Luxury car makers are battling to cater to the changing needs of the super-rich
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Even for a veteran Bentley designer, it was an unusual request. A woman wanted to order a Continental GT convertible in her favourite off-red shade of nail polish. But after visiting her London home, where she kept her collection of 300 different polishes, the designer was not allowed to take away the prized bottle. Instead, he had to return to his office in Crewe, north-west England, with his nails painted in the tint.
Luxury car buyers are changing. Not only are they getting younger, but a growing proportion are female, and many want an eco-friendly set of wheels to flaunt their wealth. While this means a growing pool of customers for luxury brands from Aston Martin and Ferrari to Rolls-Royce and Bentley, it also poses significant challenges. Margins can be massive — last year, Ferrari booked a profit of $80,000 for each car sold — and the companies need to change with the times to protect them.
They also face fresh competition. A new crop of manufacturers specialising in all-electric supercars are encroaching into the sector, propelled by the lower barriers to entry — with fewer moving parts in place of an engine, electric cars are easier to design and build than traditional vehicles. HR Owen, the UK dealer group that sells more Ferraris, Lamborghinis and Bentleys than any other worldwide, recently announced that two — Croatian electric start-up Rimac and Mahindra-owned design house and hypercar company Pininfarina — will join its stable of luxury marques.
The number of high net worth individuals in the world (people with $1m-plus of investable assets) is predicted to climb from 18m to 30m by 2030, according to Aston Martin, which is likely to alter the profile of the supercar customer base. A growing number of enquiries are coming from the new wealthy tempted by a supercar but who, according to Ken Choo, HR Owen’s chief executive, “wouldn’t have anything other than electric”. The new wealth pools — from California’s Silicon Valley to China’s heavily polluted megacities — are breeding more environmentally conscious car buyers.
Yet luxury car buyers are changing in other ways, too. The shift from inherited wealth to self-made money, including some entrepreneurs as young as 18, is having a knock-on effect on the luxury car industry. “Our customers have changed in a major way,” says Torsten Müller-Otvös, chief executive of Rolls-Royce. “They are far more relaxed, easy-going, casual.”
The auto industry by nature is slow to change. Cars traditionally take years to design and develop, and the models rolling out of the factories might have begun life more than half a decade earlier on the drawing board. Yet as demographics shift, carmakers are having to become more nimble, and take greater risks, to remain relevant.
In 2016, Rolls-Royce launched its Black Badge range — a darker, edgier version of its models, designed to appeal to an audience more attuned to hip-hop culture and clubbing than the country-club refinement of its cars’ traditional owners. The marketing was almost gothic — a model wore streaming black eyeliner, while consumers were invited to “liberate the darkest recesses of your mind”. And the Spirit of Ecstasy, the flying lady who adorns the bonnet of every handcrafted Rolls, was blacked out as, in the company’s own words, a “high-gloss black vamp”. The car was also more expensive: a Black Badge version of the £250,000 Rolls-Royce Wraith costs £286,000.
It was a massive gamble. But today, more than a third of Rolls-Royces sold are Black Badge models, while the average customer age has dropped from 57 a decade ago to 43, according to the company — and is continuing to fall. “Black Badge particularly gave us a lot of funky new young customers, and that never turned the traditional Phantom extended-wheelbase customer off,” says Müller-Ötvös.
By region, however, the age of luxury car buyers varies wildly. In the UK, Europe and Japan a typical supercar buyer will be in their 50s, but in California it falls to 35, and in China they can be as young as 20, according to executives across the sector. This reflects a combination of young people with trust funds coming of age and the blooming of impossibly young internet entrepreneurs. These fresh-faced customers bring with them the demands of youth, including wanting the latest in connected technology.
For brands such as Ferrari, which funnel all available resources into improving how their cars drive, this has posed a challenge. “The driver doesn’t buy a Ferrari for the infotainment system, but when they sit in the car, they want to have it,” says Enrico Gallieri, the company’s sales chief. “They don’t want to feel they are going back 20 years.” As crowds gawk at the line of supercars parked outside HR Owen’s new Berkeley Square Ferrari showroom in London, he explains that consumers still expect to be able to connect phones and stream music — especially as the same systems are available on cars that sell for a tenth of the price.
