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Why Volkswagen Group took Lamborghini under its Umbrella in 1998?

Volkswagen group takes Lamborghini under its Umbrella.

Lamborghini is an Italian brand and manufacturer of luxury sports cars and SUVs based in Sant’Agata Bolognese. Lamborghini, being one of the biggest automobile brands in today’s era, started its journey by manufacturing the SPA tractors.

In 1973, the company faced a downfall in sales because of the worldwide financial downturn and the oil crisis. The company wasn’t able to invest on the road and needed big investors. So in totality, ownership of the company changed three times after 1973 which also included a bankruptcy in 1978.

In 1987, the American corporation Chrysler took control of Lamborghini and sold it to Mycom Setdco (Malaysia-based investment group) and V’Power Corporation (Indonesian group) in 1994. Finally, the ownership was placed in the hands of the Volkswagen group in 1998, which placed it under the control of the group’s Audi division.

Progress under the Volkswagen group

Volkswagen saw potential in Lamborghini and thus, invested a lot in it to make it one of the biggest brands it owns. New products and models were introduced to the brand’s name and presented in the market, and it was overwhelmed to see the increased demand and in turn, increasing its productivity.

Though hindrances like the worldwide financial crisis of the 2000s did a drop in sales to the company by 50%. Volkswagen’s Audi offered around $100 million for Lamborghini.

Under Audi’s management, Lamborghini has been on a path of increasing profits. Introducing big products on road like Aventador and Huracan brought up the sales of the company by 30% and 50% when the SUV Urus was launched.

About the Volkswagen Group

Volkswagen AG is a German multinational automotive manufacturing company, globally known as the Volkswagen Group. Its head office is in Wolfsburg, Lower Saxony, Germany. The group designs manufacture and distribute passenger and commercial vehicles, motorcycles, and some other things of the same category.

It has the largest market share in Europe and has maintained it for over two decades. The passenger car brands that it owns are Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Skoda, Ducati, Scania, and TRATON. Volkswagen was founded in 1937, to manufacture the car which was known as the Beetle.

The production scale of the company grew rapidly and it then acquired Auto Union in 1965, which produced the first post-war Audi models. Volkswagen launched the generation of the front-wheel-drive vehicle
From the 1970s to 1992, the acronym V.A.G was used for the Volkswagen group as a brand for versatility in activities.

On the contrary, V.A.G had no official meaning and was never the name of the Volkswagen Group. Volkswagen survived the world war the way no else company did, it withstood the crisis and continued the production of cars that met the needs of the customers at that time. 

Audi taught Lamborghini Quality

Ex Ante to all the supercars Lamborghini made, its founder built more down-to-earth vehicles i.e. tractors. From the initial point of the story of Lamborghini from the farm, it faced a hit from Ferrari with the launch of sports cars.

No matter how much fame Lamborghini had gained it had faced a lot of difficult times with finance and sales. Volkswagen Group owner and Audi boss: Ferdinand Piech, saw where the problem was, he suggested that what Lamborghini needed was efficiency while working with quality and financial backbone. With Audi, it was able to focus on quality up-gradation and without it, there was no major Lamborghini success.

Audi already had the tools Lamborghini needed and it was just about they both come together, not forgetting the back support of the Volkswagen Group. Apart from design, one of the most defined features of Lamborghini is sound. The beast-like engines have a powerful revving noise like no other car engine. The exhausts that Lamborghini brought in the market separated it from the rat race everyone was running for.

To be more precise it created what the customers were looking for but could not explain when asked, which means the company crafted ideas into reality.

Was it worth it?

Taking the normative view in perspective, it was a life-changing turn for Lamborghini, that saved its brand name in the market. Audi gave Lamborghini what it needed i.e. a financial cushion and quality up-gradation advice under the shade of Volkswagen Group.

When morphed together Lamborghini products were unbeatable in the market. Lamborghini’s performance in the market could be compared with a raging bull in an arena, which in turn was its logo too. From manufacturing tractors to making V-12 engines supercars, it had come a long way.

Lamborghini never shows any commercial on television because it claims that people who can afford a Lamborghini don’t have time to watch television.

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