Forbes pegs the number of billionaires at a record 2,208. Average net worth: $4.1 billion (all figures in U.S. dollars). Combined net worth: $9.1 trillion. The U.S. was the reported home to 585 billionaires, China in second place at 373.
In June, Bloomberg said a Boston Consulting Group report found that millionaires and billionaires now hold almost half of all the world’s personal wealth. Total personal wealth around the globe reached $201.9 trillion last year, a 12 percent gain from 2016 and the strongest annual pace in the past five years.
And then we have the millionaires. Business Insider reports that more than 33 million people have a personal net worth in excess of $1 million. But it’s the ranks of the ultra-rich – personal net worth in excess of $20 million – that is growing the fastest in the world of the very wealthy. Boston Consulting predicts the ultra-rich will grow to 671,000 in all by 2022.
Now you have a rough idea of whom Rolls-Royce is targeting with the Cullinan SUV, recently launched – less than a million buyers in all, it would be fair to say. Indeed, Rolls is among a handful of car companies racing to attract and please the ultra-rich. Meeting the desires of a rapidly changing market for super expensive automobiles is tricky. These people can afford anything they want.
What’s more interesting is the fact that many of the ultra-rich are shockingly youthful vehicle consumers more than willing to spend in the $300,000-plus range – often up to a million or more, in fact. And so, we have the Cullinan.
Rolls’ first SUV (sport-utility vehicle) is a departure for the 114-year-old luxury brand. The North American debut was held earlier this year at Canada’s No. 1 Rolls dealer by volume – one of two Rolls-Royce stores by British Columbia’s Open Road Group.
“The perception of the (Rolls-Royce) brand, is that it is old and outdated and that is very wrong,” says Torsten Müller-Ötvös, the CEO of Rolls-Royce Motor Cars. “The average age (of a Rolls-Royce customer) worldwide is 45. Eight years ago, it was 56.
Müller-Ötvös spends a huge chunk of his time traveling the world, selling Rolls the brand and its products. He came to Vancouver to support the launch and a dealer who has invested heavily in a new two-level, 4,500 square foot showroom on a stretch of Burrard Street that has become luxury car row in a city and province that leads the nation in luxury car sales penetration. Just down the street you will find showrooms filled with Aston Martins, Ferraris, Lamborghinis, McLarens and other premium brands.
Rolls officials expect the Cullinan to do far more than halt last year’s 16 per cent slide in sales, though they argue that sales results are not a true measure of the Rolls-Royce brand. Nonetheless, the BMW AG-owned Rolls-Royce saw deliveries drop to 3,362 in 2017.
That was well below even 2013 when Rolls-Royce sold 3,630 cars, and certainly at least a small disappointment given sales hit 4,011 in 2017 4,011. Last year, Rolls had to manage the loss of the Phantom, though the company has since unveiled the Phantom VIII, which along with the new Cullinan will most definitely reverse the slide, and more.
“Our clientele is getting younger and younger,” says the trim and dapper Müller-Ötvös, a German who took the helm of this storied British brand in 2010 with a mandate to take BMW’s investment to higher levels of profitability with a modernized lineup.
“Ultra-high-net-worth individuals, that’s our clientele,” he says. “We have seen a dramatic change over the last 8-10 years. It’s not just inherited money. It’s self-generated money. And the average age going down like this,” he says, swooping downward with an arm dressed in a handsome and quite black bespoke suit that has the look of Saville Row.
“So, our clientele is getting massively younger. What they are all searching for is something more casual, easy — easy to use on a daily basis. They want a car they can take everywhere for all occasions. And that of course leads them to an SUV.”
Not a truck. I am corrected when I refer to the Cullinan as anything but an SUV or car. “It’s not a truck,” he says brusquely.
The SUV market is quickly and steadily displacing passenger cars and the ultra-luxury segment is no exception. Storied premium brands that once would have scoffed at the idea of selling SUVs are now racing to launch new models. For instance, Bentley has the new Bentayga, Lamborghini the Urus, Maserati the Levante, Mercedes-Benz the G65 AMG and G500, and
Range Rover the LWB Autobiography to name some of the new very expensive entries.
Müller-Ötvös argues that while these are all very nice vehicles, the Cullinan and everything else in the Rolls-Royce brand compete at a completely different level. In particular, he bristles when I draw a comparison between Rolls-Royce and Bentley.
