BMW-owned luxury car brand Rolls-Royce Motor Cars has revealed record sales results for 2013 and is adding jobs at its UK manufacturing site. Dave Leggett spoke with CEO Torsten Müller-Ötvös about the brand’s performance and prospects.
These are very good times for British-based luxury automotive brands. Tata-owned Jaguar Land Rover has just posted record sales for 2013, 19% up on 2012. In what might be termed the super-luxury area, things have also been going well. VW-owned Bentley also posted a new record last year and was also up 19%. Things have also been going well for Bentley’s former brand sibling Rolls-Royce. It sold some 3,630 cars in 2013 (1.5% up on the previous year) which represents the company’s fourth consecutive record.
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Rolls-Royce also said that it will add 100 new permanent jobs in manufacturing areas at its Goodwood base. This is in addition to the 100 new jobs announced in July 2013. More than 1300 people are now employed by Rolls-Royce worldwide.
CEO Torsten Müller-Ötvös is understandably pleased with the way things are going for the super-luxury brand.
“I stated at the beginning of last year that I wished to see further sustainable growth, I am therefore delighted with this fourth successive record year, a result that reaffirms our leadership of the super-luxury segment,” he said.
China and the US are the big markets for Rolls-Royce – the two combined account for around half of all Rolls-Royce sales. They each accounted for around 900 units for Rolls-Royce in 2013. “Both are big pillars for us,” Müller-Ötvös said. “And we are happy with our progress in these two key markets.”
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By GlobalDataRolls-Royce sales in China were up 11% in 2013. However, there were reports of an official clampdown on corruption that was impacting luxury goods in general. Has Rolls-Royce seen any impact from that?
“Our sales in China were 11% up last year, but you have to understand that we are a tiny part of the overall Chinese car market.” He sees the market positioning of Rolls-Royce as subtly different from some other brands, too. “A Rolls-Royce is seen as a high-end serious investment, not so much a bling thing. It is perceived by our customers as the most comfortable way to drive. Many of our customers are entrepreneurs, commuting between cities in China and they need to travel in a really comfortable way.
“And things like our resale values, keeping the exclusivity of the brand, that is very attractive to our Chinese customers.” The exclusivity for a super-luxury brand is an interesting point that Müller-Ötvös emphasises underpins the strategy for China. “We are never pushing volume,” he says. “And we are never entering into lower price segments. We are maintaining that highly rare and exclusive image of Rolls-Royce.”
Rolls-Royce is also making progress in other emerging markets around the world containing significant numbers of high net worth individuals who could become Rolls-Royce customers. Müller-Ötvös has to send Rolls-Royce where the customers are. Russia springs to mind. “It’s a question of perspective. China is very big right now, but we are also expanding elsewhere, of course. We are expanding in Russia – we have an outlet in St Petersburg now, but it is still small numbers compared to China.
“Russia will grow though and it is important to have presence in the markets with good growth potential.”
What about prospects for Rolls-Royce Motor Cars in 2014? He thinks that growth to a new record level of sales is coming. “I am very confident that we shall see another very good year. A part of that is the Wraith, the new model, and the impact of that. After launch last year, that will be in full swing in 2014. Order books are full and it is already sold out until the end of June.”
“Also, our major markets are looking good….just so long as we don’t have a catastrophe on the economic side, which I also don’t expect.”
If Rolls-Royce grows further, there’s potentially the question of capacity constraints at the Goodwood manufacturing site. It’s perhaps worth reminding ourselves that Rolls-Royce Motor Cars is not a volume driven business. It’s a rarefied brand and volumes – in industry terms – are relatively small. Tweaks to the manufacturing process can be made to fine tune output. It’s not a case of ‘we’re pushing the buffers and have to add another plant plant or we’ll lose sales’ the way it can be on the volume side.
Müller-Ötvös certainly believes Rolls-Royce has taken the right steps to ensure sufficient capacity for the foreseeable future. “We have invested in the expansion of Goodwood and are adding more people to ensure that we are okay for growth. There is also the possibility to add further capacity if needed by some restructuring, changing shift patterns and so on.”
And Müller-Ötvös also wryly notes that some other automotive companies have the opposite problem – overcapacity. Wrestling with squeezing out more capacity, if needed, from an operation at full tilt is obviously preferable. “In principle, I am in a comfortable situation because I am at capacity. We are ready for increased demand for Wraith, we have prepared for that.”
What about the very long-term? Which markets that are relatively small now, could one day be very significant for Rolls-Royce? Müller-Ötvös reels off the usual emerging market suspects but there is one surprise in the list. “I am very keen on entering Nigeria; Lagos in particular, but Nigeria in general is very much a country in upswing mode. We are seeing more and more potential customers around in Nigeria and for that reason we are definitely investing there.” Perhaps I should not be too surprised about Nigeria. After all, the guy from Goldman Sachs who coined the term BRIC thinks it is in the next wave.
