The boss of Bentley has said the luxury car market is experiencing a ‘post-war boom effect’ in a sign that wealthy drivers are ready to splash out again.
Adrian Hallmark, chief executive and chairman of the Volkswagen-owned car maker, revealed the company had seen a surge in demand in Europe, the US and China. Sales of Bentleys for the three months to the end of September rose 15 per cent on the Continent, the Cheshire-based manufacturer’s largest market, compared with the first three months of this year before Covid struck.
Sales are now back to pre-pandemic levels in the UK, marking a sharp rebound since the summer. The luxury car industry is seen as a bellwether for the wider economy, so signs that wealthy customers are spending again will raise hopes that the downturn – and the surge in unemployment this winter – could go into reverse next year.
Road to recovery: Wealthy buyers are snapping up exotic cars like Bentley’s Continuation replica of a 1920s icon
Sales rose between 10 and 15 per cent in the US for the same period. In China – an increasingly key market for Britain’s luxury car makers – orders are 25 per cent up on last year, far exceeding precrisis levels.
Hallmark said of UK sales: ‘The last quarter of last year and the first quarter of this year before the crash were tracking well – 10 to 15 per cent up on the past. We’ve come through the crisis and we’re still at that level.’
The sales figures show a remarkable bounceback after the company was forced to shut its factory in Crewe from March 21 to May 11.
The 101-year-old manufacturer produces only cars that are made to order and typically cost more than £150,000, often with bespoke features such as finely crushed diamonds in the paintwork.
Hallmark said the luxury car market is normally closely correlated with gross domestic product – a measure of economic activity – slumping during recessions.
He said: ‘Despite the fact [wealthy customers] can still afford expensive cars in a recession, there is a complete switch-off in demand because it just feels wrong to go and buy something which is a pure pleasure item when you can see other people not having as much pleasure as they should.
‘What we’re seeing now is almost a post-war boom effect. It’s the opposite of a recessionary effect so far.’
Bentley holds monthly calls with depositors of its Bacalar supercars, which can cost £2million, and customers who have bought its Continuation series of rebuilt versions of the iconic 1920s ‘Blower’ racing cars. Hallmark said: ‘Every single one says the same thing – ‘I’m a collector. This is a unique opportunity. I still have the means to do it and, actually, the pandemic has reinforced my priorities in life, which is not to be decadent and irresponsible but to live in the moment and do what is right when I can do it. There’s no need to back out because, beyond all of this, I’ll still be around and I want one of these cars for my collection’.’
Hallmark, who joined from Jaguar Land Rover in 2018, said he was ‘not complacent’ about the future, but remained ‘cautiously optimistic’. In some markets, orders for the bespoke models have already been taken for delivery in September next year.
Bentley was the only brand in the Volkswagen Group, which includes Audi and Porsche, to increase deliveries in the first half, with sales up 2.8 per cent to 4,918 vehicles compared with the same period in 2019. Bentley sold a record 11,006 cars last year as turnover hit €2.1billion (£1.9billion).
David Bailey, professor of business economics at Birmingham Business School, said: ‘The ultraluxury market is very cyclical and usually declines with the economy.
‘This is different in that we have all been through an awful experience and now we’re reassessing what we want, whether it’s a house or buying a car.’
Earlier this month, Bentley led a drive to switch to making electric cars only by 2030. In the short-term it will make a plug-in hybrid version of every model by 2023, and by 2026 customers will only be able to buy new plug-in hybrid or electric cars. It will launch two plug-in hybrid cars next year.
The move comes as the Government orders the industry to switch to selling only new electric or hybrid cars by 2030.
Hallmark, a self-confessed ‘petrolhead’ turned electric evangelist, has owned 150 cars since the age of 17 and now drives a Porsche Taycan and a Bentayga Hybrid – Bentley’s first plug-in car.
He argues that the 2030 timescale is ‘ambitious and feasible’ for the premium manufacturer, but mass market use of electric vehicles is further away. He said: ‘It’s probably 20-plus years before you get an infrastructure where everybody can charge anywhere, any time without hassle.’
PARTS COULD BE FLOWN IN POST-BREXIT
Car manufacturers are making plans to fly in parts to the UK in the event of a No Deal Brexit.
Bentley has booked space on planes from Germany to ensure access to key parts in case roads become jammed. Aston Martin is also looking at flying small parts in as a last resort, The Mail on Sunday understands.
Several car makers are shifting import routes away from Dover for fear of hold-ups. Nissan, which is gearing up to sell its new hybrid Qashqai model next year, has warned that customs checks could slow production.
Bentley has switched from keeping two days’ stock on hand to keeping ten days on hand and has been preparing staff and suppliers for new customs IT systems.
However, the biggest worry for the industry remains an increase in tariffs, which would raise costs and, potentially, prices.