► Why luxury is the car industry’s secret weapon
► A new arena to compete with China
► How brands like Rolls-Royce and Bentley do it
For a brief period in time in 2023, a man called Bernard, who sells T-shirts, watches and fizzy wine, became the richest person in the world. His conglomerate, LVMH, which owns luxury brands like Louis Vuitton, Möet and Fendi, performed so well on the Parisian stock exchange that it pushed its value up at the same speed as the Nasdaq – where shares in Apple, Microsoft and Amazon trade. Luxury is an irresistible commercial force.
This is brilliant news for legacy automotive brands currently worried about China. The brute force of colossal, relatively cheap labour and vertically integrated production – all funded by lakes of state capital – has helped China become the world’s biggest vehicle exporter, its cars heading overseas by the boatload to disrupt the old order. Analysts from bank UBS think the Euro and US brands will lose a fifth of global market share by 2030.
So, which direction should the old school carmakers take? Jaguar, currently re-inventing itself, makes no secret of the fact the main reason its new cars will sell for north of £100,000 is to put them beyond current Chinese competition. Bernard shone a bright golden light on the new western paradigm. Go luxe or go extinct.
For more than a decade the likes of Rolls-Royce and Bentley have found that pushing upmarket is a gilded lifeboat helping them weather a multitude of storms, from worldwide financial collapse and a global pandemic to supply-chain crises and exit from the EU. If the rest of the world’s car makers are serious about luxury they could learn a lot from these UK-based players. And success starts by letting your clients run riot…
The irony of wealth is that it becomes impossible to treat yourself. Which is why luxury customers no longer want just stuff; they want access to and influence within their favourite brands – to walk around like they own the place. Directing designers and whispering into the ears of CEOs is valuable. Bentley recently invited a handful of very special clients to meet and dine with senior management on the production line at Crewe. And such activities are exceptional for business.
Aston Martin has Q Branch, Bentley has Mulliner and Rolls-Royce has Bespoke, all mini empires in their own right, where customers are not only let loose but encouraged to make outlandish requests – so long as their bank balance can back up the bravado.
Bentley saw profits soar to a record £623.7 million in 2022, and in 2023 grew its custom operation by 43 per cent. While revenue for the first half of 2024, a more challenging period, was down on the previous year, €1.388bn isn’t too shabby. Neither is an 18.8 per cent return on sales. Rolls-Royce, a brand more coy about its profitability, delivered 6032 cars in 2023, with the average customer dropping more than €500,000 per car that year, well above the list price of its most expensive model.
Aston and Bentley’s approach is mostly colour and trim, while also offering limited-run coachbuilt cars like the Bacalar, Batur and Valour, not to mention recreations of their classic icons. Rolls-Royce facilitates the full Roaring ’20s coachbuilt experience. These one-offs are an economic miracle – customers happily pay to fill the void between a designer’s wildest dreams and the accountants. The result is a customer-funded, roadgoing concept car. To give you an idea of budget, one coachbuilt Rolls-Royce was rumoured to cost £25 million.
Dealerships are all well and good, but you need to be smart to capture the ‘ultra high net worth individuals’ – people with a net worth of at least $30 million. Ergo, the rise of the pop-up. From Saint Tropez to Savile Row, following the money has been an essential tool for Britain’s luxo titans to support both revenue and brand image. In addition to rocking up in places bristling with wealthy travellers, from Saint Moritz to the Côte d’Azur (where Rolls-Royce has summered), they use the pop-up model as a low-cost means to experiment with new markets and interact with their customers face to face. This flexibility is needed to respond to the speed with which luxury markets emerge.
While supercar brands can be guilty of splashing their logo on questionable merch, a better-curated partnership can pay substantial dividends, and help elevate an automotive brand’s position as a luxo entity rather than a boring old car maker. Aston and Bentley have gone in on property, offering their brand to residential projects in Miami and Dubai. They’ve imported the tactic from Versace’s Palazzo Versace model, Bulgari’s Hotel & Residences scheme, and other similar property-luxe tie-ups.
Rolls-Royce’s approach is softer. It infiltrates the monied world by funding emerging creatives through its art programme, Muse. If your brand enters the room hand-in-hand with creative talent, an audience of spenders might like you as much as they pretend to like art.
There’s no word more powerful than ‘no’ to a rich person. Telling your customers they’re not allowed to buy your expensive new product is a time-served luxury play (see the Hermes Birkin bag, every attractive Rolex and a reservation at The Fat Duck). That’s why brands have different tiers of ownership. It begins with a hybrid of linked app and owners’ club. Bentley has the Bentley Network and Rolls-Royce has Whispers, both offering invitations to experiences, a concierge and the opportunity to chat to executives as well as other owners.
Once you’ve got your car, shown your face on the app and turned up to a few showroom events, you might get invited to play on the next level: the limited-edition car. These tend to have more power, sleeker bodywork and off-menu features. They’re for existing customers only, and tend to cost between 40 and 100 per cent above RRP. Beyond that, the very top tier includes the possibility of a coachbuilt one-off. This is profitability squared.
Exploiting your heritage is pretty standard practice for a car brand, but the luxo set has wised up to a key fact: the rich are getting younger. Today, the average age of Bentley’s customers in some regions is just 39. Crewe has extended its heritage fleet, promoting cars not just from the universally understood ‘classic’ period but the ’80s, ’90s and beyond – periods that resonate if you’re 39. But heritage comes with a catch – if you’re not careful, history can be the only place your brand belongs, which isn’t terribly appealing to the next generation of luxury consumer.
So, Bentley rarely markets a new model finished in its traditional, subdued colour palette, preferring neon oranges, electric purples and nuclear greens. It also has a boosted and blacked-out Speed range, addressing its old-world associations head on and elbows out.
Rolls-Royce has gone even further, aligning itself with ‘subversive’ customers who, according to the company, ‘reject suits for streetwear’ and ‘use blockchain not banks’ with its bad-boy Black Badge models. It works – the average age of an RR customer is just 42 worldwide, and the package (wheels, engine tune, carbon trim and a thorough de-chroming) is a circa-£40,000 option. Ker-ching.