For Rolls-Royce, the Future Is Customization, Not Electric

(Bloomberg) -- More than 90 percent of all Rolls-Royce vehicles sold are so personalized they’re practically one-offs. 

With the Phantom estate car, that number reaches 99 percent. And with the Cullinan SUV, it reaches absolute levels: Of the Cullinan SUVs sold, 100 percent have been customized. 

That’s according to Torsten Müller-Ötvös, the chief executive officer of Rolls-Royce Motor Cars Ltd. He spoke Wednesday as the Goodwood, England-based automaker released 2018 data showing record global sales.

The figures are notable because they show a big jump in the popularity and value of customizing already extremely expensive cars. (The average price of a Rolls-Royce sold in the U.S., its biggest market, is $400,000 including options.) In 2016, when 80 percent of Rolls-Royce vehicles worldwide were heavily customized, bespoke additions added 20 percent to the purchase price . For 2018 the added price is almost 40 percent. 

To keep up with demand—and put its payroll where its payday is—Rolls-Royce hired 100 employees devoted to the bespoke department. That represents an almost 6 percent jump in total workforce to 1,900 and signifies where the company is focusing in 2019 and beyond. Rather than developing hybrid or electric technology to grab sales like other manufacturers (never hybrid, maybe electric in 10 years, Müller-Ötvös said in October), Rolls-Royce is doubling down on what is working now. 

“It’s needed,” Müller-Ötvös says. “Customers are increasingly intrigued by all the possibilities we can offer—they want to put their own personal signature on the product. This is super important for us selling extraordinary objects of this caliber.” 

Rolls-Royce has increased options for bespoke cars such as the Phantom ($450,000 base price), which can include a clear gallery-style box set inside the dashboard. Each one customized to showcase individual collections of object d’art such as pricey mechanical watches, rare stamps, or Fabergé eggs. You know, your standard stuff. 

With the $325,000 Cullinan, new in 2018 with seating for up to seven, the SUV was designed with extra amenities that beg for customization: rear work stations trimmed in exotic wood, deep-pile cashmere carpeting, and spots for Champagne coolers, picnic baskets, and cigar humidors. The more space you have to work with, the more you can customize—and the more money you can make, the thinking goes. (For example: A picnic hamper costs  $46,000; a 9-carat-gold-plated Spirit of Ecstasy hood ornament costs $17,000. Add in man-hours on more complicated extras, such as custom woodwork, and prices go up from there.)

While the Dawn was the brand’s best-seller last year in the U.S., look for the V12 Cullinan to surpass it in 2019, says Müller-Ötvös, single-handedly accounting for more than 20 percent of sales. 

“Cullinan will come into real play in 2019,” he says. “We are already sitting on a very strong order bank,” with most deliveries starting in the third quarter.

Cullinan is conquering buyers who might be tempted to buy Bentley’s Bentayga ($200,000) or Lamborghini’s Urus ($200,000) instead. More than half of the people who have ordered a Cullinan are new to the brand. (Rolls-Royce’s official stance is that it stands alone in this rarefied air: “Bentley is not a competitor,” Müller-Ötvös says.)

Bentley Motors Ltd., for its part, has gained stature in some circles since Cullinan made its debut. Early reviews of the Bentayga were mixed, with critical jabs taken at its Audi-like body and soft drivetrain. But during a conversation at the Pebble Beach Concours d’Elegance, Bentley Chairman Adrian Hallmark said he felt “very good” about the Bentayga after seeing Cullinan’s debut. 

“We are in fantastic position,” he said with a smile, referring to how the boxy and bigger Cullinan looked. The implication was that the new, more expensive offering from Rolls-Royce made Bentley’s SUV, which had debuted first, look good. 

Indeed, Instagram commenters and other critics had seemingly moved on from beating up Bentayga in favor of Cullinan, which in photos can look like a gilded Mack truck.  

Big, expensive vehicles are easy targets, after all. They tend to photograph poorly and draw the most ire from environment- and class-minded critics who decry their conspicuous consumption (12 miles per gallon in the city, never mind the cash outlay). But they continue to be the primary money makers for Bentley, Rolls-Royce, Lamborghini, and every other automaker who makes a six-figure SUV, and even more so when they are bespoke.  

Never mind the gas-thirsty drivetrain. It’s very much besides the point. 

To contact the editor responsible for this story: Justin Ocean at jocean1@bloomberg.net

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