“It starts with a huge misconception. The misconception is the price position,” he says, noting that Rolls-Royce models across the line are about $100,000 more expensive than a comparable Bentley. “So, we are here,” he says, raising his hand high, “and here is Bentley,” he motions lower.
Müller-Ötvös insists that Rolls will not and does not need to chase volume in the way of Bentley. Bentley has a large factory in Crewe, U.K., that can produce 15,000 units and has some 4,000 employees.
“Our strategy is
to stay highly exclusive and to stay limited in volume,” he says, adding that BMW’s mandate for Rolls is to “chase profitability and we are vastly more profitable than Bentley at less than half the volume.”
Any comparison to Bentley rankles the Rolls-Royce crew, in fact. Yes, there is a grand historical rivalry, but current comparisons bring into play the recent history of the two brands. Two decades ago, BMW struck a deal for the rights to the Rolls-Royce name and the name only. No factories. No cars. No showrooms.
This marked the end of a takeover brawl between BMW and rival Volkswagen AG. BMW paid $65 million for the Rolls-Royce name — and the ”Spirit of Ecstasy” hood ornament — from Rolls-Royce P.L.C., while VW paid $780 million (all figures in U.S. dollars) for the Bentley name, the ancient Crewe factory complex and a few bits of hardware For BMW, getting the Rolls-Royce brand name for relative peanuts in the car business was a steal.
Since then, BMW has plowed billions into Rolls – a new factory and headquarters in Goodwood, England, all new cars – the Phantom; the Ghost; the Wraith; Black Badge variants of both the Ghost and Wraith families; a burgeoning custom-made Bespoke line; and now the new Cullinan and Phantom VIII.
“We have proven to the world that the BMW can build a brand in a really responsible way,” says Müller-Ötvös, noting that “Cullinan is to an extent a departure for the brand, the next big departure, but a very important one.
“Yes, this brand is 114 years old and yes, you need to understand the pedigree of the brand, the credentials. But you need to move early enough to get into new territory, to attract new customers, customers you never had before.”
Given the shape of the luxury market overall and the ultra-luxury market in particular, Rolls should attract many new customers, thereby turning around those stalled sales volumes. According to IHS Automotive, registrations worldwide of the seven leading ultra-luxury brands have about tripled in the last decade, to more than 300,000.
The world now has some 2,000 billionaires and the global charity Oxfam says last year alone, a new billionaire was minted every two days. Knight Frank’s 2017 wealth report says the number of millionaires jumped 36 from 2006-2016. Millions of them live in Canada and the U.S.
Not surprisingly, luxury vehicle sales are booming and should jump 7.0 per cent this year, says Desrosiers Automotive Consultants. Actual Canadian sales of figures for ultra-luxury brands like Rolls-Royce, Bentley, Lamborghini and Rolls-Royce are difficult to come by, though sources suggest they were up 10 per cent last year. Dealers and carmakers competing in this segment expect strong sales to continue in 2018, barring any serious economic downturn.
“We see a growing market, especially in the Asian market (here) in Vancouver,” says Müller-Ötvös, noting that what he’s seen Rolls-Royce’s order books for the SUV in Canada is “stunning. Really stunning.
“I am very pleased. I would even say that we have never seen before so many orders at such an early time in our order books in history. So, I think this car is and will be a smashing success not only in Canada, but worldwide.”
That said, a gaping hole in the Rolls-Royce lineup is any offering with any sort of electrification. Impressive though it might be, the Cullinan is powered by a very traditional and very large he 6.75-litre twin-turbo V12 engine (563bhp/627 lb-ft of torque).
Nothing the Rolls lineup is electrified in even the most modest way. Yet this spring at the Geneva auto show, Bentley showed the first-ever Bentayga Hybrid, a gasoline-electric plug-in powered by a V-6 gas engine teamed with an electric drivetrain that gives this SUV an electric-only range of about 50 km.
Without being specific, Müller-Ötvös says Rolls-Royce will in the next decade go “electric, step-by-step-by-step,” aided in large party by parent BMW’s multi-billion-dollar investment in EV technology.
Of course, Bentley has promised an entire lineup of plug-in models by the time Rolls joins the competition.