Female buyers are another changing demographic in the luxury car market. While the number of wealthy female buyers is growing, Ferrari estimates they account for less than 5 per cent of its sales. At Aston Martin the figure is 8 per cent, which is higher than a decade ago but still low. In China, however, this rises to 50 per cent, driven by the marque’s flagship £155,000 DB11 grand tourer. Fellow UK sports car maker McLaren estimates its sales to women are around 15 per cent, though it thinks the proportion of female drivers is much higher.
The person whose name goes on the registration documentation isn’t necessarily the owner, says Mike Flewitt, chief executive of McLaren Automotive. “We think the number of cars for the female buyers, or where a female is involved in the buying decision, is closer to 50 per cent.”
It is going to become an increasingly important market — there are 14,000 women worth $30m or more in the US and China alone, according to Aston Martin, which adds that while China is the fourth-biggest luxury car market globally behind the US, Japan and Germany, it is fast climbing the league table.
One growing segment of the luxury market that has attracted women is sports utility vehicles (SUVs). Rolls-Royce estimates that one in five of its £264,000 Cullinan SUVs have been bought by women, compared with fewer than one in six, on average, of its other vehicles. An SUV’s high driving position, better road view and more practical boot are some of the attractions.
Regardless of the gender of buyers, sales of high-end SUVs are buoyant. Some 60 per cent of Lamborghini’s sales in the first half of this year were the Urus SUV; buyers were trading in Range Rovers and even current Lamborghini sports cars. Aston Martin has pegged its future on successful sales of its upcoming DBX, an SUV to be made at its new plant in St Athan, Wales. The company expects this to bankroll its push over the next decade into electric cars and help protect it against contractions in the sports and touring car markets. Two-thirds of Aston owners also have an SUV, so converting them into dual-Aston buyers will help the company’s bottom line. If a woman is ever cast as James Bond, Aston Martin chief executive Andy Palmer once joked, she would surely drive a DBX.
The company has come up with a way of visualising its customers, on a chart with axes marking emotion and function. A full-on sports car sits at the top corner where emotion meets focus, an SUV at the bottom corner where versatility meets rationality. Dotted across the chart are names of fictional global customers — from Brad and David to Lebron, Li and Margaret. Charlotte, a 43-year-old Canadian mother, is the name given to the ideal DBX customer, who wants emotional products but also versatility and practicality.
The idea is that when engineers or designers come to a sticking point, rather than question what the chief executive or head of design wants, they contemplate the needs of the ideal buyer. Pictures of Charlotte’s smiling face, with brown eyes and dye-blonde hair, are dotted around the office to aid them.
There are, however, pockets of fierce resistance to the industry’s rush to make high-riding vehicles. Ferrari is developing something larger than its traditional low-slung models, yet refuses to dirty its sports brand with the SUV moniker, instead calling its upcoming model a “Ferrari Utility Vehicle”. McLaren has gone further, ruling out entering the segment to protect the authenticity of its racing brand heritage.
Another weapon in luxury carmakers’ arsenal is personalisation. Executives have realised that encouraging customers to be emotionally invested is the key to securing a second, third or fourth order. In the battle for affection, everything is up for grabs, from the hue of the stitching in the seats to the colour of the brake calipers.
Much like Bentley’s nail-painted designer, McLaren has its own paints division dedicated to catering for its more imaginative clients. One customer wanted a shade of white that exactly matched the first rays of the morning sun striking the snow outside his Swiss chalet. Accordingly, a team of paint engineers was dispatched to the mountains to record the scene and devise the correct shade. Often the customer owns the rights to the shade — and can come back and order a second vehicle using it. “They feel an even stronger bond with the product,” says Flewitt.
These bonds don’t hurt the carmakers either — a newly created shade at McLaren, for example, will add anything from £30,000 to £100,000 to the price of the vehicle, depending on the complexity.
Just 156 shades of blue
David Kyte, an independent engineering consultant, is among the luxury car buyers who have sought the services of McLaren’s personalised paints division.
He had the company present 156 prototypes of metallic blue before settling on the right shade for his P1 hypercar, in a process that took two years.
“They were keen to let me express it and get the right colour for me,” he says. “They said to me, ‘If you can imagine it, we can do it’.”
His wanted to emulate the colour of an old Lamborghini he used to own, which had a metallic grey that “shone in the sun, but was moody in the dark in the shade — and I wanted to do that in blue”, he explains.
