Rich Moms and Millennials Make Canada Hot for Rolls-Royce
(Bloomberg) -- When Rolls-Royce Motor Cars unveiled its first-ever SUV in the Americas last month, it chose Vancouver. On day one, it sold six, which start at C$399,000 ($308,000) each -- not bad for a bespoke brand that delivered just 3,362 cars worldwide last year.
When it comes to supercars, Canada -- somewhat oddly -- punches above its weight. Canada accounts for roughly 10 percent of Rolls-Royce’s sales in the Americas though the country’s rich represent only 6 percent of the hemisphere’s high-net-worth population. One of Rolls-Royce’s top-performing dealerships globally is in Vancouver, a city of 2.4 million people. One of every 10 vehicles sold last year in Canada were luxury wheels, according to DesRosiers Automotive Consultants.
Rolls-Royce says Canada is only just getting started -- thanks to a growing appetite for luxury driven by super-rich immigrants, moms, and millennials.
“Canada is quite a massively developing market,” Torsten Muller-Otvos, chief executive officer of the BMW AG unit, said in an interview at Rolls-Royce’s gleaming new showroom in Vancouver. “I would say that it started two, three years ago when we saw this market going from one record to the next,” he said.
The fabled carmaker -- long associated with venerable gentlemen driven by uniformed chauffeurs -- has looked to a younger, less staid clientele for growth since Muller-Otvos took the helm in 2010. It has introduced a coupe, a convertible, and edgier reinterpretations of classic marques, helping turn the 114-year-old brand into the unlikely king of pop-culture music references and the new favorite among a tribe of youthful, globalized millionaires.
“The success of Rolls Royce Motor Cars over the last couple of years is on the back of these younger customers worldwide,” said Muller-Otvos. “The majority of our customers are global citizens -- they are maybe raised in Asia but went to universities in the United States. They are very international.”
That resonates in Canada, a beneficiary of elite Asian migration and one of the world’s fastest-growing pools of wealthy people. In 2016, 357,000 Canadians joined the global rich club, up 11 percent from the previous year, a standout alongside Russia and Brazil, according to Capgemini’s most recent World Wealth Report, which defines rich as those with at least $1 million in investable assets. The uber wealthy -- those with a net worth of at least $30 million -- rank Canada among the most likely places that they’re inclined to emigrate to, especially if they’re from Asia, according to Knight Frank’s 2018 Wealth Report.
While Rolls-Royce has dealerships in Toronto, Montreal and Calgary, the trends driving sales play out most visibly in Vancouver -- a Pacific Coast magnet for luxury lifestyle seekers that’s been dubbed the supercar capital of North America.
“You see quite a lot of customers from Asia, customers finding new homes here in Canada, and wanting to be seen in a Rolls-Royce,” said Muller-Otvos. He declines to share specific sales figures. “Volume is the last thing our customers want to hear. We are selling dreams, unbelievable products, we are not selling volumes.”
The University of British Columbia has earned the moniker the University of Beautiful Cars for the student-owned fleet of Lamborghinis, Aston Martins and Porsches parked in campus lots (sometimes sporting novice driver plates).
A local developer is building new luxury condos to house, not people, but fancy autos in the comfort of air conditioning, panoramic mountain views, and private gated security. Its bilingual Chinese-English website says 80 percent of the units are booked. Last year, the troubled government-run auto insurer doubled the premium on high-end vehicles to help offset the repair and replacement costs of fancy cars coursing the streets.
All the money flowing into luxury vehicles has caught the attention of provincial officials who are pledging to more closely scrutinize such transactions. British Columbia Attorney General David Eby says that Canada’s money-laundering watchdog -- the Financial Transactions and Reports Analysis Centre -- needs to start requiring car dealerships to report suspicious transactions, such as large cash payments.
“They need to include luxury car dealers in their reporting entities,” Eby said in an interview Thursday in Vancouver. “They need to collect that data.”
More than 70 percent of Rolls-Royce’s customers in the city are Asian, and the biggest buyers of the hipper Wraith coupe and Dawn convertible models are yet to turn 30 -- “quite remarkable,” as Aly Jiwani, general manager of the Vancouver dealership, puts it. He says one of his customers owns a fleet of 14 Rolls-Royces.
Moreover, women are pouring into the showroom. Female drivers already account for 40 percent of Jiwani’s clientele -- compared with 15 percent on average worldwide for Rolls-Royce -- and will soon probably account for half of his buyers, he says.
Expect more of that, fueled by the Cullinan, says Muller-Otvos. The new SUV, named after the largest diamond ever found, was designed with a market like Canada in mind -- for harsher climates, rougher terrains, more adventurous drivers, and of course, well-heeled soccer moms.
“It’s flexible -- you can bring your kids to school, you can go out for the evening at the opera. It’s fully suitable for all occasions,” he said.
©2018 Bloomberg L.P.