Torsten Muller-Otvos, Chief Executive, Rolls Royce Motor Cars Limited, shares his thoughts on the performance of the company and the primacy of the Middle East market in a chat with Mayank Singh.
|Rolls Royce sold 3,630 cars in 2013, which is an all-time record. The company has also seen four years of historic growth. What has enabled you to do so well?
It has to do with hard work as you can see such results do not come easily. It is a perfect combination of excellent products, particularly Ghost which has helped us to grow substantially. We have changed our marketing activities intensively, in the way we approach customers bringing more customers behind the wheels. Once you have experienced what a Rolls Royce is, sitting behind the wheel then you do not want to step out anymore. We have properly balanced our business worldwide, by not putting all our eggs in one basket. We have developed the Middle East territory, which is 20 per cent of our worldwide volume — which is substantial and a very important region. We have grown our dealer network in the US, Europe and Asia. It is important that you are well balanced around the world, because even if one region goes down due to economic problems you would never see that all over the world as you have a balanced presence across markets.
The Middle East market has grown by 17 per cent and 15 per cent in 2013 and 2012 respectively for Rolls Royce. Where is this growth coming from and what is enabling you to do so well in the region?
Every country has contributed towards this, be it Dubai, Abu Dhabi or Oman which contributed nicely last year by growing by 10 per cent. We are pleased with our dealer in Oman. We have a brand new showroom and there are still more to come. Middle East is a leader in bespoke cars, our dealers are creating cars where you see a story being created and our customers in the region are highly creative. A number of businessmen in Oman visit London often and they come to our factory in Goodwood giving us specifications of the car that they would like.
The US and China remain your biggest markets, with each accounting for 900 plus cars a year. Do you expect these market to continue growing at similar rates or are you looking at other countries substituting this growth?
For me Middle East is a key market and I see a lot of growth potential here in the years to come. We see wealth growing heavily in the Middle East as the economies are doing well. We see countries like Qatar, with the upcoming soccer championship, fuelling the business and once the business is in proper shape in a country, our sales surge. We see more and more wealthy people in Oman and there is a lot of potential to grow their business here. With our newly launched car Wraith, I see a lot of additional potential in the market. That is because we are addressing for the first time a segment of people whom we have not addressed before, like sports car drivers, Ferrari drivers, Lamborghini drivers, younger customers etc. And our order bank is really strong. Coming back to your question, China and the US are our main pillars. In 2013, we registered substantial growth in US and China, but in China it was not as explosive as it was a couple of years ago, particularly in 2010 and 2011. As the Chinese market is maturing and becoming a regular car market, you do not see those patterns any longer, but the growth is still strong and pleasing. The growth in China is not comparable to the Middle East but it is still in double digits.
You have mentioned about Russia and Nigeria as being two countries which hold a lot of potential. What makes you say that?
You cannot compare Russia to China as it is a completely different market. Russia is a good country for us but not substantially, definitely not as important as the Middle East, which is our third biggest market worldwide, bigger than Europe. Regarding Nigeria, we are always looking at unexplored territory and that is driven by our analysis of Ultra high networth individuals (UHNI) of those countries. Nigeria grew massively over the last few years with UHNI, and once that happens we get more and more demand into Goodwood directly and this is our first signal to look into those markets. We are not interested in harvesting low hanging fruits for one or two years but are interested in a sustainable business story for us and the dealer. And we believe that Nigeria is in a position to deliver that over the next 10-15 years and for that reason we are now entering Nigeria. But we are talking about small volumes compared to the Middle East, but you need to have a foot in the door early. We saw the same pattern when we entered South America two years ago, but now it is growing sustainably.
Rolls Royce has Phantom and Phantom II, your bestsellers. The Ghost which brought in younger customers and now you have the Wraith, which is the most powerful Rolls Royce ever. How do you differentiate between these and who is the average customer who would drive the Phantom, the Ghost or the Wraith?
You can differentiate it by the way people are dressed. The Phantom is the Tuxedo, the car for occasions, very often chauffer-driven, a car that underlines your position in society. Whilst Ghost is the tailor-made business suit, the car which is used daily to go from home to office and back and many of our customers are sitting behind the wheels themselves. Wraith is more the casual styled Rolls Royce, more informal, self-driven massively by younger people. We learnt that the youngest Wraith customer worldwide is not coming any longer from Asia but from Oman, as we have a customer who is around 25-26 years of age.
There is talk about an electrically powered Rolls Royce. Your customers have conventional preferences. Do you think that an electric Rolls Royce would be acceptable to them?
In principle, an electric engine fits very well with a Rolls Royce, as it generates a lot of torque, in addition to the silence of the engine and an unbelievable feeling of waftability. You are referring to the 102 EX – our concept car that was showcased at the Geneva Motor Show in 2011. This car got ambivalent reactions from customers worldwide, as we got over 500 of our customers to drive it and the major feedback was that 100-120 miles per hour range was not acceptable and I completely understand that, because our customers do not live in city centres but in the outskirts of cities and for that reason they have some commuting distance. Secondly, the charging time was not seen as being really beneficial to them as it was too long, so it all goes back to better technology. If we come up with ground breaking technology, with completely different performance patterns compared to what we have today, then I would say ‘why not’, but the intermediate solution is a plug-in hybrid, that gives you both, enough range for longer distances but also electric commuting particularly in city centres. The reason why I am on it is because we may get forced in certain cities by the legal side. It is not a customer request, but we need it and we are looking into it.
Are there any plans for a Rolls Royce 4×4 in future?
It is an interesting segment, particularly here in this region. The segment grew even in times of an economic slowdown, and what will come is a high-end luxury sub-segment in this market and for that reason it is very interesting to us. The question for me is if Rolls Royce fits into this segment. Rolls Royce is by nature neither sport, nor utility and for this reason we are looking into it and investigating what could a Rolls Royce be, what could it look. Our designers are on it and they are doing first sketches. There is clear agreement with my shareholders, the BMW group, that unless we are completely convinced that the car is right and fits into the brand we will make no decision. Another reason for this is because we are limited in terms of our volume growth in Goodwood.