Why sales of high-priced Bentleys and Rolls-Royces have boomed while the auto industry suffered

The Rolls-Royce Ghost Black Badge.Alex Goy

  • Sales of ultra-luxury cars thrived in 2021 as the auto industry struggled to build enough cars.

  • Rolls-Royce, for example, grew sales by a whopping 49% in 2021.

  • Super-premium brands saw big demand and weren’t affected by the chip crisis.

Carmakers sold millions fewer vehicles than usual in 2021 as a computer-chip shortage and other pandemic-related disruptions cast wrench after wrench into the cogs of auto manufacturing.

But ultra-high-end brands like Bentley and Rolls-Royce thrived amidst the chaos. A surging stock market made wealthy consumers even richer, while the pandemic drove them to open their wallets for physical goods instead of travel and vacations. Plus, super-premium brands weren’t hit by the semiconductor shortage like mass-market manufacturers.

Rolls-Royce, whose flagship Phantom starts at around $460,000, sold a record 5,586 cars in 2021, up 49% from 2020. Bentley moved 14,659 vehicles, a 31% increase over the previous year. Lamborghini had a record-breaking year, too.

Bentley Flying Spur W12

Bentley Flying Spur W12.Bentley

In part, sales boomed for the simple reason that wealthy people got even richer over the last couple of years. Sales of luxury vehicles are directly correlated with the stock market, said Michelle Krebs, executive analyst at Cox Automotive.

A strong market during the pandemic — one that has doubled the wealth of the 10 richest people in two years — may have pushed a certain segment of buyers to pull the trigger on that tailor-made, $400,000 Rolls-Royce Cullinan SUV or $200,000 Bentley Continental they’ve lusted after.

People had more time on their hands and fewer opportunities to splurge on travel and eating out, so they directed their spending toward exclusive and special products they could enjoy from home, Martin Fritsches, CEO of Rolls-Royce Motor Cars Americas, told Insider.

Both Rolls-Royce and Bentley also chalk up booming demand in recent years to new product offerings that have lured in first-time buyers. Since late 2019, Bentley has launched new models, paint schemes, and a dark, Blackline accessory package, all of which have attracted a younger customer base, said Michael Rocco, vice president of sales and operations for Bentley Americas.

Similarly, Rolls-Royce’s Cullinan — its first SUV and its first all-wheel-drive vehicle — has been “a major game changer,” Fritsches said. Thanks to it and other models, Rolls-Royce’s average customer age has dropped to 43.

Rolls-Royce Cullinan

The Rolls-Royce Cullinan SUV.Rolls-Royce.

But demand is only half of the equation. The bigger question may be how these companies were able to satisfy growing appetite in an auto-manufacturing environment that’s been ravaged by parts shortages, shipping crises, and other disruptions.

Niche manufacturers tend to have smaller, more stable supply chains, meaning there’s less risk of running out of parts or materials, said Kevin Tynan, a senior automotive analyst at Bloomberg Intelligence. Rolls-Royce, for example, builds all its vehicles in one factory in England. A behemoth like Toyota churns out millions of cars at plants around the globe.

Another piece of the puzzle is that Bentley and Rolls-Royce are owned by big parent companies — the Volkswagen Group and BMW Group, respectively — that are strongly incentivized to allocate as many computer chips as necessary to their most profitable products and brands. Neither Rolls-Royce nor Bentley experienced issues obtaining the chips they needed, the companies told Insider. Prioritizing high-margin vehicles when supplies are running thin is “business 101,” said Tynan.

The surge in super-high-end sales comes amid a wider boom in the luxury-vehicle space. In 2021, both Porsche and BMW saw huge growth while mass-market brands struggled. In 2012, only 6% of cars bought in the US cost $50,000 or more, according to Cox Automotive. In 2021, that figure grew to 30%.

Read the original article on Business Insider

https://www.yahoo.com/lifestyle/why-sales-high-priced-bentleys-125500884.html

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