this will also be true for the Urus.
AE: Speaking of which, let's focus on the Urus ST-X and the dedicated racing series kicking off next year. The events will be held in Europe and the Middle East, which happens to be your area of expertise. How was this area chosen over other parts of the world, such as the US?
AB: First of all, you start from your own country, when you can. In this case, you start from your own continent. Also, there are limitations in terms of the racetracks that can host this kind of multi-terrain event. The Middle East is perfect and Europe also fits the bill. Since this will be the first year and we have limited resources, we've decided to focus on what is the biggest market [EMEA area, not single market, since the latter title goes to the US]. Overall, EMEA, with its 50-plus countries, brings more than 40 percent of our sales, while the US will certainly come to this series in the future.
AE: What about the driver selection? Do you have to be a Lamborghini collector to be eligible for the program or can you directly walk into it?
AB: This is a natural evolution for those who drive a Lamborghini, so one must have either a skill, a dream, or both. For one thing, the car obviously won't be as challenging to drive as a GT3. So given the formula we've developed with the Super Trofeo [one-make series], with engineers and mechanics waiting for the drivers to just put a suit and a helmet, gentlemen drivers have the way paved for them. Then again, we want to keep the level of the competition high, so pro drivers will obviously be allowed.
AE: So, is owning a Lamborghini street car a pre-requisite for acquiring an Urus ST-X?
AB: Well, that would be the normal path, but, in theory, we are open to newcomers who will use this program as thei way into the Lamborghini world. Of course, if the demand ends up outweighing the supply, we have to favor existing customers.
AE: Have you already considered a road-going model based on the Urus ST-X? Perhaps something like the Lamborghini Gallardo Super Trofeo Stradale [here's a review of the STS]?
AB: Well, in our Centro Stile, we have so many ideas that you couldn't imagine them all. The challenge for Lamborghini is to find out which is the one that deserves to have resources invested into it. We have so many nice things we can do - sometimes something leaks, like the Huracan Sterrato. But, in the end, when you have a car that is so versatile, such as the Huracan Evo, it's only natural to think "OK, I can increase the ground clearance, do the proper tweaking and I can go offroading,"
The Sterrato was an idea that, by coincidence, was communicated because we already had a prototype, but with a clear message: we're not going to build the car!
AE: So the Sterrato isn't going into production?
AB: [he pauses for a moment] The official message is "we are not going to build it". There are already [production] rumors... Lamborghini is being flooded with requests, but, again, we need to come back to the fact that the company has a dimension that means we can only do a limited number of things at the standards we desire. So I don't have the answer now, whether it's about a Sterrato version of the Urus, as you asked before, or regarding the Huracan Sterrato. The answer at the moment is "we are evaluating", just like we are evaluating hybridization and electric engines.
[At this point, I showed Andrea the Huracan "Rally Car" built for Instagrammer Alex Choi. To my surprise, he hadn't seen it before, so there were quite a few chuckles involved.]
AE: This build was presented about two months before the Sterrato was introduced. It's hard to believe it was a coincidence, so perhaps Alex had heard rumors about the Sterrato.
AB: Alex Choi... he's from Hong Kong, I know him [for the record, Andrea used to manage the Asia Pacific region for Lamborghini].
These youngsters want to make an impression and I can name you another ten people that use the Lamborghini brand, or other brands, to draw attention. As far as we are concerned, we are simply witnessing this without being able to do anything. They bought the car and while this is not exactly our definition of the term, they are free to use it [can you hear that, Ferrari?]
[This brought the discussion to the lack of predictability of the Asian market, with China unsurprisingly setting the tone in this regard.]
AB: Much more so than in the case of any other country, China is influenced by regulations that are totally unclear that can change very quickly. For instance, the authorities had announced new C6B emission regulations without introducing a time frame. Well, the introduction of this was recently confirmed. It dramatically limits emissions while covering 70 percent of the country's surface and obviously the most relevant areas in terms of sales.
Before we manage to make the technical updates to our vehicles, just like other carmakers, we'll have to put everything on hold for a few months. The new regulation becomes effective on July 1st, 2019 and so we'll have to put the sales on hold after having registered a delivery peak in the first part of the year.
The process is lengthy and it goes like this: the Chinese government issues the new regulations, carmakers asks questions, then the authorities release an amendment. This limits the stability of the deliveries in China, so the hiatus can reach six to seven months at times.
