International International Business
HAS LAMBORGHINI LANDED ON ITS WHEELS?
Setiawan Djody, a 44-year-old Indonesian millionaire who wants to be his country's first auto tycoon, has a simple enough credo. "I want to develop a car that people can afford," he says. But he has picked a curious way to do it. He's chairman of Lamborghini Automobili, the Italian maker of luxury sports cars with $250,000 price tags.
But then, Djody is like no previous Lamborghini chairman. He comes from a Javanese royal family and has a close partnership with Hutomo "Tommy" Mandala Putra, the 32-year-old son of Indonesia's President, General Suharto. While Djody paid $40 million in January to acquire the sports-car company from Chrysler Corp., many observers regard Suharto's son as the central force behind the purchase. "Tommy likes racing cars," says a U.S. official in Jakarta. Djody denies that Tommy played a role in the purchase but says he may sell him a major stake if Lamborghini takes off in Indonesia.
COPYING KOREA. Joining his privately owned companies in real estate, mining, shipping, and heavy industry with the financial and political clout of Suharto's son gives Djody a clear shot at reaching his goal. He is already developing a low-cost Lamborghini clone. "We'll do what the Koreans did. They got all the technology they needed, and now they're exporting cars," he says. Easier said than done. "It's a really tough challenge I wouldn't wish anyone to have to undertake," says Mario Barbieri, vice-chairman of Bugatti Automobili, a rival Italian maker of luxury cars.
Djody, who made his first million at age 26 selling construction equipment, seems to have Lamborghini's existing operations back on track. After selling only 200 cars in all of 1993, the company expects to more than double sales this year. That's largely thanks to an overall upturn in the long-depressed luxury-car market, particularly in the U.S. But 12 cars were sold in Malaysia alone during the first month after Lamborghini changed hands.
Lamborghini's new owners are also intent on increasing sales through new models. Next year the company plans to launch the Borneo, an off-road, four-wheel-drive model built at Lamborghini's plant in Modena, Italy, for sale around the world. With a V-10 engine, the semiamphibious vehicle will have tough titanium parts and be able to plow through swamps, sand dunes, and snow. Despite Indonesia's high duties of up to 300% on imported cars, Djody expects to price the Borneo at $85,000. By contrast, Chrysler's Jeep Cherokee now sells for $90,000 after taxes in Indonesia.
Djody will call his inexpensive Indonesian car the MegaTech, to protect the elite Lamborghini name. With a Lamborghini look and a $10,000 price tag, the dream car is intended for Asian yuppies with annual incomes of around $30,000. Competition will be stiff, particularly from Daihatsu Motor Corp.'s $8,000 microbuses and Toyota Motor Corp.'s $15,000 sport-utility vehicle.
AUTO PARTS AMBITION. Engines for the MegaTech are being designed at Lamborghini's Formula One development lab in Modena. The seven prototypes range from one to three liters. One of the smaller models could go into the $10,000 car, while the larger ones could power a high-performance model that Djody hopes to sell for $15,000. Both MegaTech cars are supposed to roll out in three or four years, and combined annual output is to start at around 50,000 cars.
The ambitious plan depends on Djody's ability to build an auto parts network in Indonesia. Once again, Djody is shopping abroad. He and Indonesian textile manufacturer Texmaco are negotiating a joint venture with U.S. machine-tool maker Bridgeport Machines Inc. They're also looking to buy an auto parts plant in Britain. The plan is to dismantle the plant and move it to Subang, West Java.
Despite its support from a member of Indonesia's first family, the Lamborghini venture is not without its political risks. Indeed, the involvement of the President's son with such a luxury brand may only add to the image problems of a government that has ruled with military backing since the mid-1960s. The family is already being criticized for playing a role in most of the country's largest infrastructure investments. But one way or another, Djody is determined to see his new MegaTechs on Indonesia's streets and highways.Michael Shari in Jakarta, with Silvia Sansoni in Rome