Adrian Hallmark, CEO, Bentley
Scott Mlyn | CNBC
After a record-breaking year in 2022, Bentley Motors reported surging profits in the first quarter thanks in large part to car customization, CEO Adrian Hallmark said.
Bentley reported its best-ever first quarter, with operating profits up 27% to 216 million euros, or about $232 million. Even more impressive, especially at a time when many car companies are seeing profit margins under pressure, Bentley reported that its return on sales actually increased in the first quarter to 24.4% from 20.9% during the same period in 2022.
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The reason: Wealthy buyers are spending more to personalize their cars with special paint colors, leather, stitching and details.
“Customers are choosing one of our 62 paint colors, the 43 leathers we offer and lots of options,” Hallmark told CNBC. “So it’s a total shift in the configuration of the vehicle. And they’re buying the top models — like the Speed version of the Continental GT, rather than base edition.”
Hallmark said the average price of a Bentley sold has jumped 40% over the past four years, but only 9% of that increase is due to model price increases. “The rest is content,” he said, meaning upgrades, options and personalization.
The rise of customization is driving record profits across the super-car segment, from Rolls-Royce and Ferrari to Lamborghini, Aston Martin and McLaren. Still flush with cash from Covid, and eager to own one-of-a-kind rides that stand out from the pack, today’s wealthy car buyers are willing to pay steep prices for special details.
In its first-quarter earnings call, Ferrari said its adjusted EBITDA got a boost of 85 million euros, or about $91.6 million, from “higher personalisations whose contribution exceeded our projections.”
Rolls-Royce’s Bespoke department has become famous for meeting unusual client demands, from matching the paint color of a piece of ancient Japanese ceramic to copying an Hermes design scheme on a client’s private jet.
Bentley’s Mulliner Edition department at the company’s Crewe factory is turning out record numbers of one-of-a-kind Bentley’s with special paint colors, metal finishes and embroidery. Some clients want their names or family crests embroidered on the seats. Others want special interior lighting, or carbon-fiber details.
One of the company’s most popular options for its Continental model is a rotating display, where a section of the dashboard flips from a plain carbon face to an infotainment touchscreen. Despite the steep cost — at over $6,000 — the upgrade has been purchased by nearly three-quarters of buyers, according to the company.
“The whole world of luxury is changing,” he said. “It’s not just cars, it’s fashion, everything. If customers are going to spend that kind of money on something, they’d rather pay a little more for the upgrade or option to have something truly special.”
Beyond upgrades and personalization, Hallmark said Bentley is not seeing any signs of a demand slowdown from rising rates, falling stocks and recession fears.
“The order intake in the U.S., like most of our markets at the moment, is really strong,” he said. While prices for used or pre-owned Bentleys are coming down slightly, Hallmark said the adjustment is healthy.
“We can see on the secondary market that residual values, instead of being crazy and above retail like they were, are now normalizing. But the demand is really strong still.”