Codename Cullinan

Rolls-Royce to add SUV and may even go electric

ROLLS ROYCE CEO Torsten Müller-Ötvös
Wait until you see what comes next. Source: Jiri Rezac for Handelsblatt

Wealth and status don’t have to come with age. At least, that’s Rolls-Royce’s bet. Torsten Müller-Ötvös, the German who runs the iconic luxury British carmaker, says the firm is rolling out a succession of new models, including the company’s first-ever SUV, designed to appeal to a younger and hipper but still very rich customer.

Mr. Müller-Ötvös was named to lead Rolls in 2010 by its owner, German carmaker BMW, after successfully leading BMW’s economy car brand, Mini. The company that once boasted that the ticking of the clock was the loudest sound in the car now offers a 1,300-watt, 18-channel customized audio system with two thumping bass speakers, seven tweeters and seven mid-range speakers.

And the changes are bearing some fruit: 2016 was the second-best year in history in terms of sales volume. Back when the company only offered one model, the Phantom, the average age of its owners was 56. Now that average has dropped a decade to 45, Mr. Müller-Ötvös said, as the company introduced the economy-sized Ghost in 2010, followed by the sleek Wraith fastback coupe and the Dawn convertible, as well as high-performance versions, called Black Badge.

Customers are not only skewing younger but increasingly female. Mr. Müller-Ötvös said about 15 percent of Rolls customers are women, many of them entrepreneurs or heads of family-owned companies, and the Dawn was particularly popular with female drivers in the US. He said some women send lipstick containers to the factory in England to ensure that the color of their handmade Rolls matches their lip gloss.

Mr. Müller-Ötvös noted that Rolls-Royce sales fell in 2017 from the 4,011 sold in 2016, but explained it away as the company had announced it would introduce a new Phantom in 2018, so customers are waiting for the new model. He also confirmed to Handelsblatt that the “first-ever SUV from Rolls Royce,” first teased in 2015, would be coming to market in late 2018.

While he gave scant details of the car — which the firm has codenamed Cullinan — it will compete against the Bentley Bentayga, a super luxury truck with a $225,000 base price advertised as the world’s fastest SUV. It isn’t the company’s first attempt to go off-road: Rolls-Royce actually built a fleet of SUVs — armor-plated Silver Ghosts — for T.E. Lawrence, also known as Lawrence of Arabia, for his guerrilla war against the Ottoman Empire during World War I.

Rolls-Royce customers are usually so rich that they don’t have to choose between a Ferrari and a Rolls. They buy both.

The fact that Rolls-Royce is busy broadening its appeal doesn’t extend to the less wealthy, however. Mr. Müller-Ötvös noted that his customers are usually so rich that they don’t have to choose between a Ferrari and a Rolls. “They buy both,” he said. The average customer has assets of €30 million, he noted. Rolls-Royce is “not in the normal car business. We are a luxury goods manufacturer,” in the vein of couture fashions and bespoke watches.

Mr. Müller-Ötvös acknowledged his company isn’t necessarily a driver of technological change in the industry. Self-driving cars are “not yet a topic” for his clientele, though he says they would consider using the technology once it has been perfected. The same goes for electric cars, where he notes that parent company BMW is very active. While there are no specific plans, he predicted that “we will see an electric Rolls-Royce in the next decade.”

Once part of the same British company, Rolls-Royce and Bentley are now German-owned rivals. In 1998, British defense firm Vickers sold the famed Rolls-Royce “Spirit of Ecstasy” hood ornament and conspicuous grille, as well as the car factory in Crewe, to German carmaker Volkswagen. But the Rolls-Royce brand and double-R logo actually belonged to the Rolls-Royce aircraft engine company, which licensed them to BMW for a relatively puny £40 million ($53.7 million).

Despite the German ownership, the company strives to maintain its British roots, with 80 percent of its employees still in the UK. That will remain the case even once Britain leaves the European Union, Mr. Müller-Ötvös said, though he noted that Brexit will be a challenge for the firm. “For us, it’s important that there will be no impediments to trade,” he said. That’s because Rolls-Royce imports a lot of components, while only 10 percent of the cars produced remain in Britain.

Asked whether Rolls-Royce sales numbers were a good indication of the state of the economy, he replied: “I think we are an excellent barometer of the perceived buzz in the marketplace, because our clients are at the top of a country’s economy,” he said. One example: A declining oil price has affected Rolls’ business in the Middle East, its second-largest market. “If their business is declining and they have to contemplate layoffs, then the purchase of a Rolls-Royce will be be postponed.” Not because they cannot afford it, Mr. Müller-Ötvös said, but because such a statement might be a public relations headache. After all, “you shouldn’t be afraid of the limelight if you buy a Rolls-Royce,” he said.

Kerstin Leitel, a correspondent for Handelsblatt in London, conducted the interview. Charles Wallace in New York wrote this story for Handelsblatt Global. To contact the author: leitel@handelsblatt.com

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