Because the final shade was a mix of existing hues, the whole job “only” cost “single-digit thousands”. He now owns the rights to the shade, with permission to use it on future models.
A serial McLaren owner, he has six — including a £750,000 Senna that is parked next to his desk in his office.
Carmakers know that exclusivity — the watchword of luxury — is a way to tie in customers. With the rising popularity of limited-run vehicles, produced in small batches to tantalise buyers, dealers such HR Owen know they can still drive sales through envy. “I tell them, ‘I have three others, 10 others, waiting along the line, so it’s up to you’,” Choo tells clients. “‘I’m not the one who’s going to be crying when you see your friend driving one and you don’t have one’.”
At the 2016 Monaco Grand Prix, Aston Martin invited choice customers — those who had already bought either a £1.2m 177 model or a £1.5m Vulcan — to view its latest exclusive model, codenamed AM-RB 001. With thousands of motor-racing fans in town, the car had been delivered at night on an unmarked truck to avoid publicity. After the weekend, the company — which planned to make only 100 units — had received some 200 expressions of interest.
As the average age of buyers falls, environmental credibility has become a way to win them over — what Michael Perschke at Pininfarina calls the “Greta Thunberg effect”. Demand for sustainability doesn’t just extend to what powers the wheels — some new buyers, particularly the eco-conscious generation just coming into wealth, want every part of the vehicle to be kind to the planet.
Bentley’s EXP 100 GT coupé, unveiled at the marque’s centenary in July, is stuffed with eco-materials, from reclaimed 5,000-year-old wood reinforced with recycled copper around the seats, to an organic leather substitute made from byproducts of wine production. The car is even covered in paint made from recycled rice husks. In time, these features will seep into the company’s wider product line-up. “The new luxury buyers won’t associate with brands they don’t feel have their values,” says Chris Craft, Bentley’s head of sales and marketing.
The biggest shift, however, is the rise of electric power, and its appeal to a new class of buyer. “There’s a completely new breed of customer — people who so far have not been on the marketing [radar] of any hypercar company,” says Perschke at Pininfarina, the Italian design house bought by India’s Mahindra in 2015. His roster of deposits for the new $2.5m Pininfarina Battista electric grand tourer includes classic Ferrari collectors, but also people who have never dabbled in the hypercar market.
At Rimac — the Croatian electric car start-up founded by Mate Rimac — one of the earliest buyers of its $1.2m Concept One car was a plastic surgeon in Florida who only drives electric and wanted to upgrade his Nissan Leaf hatchback to the best vehicle he could find.
However, while Aston Martin has launched 150 units of its electric Rapide E, and plans several all-electric models in the early 2020s under the Lagonda brand, the luxury players have been slow to roll out battery models. Most cite limitations of current battery technology, from making the cars too heavy to corner around a racetrack in the case of Ferrari, to sapping the range enjoyed by their current customers in Bentley’s case.
Rolls-Royce, which fits its vehicles exclusively with 12-cylinder petrol engines, is edging towards electric, with plans for a full electric car within a decade. Some of its buyers are convinced, comforted they can now tell dinner party guests that their next Rolls will probably be one that runs on batteries. Other Rolls owners, many of whom have a fleet of vehicles, are already in the fledgling electric-car market. As Müller-Ötvös explains: “Many of our clients already own a Tesla.”
A petrolhead goes full electric
Graham Royle is one of the first customers for Pininfarina’s Battista electric car, which will supplement the Ferraris in his garage. “I’m a traditional petrolhead, so to go full electric is something rather different,” he admits.
A loyalist to the Italian supercar brand — he has had 11 Ferraris and has two more on order — after seeing the Pininfarina at the Geneva Motor Show in March he put down a €200,000 deposit for one.
It helps that the Battista looks like his favourite brand (Pininfarina, an Italian design house, has shaped Ferraris of the past). Its technical specifications also impressed him: the car can accelerate from zero to 60mph in less than two seconds, quicker than even the paciest Ferraris.
Royle has already dipped his toes in the electric car market, ordering a hybrid Ferrari SF90 Stradale that is due to arrive in 2021, around the same time as his Battista.
Royle’s wealth comes from his business, the GRI Group, which is a supplier to the household goods industries and produces its own-label I Love shampoos and shower gels.
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