For example, this new regulation involves doing 160,000 kilometers [100,000 miles] on a test bench per model. But even if you spend 24/7 on the bench, it takes nine months. So you can imagine how challenging it is.
For instance, the Korean process of homologation is also time-consuming, lasting for months. Of course, there's a fair sensitivity around the world regarding this and we're complying. For one thing, the production process in Sant'Agata Bolognese has been carbon neutral since 2015.
AE: Since we're talking about tuning, the market is in a place that allows carmakers to take back some of the "ground" captured by aftermarket developers. And, for instance, you did this with the aero package for the Huracan back in 2016. Will there be more of this, perhaps a unified parts catalog for the entire Lamborghini range?
AB: Lamborghini is working in a different direction. When it comes to do a car, let's call it custom, what we can do is much more dramatic - you've seen the Alston last year. In the end, customization is one thing and these accessory range will be wider and wider, on top of the Ad Personal personalization program, but when it comes to "tuning", we want to sit down with the customer and imagine something that is truly redefined on a chassis we already have. We want to bring this to the extreme end! These parts need to have their form following a function, one that involves a delicate balance, which is why tuning has to be a full project.
AE: We discussed the Aventador and its hybrid successor, but will there be nothing between the 2018 launch of the SVJ and 2021, when the model goes out of production? There have been rumors of an Aventador RWD final edition...
AB: Well, as I mentioned, the V12 production schedule is full until 2021, so there wouldn't be time to build an extra version.
AE: There was something regarding the 2018 sales in Europe: as opposed to the size and even the variation trends of these two markets, the UK generates considerably more sales than Germany [think: 636 vs 463 cars, respectively].
AB: This is a typical discussion we have in the company and you named the two biggest countries for us in Europe, a continent that already generates the greatest sales for us. Not to mention that Lamborghini's shareholder is German, or that our most important competitors are English. Italian or German, so these are the three countries that are making the supercar world what it is today [Lamborghini's Italian sales sat at 295 units last year].
If you look at the sales in Germany and include statistics from a few years ago, Lamborghini hasn't used its full potential as well as other brands. Obviously, Porsche, which is part of the VW Group together with us, is a local carmaker, so it has a special grip on the market. But when it comes to other brands from Italy, for example [no further explanation required here], they've been doing a much better job than Lamborghini in the past. So if we look at German market growth we've experienced in 2018, we are on the right direction to catch up.
I can tell you the mistakes we've made in the past: the German customers had an incorrect perception of the Lamborghini brand. Somehow, I'm talking about ten years ago, there was a wrong approach to the market. What is happening now is that Germany is going up strong and my forecast is that it will become greater than the UK soon. Fortunately, we haven't done the same mistakes in Britain, so we were already strong. And with last year seeing us introducing the Huracan Performante, which was an incredible success especially in this market, as well as the Aventador SVJ, these range-toppers appealed to the hardcore customers in that part of the world.
AE: Moving on to Polo Storico [the company's classics arm, which was launched in 2015 and handles cars that have been out of production for at least ten years]: the Murcielago will enter its radar in 2021, so what will change and how will this influence the pricing?
AB: The price of classics in incredible. As you've seen, one of the best, if not the best investment you can make involves classic cars. It's also surprising for me and probably for everybody. There has clearly been a boom of collectors and Lamborghini, together with other iconic brands, has experienced a huge growth in terms of value. The Miura is now incredible, the Countach had picked up a long time ago, the Diablo is starting to show interesting prices, not to mention the LM002.
As for the Murcielago, what can I say? The production was still very limited [think: 4,099 cars] compared to what Lamborghini does today. Of course, some of the cars were ruined in accidents or weren't properly maintained. So I can predict that the Murcielago will see a progressive increase in pricing. Then again, the Polo Storico is a tool that allows you to ensure you can repair the car in the best conditions
AE: Female buyers - you've already stated that 70 percent of the Urus customers are new to the brand, so what do the statistics show in terms of women?
AB: This is of course a sensitive topic, as none of us actually knows what women want [for the record, there were two women and three men at the table in that moment and everybody got closer as we discussed this, with eyes being opened as wide as our smiles].
On a more serious note, our customers base has been made of 100 percent males in the past. However, the number of female buyers has gone from zero to seven percent with the Urus. This is on a global scale and if you look at Asian market, that percentage is in the double-digit range. In fact, If I had to make a prediction, I'd say that figure will rise to 40 percent in the future.