By Edward Attwood
Rolls-Royce’s new CEO on why the British marque hits a chord with the Gulf's jet set
While one branch of the Rolls-Royce brand might be suffering at the moment, another is booming. The aerospace company is dealing with unwanted headlines due to the failure of a series of its aircraft engines, but for Rolls-Royce Motor Cars, the recession appears to be over.
In truth, the type of consumer that buys a Rolls-Royce isn’t necessarily going to be put off by a change in economic circumstances, but the figures that are being produced this year seem to indicate that appetite for the super-luxury marque is back in vogue. It’s also possible to argue that sales offer a useful economic indicator as to which parts of the world are brimming with purchasing power and confidence.
“We also suffered, but Rolls-Royce managed to get out of the recession in a pretty stable way,” says Torsten Müller-Ötvös, the firm’s CEO, who is visiting most of the GCC countries to galvanise interest in the latest Rolls-Royce products. “We only saw a downturn of minus 17 percent last year, and compared to other manufacturers in that segment, it was a good achievement.”
Undoubtedly Rolls-Royce’s strongest asset is its brand. Formed in 1906 via a partnership with Charles Rolls and Henry Royce, the company has developed a reputation not only for luxury, but also for resilience, reliability, power and speed. The firm’s first car, the Silver Ghost, was produced in 1907, but stayed in production until 1925, an impressive achievement given the changing nature of the motor industry in its early days. That reputation for reliability has remained; fully 70 percent of all the Rolls-Royce vehicles ever built over more than a century of manufacturing, remain on the roads today.
However, while the reliability of the cars has remained the same, ownership of the brand has shifted over the years. Once a uniquely British institution, German manufacturer BMW bought up the rights effective from 2003 onwards.
While there are no previous links to the old British company apart from the brand — the engine, for example, is sourced from BMW — the cars have benefitted from German car manufacturing expertise even as British know-how in auto design has weakened over the years. The launch of the Phantom in 2003 represented the first in a new line of vehicles that has blended the best of British engineering experience, given that the firm’s factory is based in Goodwood, and German technical expertise.
Fast forward to 2010 and the company’s CEO says that he sees sales doubling this year in comparison to last. Rolls-Royce doesn’t have a significant number of competitors in the super-luxury segment, but many of its peers saw sales dropping by over half amid tough times for the world’s auto industry. The firm also made a point by not reducing prices at a time when many firms panicked.
“It is also that we always resisted lowering prices so the brand always kept its pinnacle premium position,” Müller-Ötvös adds, with a touch of pride. “We clearly said that the brand was so valuable that there’s no way we could touch the price, and I think our customers appreciated that a lot.”
The CEO says that Rolls-Royce will sell around 2,000 units this year. With the basic price range of one of its vehicles weighing in at around a quarter of a million dollars — significantly more when bespoke features are installed — the numbers are certainly looking healthy. Müller-Ötvös puts this down not only to a recovery in many economies, but also to new products; specifically, the Ghost saloon, which was unveiled to the public for the first time at the Frankfurt Motor Show last year.
The part that the Middle East is playing in Rolls-Royce’s success cannot be underestimated. Like another British hallmark, Land Rover, the brand seems to have a cache with the higher echelons of Gulf society that is hard to match elsewhere in the world. Dubai and Riyadh were reckoned to be in the company’s top five markets in 2007, with Abu Dhabi claiming the top spot in 2008. Overall, the region is Rolls-Royce’s third most important market, behind America and China.
“This region was always vital for Rolls-Royce. We see here quite a lot of customers who have been fans of our brand over the course of the last century,” Müller-Ötvös says. “A lot of royal families are very much in love with Rolls-Royce and if you ask me how it will develop — I think it’s very positive.”
While the executive says that his clients have always been able to afford his vehicles, even in straitened times, there has been concern over the perception of others. When members of the general population are cutting back on spending and, in many cases, losing their jobs, not everyone wants to be seen as the extravagant type that likes to flaunt their wealth. Now, however, Müller-Ötvös says, clients feel that they are “allowed” to spend their money.
“It’s a very good signal that the whole economy is picking up,” he remarks. “Because [you] only make this kind of investment when you have a good gut feeling that everything is running in the right direction. I’m quite bullish on the region and we’ll definitely see good growth here in the future.”
