Rolls-Royce Middle East: Life is a roller coaster

Torsten Mueller-Oetvoes has been at the helm of Rolls-Royce Motor Cars since 2010. He has just delivered the company’s best ever sales figures
By Massoud A. Derhally
Sun 24 Feb 2013 05:14 PM

Every morning after his daily exercise Torsten Mueller-Oetvoes drives over to his office in Goodwood in a two-tone powder and dark blue Rolls Royce-Ghost. For the 52-year old German CEO of Rolls-Royce Motor Cars, there couldn’t be a better job.

“There’s no typical day. There’s a lot of travelling,’’ says Mueller-Oetvoes, who on average spends two weeks of every month on the go to stay on top of what’s going on in the company. “If I am in Goodwood it’s a lot of talking, discussions, and a lot of meetings. When I am travelling I’m very much visiting customers, visiting our dealers. It’s probably one of the most rewarding jobs in the world because it has so many different facets in its daily jobs.”

And one does need to be a car enthusiast to run the company to an extent, he says.

“You need to understand the car business... that this business is not a typical car business and that this is a luxury goods business,” says Mueller-Oetvoes. “You need to have a feeling for discerning people, you need to understand technology and how we can meet certain customer demands.”

Mueller-Oetvoes, who has spent 25 years of his life at the group, has been at the helm of the luxury car maker unit of BMW since 2010, and has seen it report record sales year after year across the globe.

“I’m in close contact with our customers,” he says. “You need to be in daily contact with your customers and prospects to understand what they would like to see tomorrow.”

Rolls-Royce Motor Cars sold 3,575 units  globally last year, a record for annual sales in the company’s 108-year history and the third year in a row it had achieved a new benchmark for sales. That, by any measure, is pretty impressive let alone for a company that employs 1,200 people.  Even more impressive is that it takes over 500 hours to build a Rolls-Royce and as many as 800 hours for cars delivered to clients in the Middle East depending on their bespoke content.

“It’s like a diamond; perfectly polished,” says Mueller-Oetvoes. “They [his customers] are entrepreneurs, they are captains of industry, prominent people from the film and sports business — all kinds of people.”

The Middle East market grew 26 percent annually with highest demand for bespoke content coming from the region. It was the best-performing market globally in 2012, with the dealerships in Abu Dhabi and Saudi Arabia among the top five bestselling dealers around the world.

“We see a lot of very flamboyant, I would say, colour combinations especially for the Middle East market,” says Mueller-Oetvoes. “Many of our customers down here spend quite substantial time specifying and developing interesting ideas for their cars. Many of them even travel to Goodwood where our plant is to get further consultation by our designers. What you would see from the Middle East market is quite often very bright colours and also incredible ideas regarding family crests, embroidery in the car.”

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The Ghost model starts selling from AED1.1m ($299,000) and the Phantom starts at AED1.8m ($490,000); however, cars have sold for over AED3.7m ($1m) after additional features are included.

“We’ve seen people even ask for jewellery to be put into our cars, including diamonds,” says Mueller-Oetvoes.

The Middle East is Rolls-Royce’s fastest growing market and larger than Europe, accounting for 20 percent of what’s paid into the company’s overall portfolio.

“One major reason why I think that we are successful is that we are globally very well placed,” says Mueller-Oetvoes. “We are not relying on one region only and for that reason we were able to overcompensate losses in certain countries of the world.

“For instance we have seen in some southern European markets a breakdown for us, some sluggish business due to the economy. But on the other side, especially in the Middle East region, we have seen fantastic business for us. On the one side that is due to an excellent performance of our dealer body down here but I must pay tribute here to the outstanding economic situation in Middle East markets, which is fantastic.”

Economic growth in a traditionally strong market for the carmaker, like Europe for instance, is expected to pick up by only 0.2 percent this year after contracting 0.4 percent in 2012, according to International Monetary Fund estimates. In the Middle East and North Africa, economic growth is projected to slow to 3.6 percent after expanding by 5.3 percent in 2012.

Elsewhere around the world, Rolls-Royce has also been quick to recognise and capitalise on pockets of growth and the appetite for luxury.

Last year, the company introduced a $1.2m version of its popular Phantom model in red to celebrate the Year of the Dragon in China. The company sold out the limited edition model within two months.

In the Middle East, Rolls-Royce has created a unique bespoke collection of its Ghost vehicles honouring Abbas Ibn Firnas, a nineteenth-century Arab inventor and poet in Cordoba, Spain during the Umayyad dynasty, who was famous for being the first man in history to make scientific attempts at flying and who made contributions to a host of different sciences, including physics, astronomy and chemistry.

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And in the first quarter of the year the company intends to unveil a new model - the Wraith - in Geneva, as it vies to boost sales, says Mueller-Oetvoes.

“That will be an outstanding, fantastic and completely new car for Rolls-Royce, very much based on customer feedback, insights and designs,” he says.

Like any business during the global credit crisis market, the dynamics have changed; however, that didn’t make any difference in how customers paid for a Rolls, because even in normal market conditions the cars aren’t normally financed, says Mueller-Oetvoes.

In fact, the US, where the crisis began in 2007, overtook China as the number-one market for the luxury carmaker in 2012, accounting for 30 percent of all models sold by the manufacturer, despite a sluggish American economy and countries struggling to come out of a recession.

China was the number one market for the car maker in 2011 with the US in second place. Hong Kong remains by far the city with the largest density of Rolls-Royce cars in the world, says Mueller-Oetvoes.

“It was a close neck-to-neck race between the United States and China,” he says. “After the election was over in the US, you could see that confidence was back in the market and I was surprised. I must admit that we have seen some slowdown in the China market at the beginning of last year. Again after the government change happened there is new confidence back in the Chinese market.”

The US economy is expected to grow between 2.3 to 3 percent this year, the US Federal Reserve said last month. The world’s largest economy grew 2.2 percent in 2012, according to the International Monetary Fund. China, the world’s second largest economy saw its economy slow last year to 7.8 percent from 9.2 percent in 2011. The Asian country’s economy is projected to expand 8.2 percent this year, according to the IMF.

Looking forward, Mueller-Oetvoes expects 2013 to be another good year for the company as the car manufacturer increases the number of dealerships around the world and looks to tap new markets in countries such as Lebanon, Nigeria, Turkmenistan and Kazakhstan.

“I am cautiously optimistic that we should see also again a positive year for Rolls-Royce worldwide,” he says.

“I’m very optimistic about the Middle East market, looking at economic data and how the region developed over the last couple of years I would think that we should see the same happen again here in 2013 for us, in one of our major regions of the world,” he adds. “The Middle East market is extremely important for our bespoke business. There is literally no car any longer sold here not being bespoked.”

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