Bentley CEO Adrian Hallmark
Scott Mill | CNBC
After a record 2022, Bentley Motors posted a surge in profit in the first quarter, thanks in large part to car customization, chief executive Adrian Hallmark said.
Bentley reports its best first quarter ever, Operating profit rose 27 percent to 216 million euros, or about $232 million. Even more impressive, especially at a time when margins are under pressure for many auto companies, Bentley reported that its return on sales actually rose to 24.4% in the first quarter, up from 20.9% in the same period in 2022.
The reason: Wealthy buyers spend more to personalize their cars with special paint colors, leathers, stitching and detailing.
“Customers can choose from one of our 62 paint colors, the 43 leathers we offer and many options,” Hallmark told CNBC. “So it’s a complete shift in vehicle configuration. They’re buying the top-of-the-line models – like the Continental GT’s speed version, rather than the base version.”
The average selling price of a Bentley has risen 40 per cent over the past four years, Hallmark said, but only 9 per cent of that was due to higher model prices. “The rest is content,” he said, meaning upgrades, options and personalization.
From Rolls-Royce and Ferrari to Lamborghini, Aston Martin and McLaren, the rise of customization is driving record profits in the supercar segment. Still raking in cash from Covid and eager to own one-of-a-kind rides, wealthy car buyers these days are willing to pay top dollar for special details.
Ferrari said on its first-quarter earnings call that its adjusted EBITDA increased by 85 million euros ($91.6 million) “contributing higher personalization than we expected.”
Rolls-Royce’s bespoke division is known for meeting unusual client requests, from matching the paint color of a piece of ancient Japanese ceramics to replicating an Hermès design scheme on a client’s private jet.
The Bentley Mulliner Edition division at the company’s Crewe factory is producing a record number of one-of-a-kind Bentley models featuring special paint colours, metallic finishes and embroidery. Some customers wish to have their name or family crest embroidered on the seat. Others want special interior lighting or carbon fiber details.
One of the company’s most popular options on Continental models is the rotating display, in which part of the dashboard flips from a plain carbon surface to become an infotainment touchscreen. Despite the high cost — more than $6,000 — nearly three-quarters of buyers bought the upgrade, according to the company.
“The whole world of luxury is changing,” he said. “It’s not just the car, it’s fashion, everything. If customers are going to spend that much money on something, they’d rather pay a little more to upgrade or choose to have something really special.”
Beyond upgrades and personalization, Hallmark said Bentley didn’t see any signs of slowing demand due to rising interest rates, falling inventories and recession fears.
“Like most of our markets right now, order intake in the U.S. is very strong,” he said. While the price of a used or pre-owned Bentley has fallen slightly, Hallmark said the adjustment is healthy.
“We can see in the secondary market that residual values are normalizing instead of the crazy and above-retail that they used to be. But demand is still very strong.”