Ultra-luxury car brands have exploded in 2021 as the rich get richer
- Sales of ultra-luxury cars boomed in 2021 as the auto industry struggled to build enough cars.
- Rolls-Royce, for example, increased sales by 49% in 2021.
- Super premium brands saw strong demand and were unaffected by the chip crisis.
Automakers sold millions of vehicles less than usual in 2021 as a shortage of computer chips and other pandemic-related disruptions threw wrench after wrench into the cogs of auto manufacturing.
But ultra-premium brands like Bentley and Rolls-Royce have thrived amid the chaos. A booming stock market has made wealthy consumers even wealthier, while the pandemic has caused them to open their wallets for physical goods instead of travel and vacations. Moreover, super premium brands have not been affected by the shortage of semiconductors like mass manufacturers.
Rolls-Royce, whose flagship Phantom starts at around $460,000, sold a record 5,586 cars in 2021, up 49% from 2020. Bentley moved 14,659 vehicles, a 31% increase from compared to the previous year. Lamborghini also had a banner year.
In part, sales have exploded for the simple reason that the wealthy have gotten richer over the past two years. Luxury vehicle sales are directly correlated with the stock market, said Michelle Krebs, executive analyst at Cox Automotive.
A strong market during the pandemic – a market that has doubled the wealth of the 10 richest people in two years – may have prompted a certain segment of buyers to pull the trigger on this 400,000 Rolls-Royce Cullinan SUV $200,000 bespoke or $200,000 Bentley Continental they coveted.
People had more free time and fewer opportunities to splurge while traveling and dining out, so they directed their spending towards exclusive and special products they could enjoy from home, said Rolls CEO Martin Fritsches -Royce Motor Cars Americas, to Insider.
Rolls-Royce and Bentley also attribute booming demand in recent years to new product offerings that have attracted early buyers. Since late 2019, Bentley has launched new models, paint schemes and a dark Blackline accessory package, all of which have appealed to younger customers, said Michael Rocco, vice president of sales and operations for Bentley Americas.
Likewise, Rolls-Royce’s Cullinan – its first SUV and first all-wheel-drive vehicle – was “a major shift,” Fritsches said. Thanks to her and other models, the average age of Rolls-Royce customers fell to 43.
But demand is only half of the equation. Perhaps the biggest question is how these companies were able to satisfy a growing appetite in an auto manufacturing environment plagued by parts shortages, shipping crises and other disruptions.
Niche manufacturers tend to have smaller, more stable supply chains, which means there’s less chance of running out of parts or materials, said Kevin Tynan, senior automotive analyst at Bloomberg intelligence. Rolls-Royce, for example, builds all its vehicles in a single factory in England. A giant like Toyota manufactures millions of cars in factories all over the world.
Another piece of the puzzle is that Bentley and Rolls-Royce are owned by large parent companies – the Volkswagen Group and the BMW Group, respectively – which have strong incentives to allocate as many computer chips as necessary to their most profitable products and brands. Neither Rolls-Royce nor Bentley had any problems getting the chips they needed, the companies told Insider. Prioritizing high-margin vehicles when inventory is running low is “case 101,” Tynan said.
With the surge in super-premium sales comes a broader boom in the luxury vehicle space. In 2021, Porsche and BMW saw huge growth while mainstream brands struggled. In 2012, only 6% of cars purchased in the United States cost $50,000 or more, according to Cox Automotive. In 2021, this figure has increased to 30%.