Luxury carmakers seek balance between volume and exclusivity

Ferrari - Luxury carThe luxury car market is one that knows nothing of economic downturn, or recession, or any other of the doom monger’s catch phrases. In fact these manufacturers have the most unlikely of problems – deciding how few cars to sell.

Odd, I know, but in the luxury market exclusivity is key. So whilst demand most definitely exists, thanks to the emergence of a super wealthy client base in China and the Middle-East, the challenge is finding a balance between meeting demand and maintaining exclusivity. First world problems, right? MD

Paris, France | AFP

by Estelle PEARD

Faster, shinier and as inaccessible as ever to mere mortals: the latest luxury cars remain the stars of the Paris Motor Show but manufacturers face a tricky balance between meeting demand and maintaining exclusivity.

The latest offerings from Bentley, Rolls Royce and Lamborghini purred onto the stage at the Paris Motor Show, which opens to the general public on Saturday, at a time of record luxury car sales.

With a wealth of new super-rich clients in China and the Middle East, the fast-growing luxury car segment is presenting a unique challenge to bosses who know their greatest currency is rarity.

“If you are producing too many cars you have a problem in selling them, you start discounting and you start destroying the value of the brand, or the dream,” said Lamborghini boss Stephan Winkelmann.

“You buy a Lamborghini not because you need a car but because you want a dream to become reality.”

In Paris the luxury Italian carmaker unveiled the sporty yet curvy Asterion, its first hybrid supercar.

“For Lamborghini it is not about the volume of cars we are selling, it is about being profitable and always selling less than the demand. This is one of the key sentences in the luxury business,” said Winkelmann.

“Last year we sold 2,121 cars, this year will be more and the year 2015, I think we are even going to do more.”

The productivity versus rarity condundrum is seen as having contributed to the downfall of Ferrari president Luca Cordero di Montezemolo, pushed out of the flashy sports car brand earlier this month.

Montezemolo reportedly hoped to keep the red and black brand exclusive by limiting sales to some 7,000 cars a year, whereas his replacement Sergio Marchionne “chose volume”, said Remi Cornubert, an expert in strategy development at the Oliver Wyman consultancy.

While the hyper-luxury car market remains marginal, with only 0.1 to 0.2 percent of the global market, it is “the faster growing segment”, said Jonathon Poskitt, an analyst at research company LMC.

– ‘Something unique’ –

Bentley unveiled the latest version of its Mulsanne Speed, which promises to go from 0 to 100 km/h (60 miles/h) in only 4.9 seconds.

The British luxury automaker noted a record 19 percent growth in 2013 with sales of over 10,000 cars, and hopes to reach 15,000 by 2018.

Rolls Royce president Thorsten Muller-Otvos said the British carmaker would sell more than 4,000 cars this year for the first time.

“We are not volume driven … we are always producing one car less than we can sell, but we have expanded our worldwide footprint,” he told AFP, highlighting “substantial growth” in China and the Middle East.

Rolls Royce rolled out its new Phantom Metropolitan at the Paris Motor Show, but to satisfy its clients, will only be producing 20.

“Our customers don’t want to see Rolls Royces at every single street corner. You want to make sure you are not comparable to others, that you have something unique,” said Muller-Otvos.


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