The steering wheel may be slowly going out of style, but no one seems to have told the Ferrari set.
Purchases in this rarified strata of the car industry are accelerating far more quickly than those of the pedestrian cars and crossovers catering to the Costco crowd. Now, it’s poised to shift into an even higher sales gear. Over the past five years, the five brands that sell their cars for $200,000 and up - Bentley Motors, Ferrari, Automobili Lamborghini, McLaren Automotive, and Rolls-Royce Motor Cars - have collectively managed a 51 per cent increase in the annual number of machines sold. Last year, 30,000 of these exotic beasts roared out of dealerships, Bloomberg says.
McLaren, for instance, as reported by The National in June, announced another record-breaking year of vehicle sales, with deliveries soaring in the Middle East.
Profit before tax of £9.2 million (Dh43.8m) from an annual sales revenue of £649.8m in 2016 gave McLaren Automotive a fourth consecutive year of profitability in only six years, since start of sales in 2011. This was an increase in profit before tax of 70 per cent compared to the £5.4m reported in 2015, the supercar maker said.
In the firm's newly combined Middle East, where Abu Dhabi and Dubai both have showrooms, Africa and Central and South America region sales grew by 69 per cent.
“The positive financial performance in 2016 was underpinned by a 44 per cent increase in sales revenues,” said the McLaren Automotive chief executive Mike Flewitt. "Investment in R&D and future product during the period was £129.1m - 20 per cent of turnover.”
Operating profit of £65.8m in 2016 was the company’s highest ever, standing at 10 per cent of turnover and representing a 180 per cent increase over 2015. The strong financial performance in 2016 was underpinned by record sales, with a total of 3,286 cars purchased; this was a 99 per cent increase over 2015 and exceeded the company’s own expectations by almost 10 per cent, with all geographic regions achieving sales growth.
In its first full year of production, the Sports Series family accounted for 2,031 deliveries, the majority of which came from the recently introduced McLaren 570GT and 570S models. In total, 1,255 Super Series cars were sold in 2016.
In March 2017 the second-generation McLaren Super Series, the new McLaren 720S, was launched and some 1,500 orders have been taken to date. A new convertible Sports Series model, the 570S Spider, was announced this month and makes its world debut this week in the UK at the Goodwood Festival of Speed.
So much for scarcity. Last year, the global car market as a whole failed to keep pace, growing by just 23 per cent, according to Bloomberg.
“I like to keep one from each brand,” says Anthony Tonokaboni, a disposable-glove magnate and self-professed petrol head. At the moment, the Los Angeles executive has a 2012 Ferrari 458, a McLaren 650S Le Mans and, on order, a Porsche GT3. Mr Tonokaboni borrows his business partner’s Bentley on occasion and, in the next year or two, intends to buy a McLaren 720, which starts around US$290,000.
Indeed, much of the recent growth at the socioeconomic peak of the car world has come from McLaren, which has gone from a boutique "skunkworks" hammering together a few hundred cars in 2011 to a polished manufacturer on par with the most bourgeois Italian brands. The supercar maker now has showrooms in Abu Dhabi and Dubai.
Jolyon Nash, the company’s executive director of global sales and marketing, says the “right number” for the brand is from 4,500 to 5,000 vehicles a year. Customers are taking to the British speedsters because they are more comfortable and pragmatic than they look. “We find McLaren customers want a car that is the best of both worlds - which is to say a car they can drive to the grocery store in, but then take to the track on weekends,” Mr says explained.
Mike Ward has long sold cars from Maserati Spa and Nissan Motor’s Infiniti at his Denver dealership. Six months ago, he added McLaren to the lot and is on pace to sell at least 40 of them annually. “To be honest, there was a little pent-up demand,” he says. Most of the buyers are in town, but Mr Ward says some are coming from Wyoming and Kansas. “At the moment, there’s plenty of money here, and people like sports cars,” he says.
Elsewhere in the pack, both Ferrari and Lamborghini have hit the pedal a bit on production. As Volkswagen was slogging through its diesel scandal, it quietly more than doubled the number of Lamborghinis coming out of its factory near Bologna. Meanwhile, Ferrari flew past its self-imposed cap of 7,000 vehicles, in part to appease investors since its initial public offering back in October 2015.
Underlying this luxury product push are some very cushy economics. The world simply has far more rich people than it did five years ago. Thanks to a bullish stock market, there are now 226,450 or so “ultra high net worth individuals” - those with assets of more than $30 million. Those ranks have swelled by 21 per cent since 2012, according to Wealth-X.
And the wealthiest of that bunch have had a few pretty good years of late. Since October 2012, the combined net worth of the world’s richest 100 people has increased 39 per cent, to $2.6 trillion, according to the Bloomberg Billionaires Index. Apparently, some of them have been shopping Ferrari on the stock market, as well as the dealership.
“If you’re a car company, you have to think about scale and volume and simplification,” says Gerry Spahn, the head of communications for Rolls-Royce North America. “That’s why we say we’re not a car company, we’re a luxury goods maker.”
Rolls-Royce has engineered that sweet little economic motor into its entire product line via its bespoke programme. Today, about 80 per cent of Rolls-Royce buyers customise their chosen cars with details that cost an additional 20 per cent, on average. After all, if the ceiling of your next car cannot approximate the night sky, constellations and all, why not just buy a natty Nissan Maxima?
“They’re getting more comfortable with splashing out a little,” Mr Spahn says. “Honestly, we’ve done seven-figure cars this year.”
IHS Markit expects annual sales of ultra-premium vehicles to increase by 19 per cent in the next five years.
“Our customers are commissioning their new Phantoms today,” adds Mr Spahn.
“And their question is always ‘When is it coming?’”