Market Insight: How Rolls-Royce stays profitable

TO ALL those who chuckled when Rolls-Royce announced an SUV would join its scant model range, it looks like the super-luxury English manufacturer might have the last laugh.

The Cullinan, a 2.7-tonne, 5.4m ship of luxury in a sea of assorted SUV species, has buoyed Rolls-Royce when there was potential for an iceberg on the horizon.

The car-maker that is reputed to ignore pricing as a measure of its products’ worth, has sold 32 cars this year to the end of November. Of those, 17 have been Cullinans.

Like most car-makers, Rolls-Royce has not been immune from the effects of the COVID-19 pandemic.

Looking at the figures to the end of November this year, the overall marque sales are down 20 per cent compared with the same period in 2019.

Rolls-Royce global client sales manager Ian Grant told GoAuto in an exclusive interview that “our world has become increasingly unpredictable with recent world events.”

“Yet we do view the future with some optimism with a complete and beautiful new range of motor vehicles,” he said.

Mr Grant said that considering Ghost has not been available this year and the global launch occurred in September “business across Australia has been remarkably stable.”

“Next year our first Ghosts will be delivered to customers in Australia and 2021 will be our first full year when our full model range will be available.”

Mr Grant said he expected increased sales “but at this ultra-luxury level, and based on the level of global demand, Ghost availability for Australia is limited.

“We have no interest in seeing a new Ghost or Ghost Extended on every street corner,” he said.

“So Ghost will remain one of the most exclusive super-luxury four-door sedans in Australia.”

Mr Grant said Rolls-Royce expected continued strong demand for all its models, especially Cullinan and the Black Badge range of cars (Cullinan, Dawn and Wraith).

“The ultra-luxury Cullinan SUV will remain strong in the Australian market alongside new Ghost,” he said.

“Australia has always been the destination for highly bespoke cars as customers here are undoubtedly luxury connoisseurs.

“In the past, Australian customers have ordered some of the rarest Rolls-Royces in the world – limited edition Phantoms, Ghosts, Wraiths and Dawns.

“Just recently, the Limited Edition Kryptos landed in Sydney and a Dawn Silver Bullet is expected to arrive in Brisbane soon. These collection vehicles follow the beautifully crafted Wraith Eagle VIII sold in Melbourne earlier this year.”

Mr Grant said each of these cars will be the only examples of their kind in Australia and each collection car represents one of only 50 in their respective collections globally.

“We know our Australian clients have an eye for detail and craftsmanship, however, exclusivity is always a key desire, something Rolls-Royce has pioneered since the early 1900s,” he said.

He said that the Australian market has Rolls-Royce buyers from a wide age group.

“It is very difficult to pin down a Rolls-Royce customer other than he or she is highly successful, and yearns for the best in luxury and appreciates the bespoke capabilities of the brand,” he said.

“Two trends over the years are evident – the average age of a Rolls-Royce customer has decreased from mid 50s to early 30s, meaning some are as young as their 20s.

“In addition, I am delighted to see more female customers join the Rolls-Royce family and also existing clients who wish to add a ‘one off’ or exclusive bespoke vehicle to their collection.”

The increase in sales and expansion of the model range compares with the position in 2009, with the Global Financial Crisis biting hard, where Rolls-Royce had one model in the Phantom available as a sedan or convertible (drophead).

That year it reported nine new cars had found buyers, a slump on the previous GFC-free year when it had sold 17 cars.

The fall in 2009 shows that even this company isn’t immune from economic patterns.

Rolls-Royce bounced back remarkably quickly given the fallout of the GFC, attributed to the confidence in the Australian market – primarily because the federal government announced it would guarantee Australian banks – and the introduction of the “small” Rolls-Royce, the Ghost.

The selective Rolls-Royce market shows how highly sensitive it is to new products.

In 2010 it sold 25 cars consisting of the new Ghost, and the Phantom in sedan and drophead guises.

The next year, with the same model line-up, it found 20 new buyers and a year later, 22.

It is from 2014 that the marque shows how it has adapted to changing economics and buyer profile, as the average age of its owners shrank and new, smaller and sportier cars were introduced.

In 2014, it sold 13 sedans (Ghost and Phantom) and 26 coupes and convertibles (Ghost, Phantom and the two-door Wraith coupe that appeared a year earlier) for annual Australian sales that breached 35 for the first time.

The same line up combined for 30 sales in 2015, then 37 in 2016 as buyers took to the new Dawn convertible.

In 2017, Rolls-Royce sales hit their highest ever with 45 sold, mainly concentrated around the smaller Wraith, Dawn and Ghost models.

It was to have a second wind in 2018 when the Cullinan arrived. Despite conversation around its size and increasing list of luxury rivals, the SUV promptly sold four units in the year.

The Cullinan went on to prove its value to the brand in much the same way as the Cayenne lifted Porsche out of potential financial heartache and into one of the most profitable car-makers in the world.

The 2019 sales of Cullinan topped 19 units and, in year-to-date figures to November this year, will ignore COVID and possibly match that with 17 sold already.

Rolls-Royce has shown that its once stablemate Phantom now has a select audience in Australia, selling barely a handful in 2019 as buyers desiring a Rolls-Royce opt for the smaller Ghost sedans, open-top Dawn or the sports-focussed Wraith.

Asked if there had been any changes to the marketing of Rolls-Royce since COVID, Mr Grant said: “Understandably, we have seen less customers visit dealerships where we are represented in Brisbane, Melbourne, Perth and Sydney.”

“However, as we are a very bespoke brand, the interaction with our customers is always personal.”

He said dealership representatives adapted quickly and invested time in bringing cars to customers, arranging private one-on-one viewings and expanding their digital portfolio to customers at a distance.

“We have also expanded our reach via mobile app through what we term the ‘most exclusive members’ club in the world’ – Whispers.

“Whispers is a digital extension to the Rolls-Royce marque and acts as a gateway to the world’s most rarefied products, services and ideas.”