Sales are up at Rolls-Royce, even though uncertainty is rising
Economic turmoil has tanked sales at Rolls-Royce before, but this time it’s different, says chief executive Torsten Muller-Otvos
The world may be in turmoil, but that hasn’t stopped the ultra-rich from buying their Rolls-Royces.
“We are in excellent shape, and we are sitting on a very strong order book,” said Torsten Muller-Otvos, the venerable luxury carmaker’s chief executive.
Delighted to be travelling again, and in town for just one night on Jul 26 to catch up on business in the region and meet customers, Muller-Otvos told The Business Times that sales of the brand’s cars, which cost at least 7 figures here, have never been better.
After delivering a record 5,586 cars worldwide in 2021, Rolls’ numbers are on track for another all-time high this year. The order books are full until well into 2023, and sales are up 7 per cent in the first 6 months of the year compared to the same period in 2021. “We had a remarkable first half, even better than the year before,” Muller-Otvos said.
The healthy sales have surprised him to some extent. When Muller-Otvos last spoke with BT in January, he said the prospect of an economic slowdown was the only thing that might affect his sleep. He carries with him the traumatic memory of how sales fell off a cliff after 2007’s Global Financial Crisis took hold. “You need to be cautious because the business we are in is luxury goods,” he said. “It’s very much driven by sentiment, by clients’ emotions. That can change, whatever happens.”
But despite a prolonged war in Ukraine, high inflation and rising interest rates all roiling markets and making recession look more likely by the day, demand for the brand’s opulent cars is as strong as ever. “In former times, you would have argued that if the world goes into a kind of recession mode, luxury brands would follow suit. But this time, I think it’s slightly different,” he said.
“During the pandemic, there was quite some wealth accumulated by ultra high net worth individuals,” he said. Lockdowns and closed borders meant they had little chance to decumulate that wealth until now, while the realisation that life is short has given them all the reason they needed to start spending. “They learned that it’s great to live in the moment, and not to postpone anything to further out in life,” he added. “I think that has changed mindsets. You want to please yourself at that very moment, and that fuels the entire luxury business now in a substantial way.”
Remarkably, it isn’t the same old captains of industry who are buying. With the average buyer now just 43 years old, Rolls-Royce now has the youngest customers within the BMW Group, meaning even Mini drivers tend to be older. “That says a lot about our changing demographics,” Muller-Otvos said. “It’s far easier today if you’re bright enough to accumulate wealth and to earn money in the early years of your life.”
Steeply rising prices have only played into the brand’s hands, as well. “It’s quite interesting that with high inflation, many people are investing now in real assets,” Muller-Otvos said. “And a Rolls-Royce is an asset.” Unlike a Rolls-Royce, however, many assets seem to be in freefall.
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