Lambo SUV Could See Production

Lamborghini may finally be moving closer to producing a high-performance sport utility vehicle for the world’s wealthy, as Italy’s job-hungry government offers incentives, according to people familiar with the matter.

In exchange for Lamborghini’s plan to hire as many as 300 people, Prime Minister Matteo Renzi’s government is prepared to offer as much as 100 million euros ($111 million) in tax breaks and other benefits for a new Italian assembly facility for the crossover, said the people, who asked not to be identified because the discussions are private. A meeting on the incentives took place in Rome on Tuesday between Lamborghini and Italian officials, and the sides agreed to gather again as soon as possible to reach an agreement, they said.

Known for low-slung sports cars like the Huracan, Lamborghini unveiled a prototype of the high-riding Urus SUV in 2012. The Italian supercar brand has since been refining a business case for the vehicle in an effort to win approval from its parent, Volkswagen AG’s Audi. If it gets the green light for production, the car will vie with the upcoming Aston Martin DBX as the world’s sportiest crossover.

The Italian government is trying to seal the deal to add stable manufacturing jobs as it combats an unemployment rate stuck above 12.5%. Employers have delayed hiring with the economy mired in a recession since the second half of 2011, the longest period on record. Parallel to talks with the government, the Italian carmaker is also seeking more flexible working hours from local unions. The Sant’Agata Bolognese-based manufacturer aims to get approval to build the model by the end of June, but the timing and final outcome of the talks are difficult to predict, the people said.

To cut costs, the chassis and other key components are set to be produced at other VW factories, such as a plant in Bratislava, Slovakia, where the frame for the Porsche Cayenne SUV is made, said the people. “We haven’t decided on the series production of the Lamborghini Urus yet,” Audi said in an e-mailed statement. “Once this has been clarified, the question about the production location will be posed.”

Audi is seeking to broaden Lamborghini’s lineup beyond two-seat supercars, which have limited appeal in emerging markets such as China where road conditions can be poor. It will be Lamborghini’s first SUV since production of the boxy LM002 — the so-called Rambo Lambo — ended in 1993.

The push comes as the increasing wealth of world’s rich led to record sales last year for most major luxury-car makers. For Lamborghini, deliveries rose 19% to an all-time high of 2,530 cars. Lamborghini has previously said there’s the potential to sell 3,000 performance crossovers a year, more than doubling the size of the brand.

“From an entrepreneurial perspective, it’s an opportunity,” Audi Chief Executive Officer Rupert Stadler said in an interview at Bloomberg’s headquarters in New York earlier this year.

-Christoph Rauwald/Bloomberg