Sales may be high in the Middle East, but what is even higher is the local appetite for bespoke products. The CEO compares this process to “designing your own car to your own fingerprint” and it’s an option that most Gulf clients are taking full advantage of. In fact, visitors to Rolls-Royce’s Goodwood plant are frequently able to tell which vehicles are destined for the Gulf based on their unique characteristics.
“This is our biggest bespoke market. Per vehicle revenue for the car, customers here are heavily bespoked,” Müller-Ötvös says. “That really makes their cars a one-off, ensuring that they will never be seen in the market again.”
Up to 80 percent of Phantom vehicles are heavily bespoked, and future owners are encouraged to be as creative as possible with their requests. As long as safety obligations are met, then Rolls-Royce engineers and designers will work their utmost to conform to owners’ desires. For the more mundane user, that can amount to trims and colours, and for the more exotic, requests come in to include drinks cabinets, partitioned walls and refrigerators.
In the Gulf, buyers seem to be focusing on their desert heritage. The company’s sales manager in Abu Dhabi works hard to design cars to fit certain themes, with Rolls-Royce bringing out a special-edition Desert Phantom earlier this year.
In November, the ‘Pearl of Arabia’ was launched, which borrows heavily from traditional Bedouin themes. Müller-Ötvös says that the marquetry on the inlaid panelling in the cars’ interiors are based on an interpretation of the patterns on camel saddlebags that denoted a specific owner.
“When you saw camels coming in the distance you could tell who they belonged to. We’ve reproduced some of these wonderful modern interpretation of the camel saddlebag colours and put them inside the car, which is really quite evocative,” he says.
“All of that is possible with bespoke; we have a lot a specially trained people who are doing nothing else than engineering those bespoke cars. Financially, it really pays off for us, especially in this region.
Elswhere around the world, the CEO says Rolls-Royce’s fastest growing region is China, which he describes as “a fantastic market”. In Europe, sales are slightly slower, although they remain robust in Germany and the UK. But the southern European markets are flat, in a hangover from the euro crisis earlier this year.
“We always had quite good business in Spain through our dealership in Marbella, as well as in Rome and Ireland,”
Müller-Ötvös says. “It’s not big business, but stable, steady business. However, that has dropped considerably.”
Russia is playing its part as well, especially as the country recovers from its own currency crisis. Rolls-Royce’s local partner has just opened up a vast showroom in the Ukraina Hotel, one of Moscow’s glitziest.
“It’s the size you would see in the Middle East,” the executive states. “For me, it’s a good signal, as it shows confidence in what business will be in the next years. If you see dealers investing in our brand, that’s the best thing. One major criterion in choosing local partners is not only how much money is available to invest in a proper showroom, but how well is the company connected to society. The business is only stable when it’s linked to society.”
One minor blip on the company’s road to expansion has been the vehicle recall undertaken earlier this year. In conjunction with other manufacturers the world over that have suffered similar problems, Müller-Ötvös prefers to refer to it as a service campaign.
“I definitely want to make sure that none of our customers will face any problems,” he says. “The possibility that that would happen is minute, but we are saying that the car should be taken to dealers and dealt with. Again, also, I want to treat our customers in a very honest way and not disguise that.”
But, generally speaking, Müller-Ötvös professes himself to be very satisfied with the performance of all the Rolls-Royce partners in the Middle East, predicting growth of around 100-150 percent in the Gulf market compared to last year. In particular, Abu Dhabi comes in for some hefty praise, particularly given the investment made into the new showroom there, which will have its grand opening next month.
That hard work is already paying off, with the UAE capital leading Gulf sales with a 250 percent increase in sales over the first nine months of the year. The executive won’t reveal how much the dealer — Abu Dhabi Motors — has spent on the showroom, but describes the figure as “in the millions”. The good news has spread across the border to Dubai, where sales have also picked up since 2009, although not on the scale of Abu Dhabi.
“If you asked me, could you see in your sales figures maybe a certain sense of how the economy is doing, I would sense that it’s doing a bit better in Abu Dhabi than here in Dubai — that’s my feeling,” adds Müller-Ötvös. “But the Dubai numbers are coming back strongly, and it’s very gratifying to see it coming back into the market.”For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.