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Bugatti's Back And Only $350,000


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BUGATTI'S BACK--AND ONLY $350,000

Don't make the mistake of thinking the helipad at the Bugatti Automobili workshops near Modena, Italy, is some piece of corporate frippery. It's a needed customer service. "A lot of our clients arrive in their own helicopters to visit us," says Mario Barbieri, vice-chairman of Europe's hottest exotic car company. "Or we can send a helicopter for them. No problem."

Clearly, Bugatti customers aren't the kind to suffer from sticker shock, even when the sticker exceeds $350,000. That's the price of the top-of-the-line EB110, which features a carbon-composite chassis and a 611-horsepower, V12 engine capable of hitting 350 kph. These autos--descendants of the old Bugattis so beloved by gangsters and movie stars--just entered production in December, 1992. Yet such bigwigs as the Sultan of Brunei and designer Ralph Lauren are already buying enough EB110s to generate an estimated $44 million in sales this year. Business is so good, says Chairman and majority shareholder Romano Artioli, that he's considering offering Bugatti shares in the U.S. this fall.

ONE-TWO PUNCH. It's a surprising success story in a recession that has taken its toll on other, more established luxury carmakers, such as Ferrari. But Artioli's customers--mostly the superrich--just keep on buying. And he has shrewdly combined ultramodern engineering with a classic image to give them a toy they simply must have.

The image, of course, is rooted in the work of Italian-born car designer Ettore Bugatti. His stylish, high-performance cars were all the rage in the 1920s and 1930s. But sales slid after Bugatti's death in 1947, with the last Bugatti car rolling off a French assembly line in 1952. Antique Bugattis became a top collector's item and kept the name alive. Meanwhile, Artioli grew rich as a Ferrari distributor in Germany and as the Italian importer for General Motors and Suzuki. "But all along," he says, "I was thinking about restarting the Bugatti tradition and building my own car."

In 1987, Artioli acquired the Bugatti brand name and all ef Ettore Bugatti's designs from a division of Snecma, a French state-owned company. Since then, the French connection has helped him in his quest for a high-performance machine. France's Aerospatiale is building the EB110's carbon-composite chassis, while energy group Elf Aquitaine provides the special lubricants necessary to keep gears smooth at 8,000 rpm. The car has already gotten raves in such buff books as Performance Car. The company's managers say Bugatti should turn an operating profit this year.

Artioli has also bolstered his in-house engineering talent by acquiring Britain's ailing but prestigious Lotus Engineering from General Motors Corp. last August. Lotus is tiny, with just $80 million in sales from two roadster models, whose prices start at $36,000. And though reviving Lotus has strained his budget, Artioli insists the acquisition is already paying off. Lotus engineers are working on a right-hand drive for Bugattis sold in Britain, while 55 Lotus distributors in the U.S. could provide a powerful marketing push when a U.S. version of the EB110 becomes available this June.

SMALL IS BEAUTIFUL. The combined Lotus-Bugatti output will probably never exceed 2,000 cars a year. But staying small may well be the key to success. When auto multinationals have tried to turn out exclusive, high-priced models, the results have been less than spectacular. Chrysler Corp. sold its loss-making Lamborghini unit to an Asian group this year. Ferrari, now controlled by giant Fiat, is facing the first downturn in its history--thanks, some critics say, to quality lapses that occurred when Fiat almost doubled output. And Lotus' managers are glad to be out of the GM family. "Bugatti relates more to what we are as a company than GM ever did," says Andrew Walmsley, Lotus' head of operations. "I don't believe GM ever saw the potential in the Lotus badge."

Artioli's next big challenge is the Bugatti EB112, a four-door sedan with the raw power of the EB110 plus the comfort and space of a Rolls-Royce. "It's a new niche: the superperformance car that is also comfortable," says Dagmar Bottenbruch of Credit Suisse First Boston Ltd., which is arranging some debt financing for Bugatti. "Let's face it--a lot of the old and rich people who buy fancy sports cars have trouble getting in and out of them." Fortunately for Artioli, they have no trouble paying for them.John Rossant in Modena, with Julia Flynn in London


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