It won’t do to have the chief executive of a major public company driving around in a Rolls-Royce these days, given the tough regulatory and governance environment. But a guy who owns his own company can drive whatever he wants. “Most of my customers are just €˜regular guys’,” says Brian Miller, proprietor of Manhattan Motorcars in New York, one of the nation’s top retailers of super-luxury cars.
Only a small fraction of his customers are famous entertainers, athletes or heads of big public companies. But 44 regular noncelebrity guys and gals plunked down at least $350,000 for a Rolls-Royce Phantom at his dealership last year. Additional customers bought a Bentley Arnage or other super luxury cars from him. He’s one of only about three dozen dealers in the country who sell ultraposh cars that comprise a tiny fraction of the overall market.
“Many people can afford the super luxury auto, but few buy them,” says Milton Silverstein, a senior partner of the Boston Consulting Group. “The $150,000-plus car buyer is a rare species in today’s world of a million millionaires.” There are more $10 million homes in Naples, Fla., than Rolls-Royces, he notes.
Despite the small numbers, the Big Three German auto companies are in a fierce fight to win over the less than 900 customers who bought a Rolls, Bentley or Maybach in the U.S. last year. Maybach, the newest entry in this segment, is made and sold by Mercedes. Rolls-Royce is owned by BMW and Bentley by Volkswagen. The German carmakers believe they can build the segment into a profitable market that caters to decamillionaires who yearn for vehicles they believe have more cachet than a BMW, Mercedes, Lexus or Cadillac. But the carmakers first have to overcome the reluctance of even the super rich to flaunt their wealth by purchasing a car that costs $250,000-$360,000. This has created a need for a luxury car that is less ostentatious, but more rare than mainstream luxury brands. Bentley and Maserati are seeking to fill this niche.
Maserati’s coupe, Spyder and sedan are gaining traction with car aficionados. The Italian cars are among the most lusted-after models in the marketplace today. Demand is so strong that it can take six months to obtain delivery of the Quattroporte sedan. The coupe and Spyder models can be had in a little less time. All Maserati models are built to order so you can’t just walk in and buy one off the floor. “Most people here don’t know the Maserati brand,” says Joost Rijnbeek, general manager of the elegant Ferrari Maserati showroom on Park Avenue in New York. His showroom doesn’t actually sell cars. It’s a showroom, displaying three Ferrari models and three Maseratis. “We don’t offer test drives here,” he says. “We give customers all the technical information and then refer them to our four dealers in the area.”
Ferrari engineers developed the current Maserati cars. They are built at a Modena, Italy, factory using fine leathers and wood. The best ceramic coating for cars, even the Ferrari palette, are available. There are thousands of interior color combinations, but Maserati will reject an order if it does not meet its code of good taste. “The beauty of the Maserati attracts these customers,” Rijnbeek says. But the Ferrari-developed V8 engines in the cars can push the Maserati trio to speeds up to 180 mph.
Maserati has a storied history of Indy racing success; Wilbur Shaw won the 500-mile race in 1939 and 1940 with a Maserati. But the brand hasn’t been available in the U.S. since 1987 when it was pulled from the market following a disastrous alliance between Lee Iacocca, then chairman of a struggling Chrysler, and the charismatic Alejandro de Tomaso, an Argentinean-born car genius who had acquired Maserati and dreamed of restoring it as a luxury icon. Their idea of building a car with a Maserati body and a Chrysler engine resulted in one of the biggest marketing disasters in auto history.
Maserati’s present timing, however, couldn’t be better. The demand for luxury products is skyrocketing and the market for ultra-luxury vehicles is hot. “There are 100,000 households in the U.S. worth $30 million plus,” says Milton Pedraza, CEO of the Luxury Institute. His company does research on wealthy consumers and executives and consults for resorts, banks and high-fashion firms. He estimates that the market for ultra-luxury cars is 10,000-15,000 units annually. Many are purchased by aging baby boomers who want luxury trophies, Pedraza says.
Bentley and Maserati say their cars attract drivers who appreciate beautiful design and want high-powered performance. Executives for the two companies say the cars are daily-driving vehicles. That may increase their sales prospects. The ultra-luxury cars€¦quot;Rolls-Royce, Bentley and Maybach€¦quot;get much less use, Pedraza says. “Maserati’s chances are reasonably good because there’s so much Ferrari influence in the car,” says Bruce Wennerstrom, who co-chairs the Greenwich Concours d’Elegance, an annual exhibition of rare and vintage vehicles. “The name has cachet, but it takes more than a name to make a luxury brand.” He says a luxury car must be distinctive and have quality workmanship and reliability.
“When a person buys a luxury car, he is making a statement about his affluence and taste,” he says. “A rap star who buys a Rolls-Royce wants to be perceived as a cool cat.” Wennerstrom, who owns several rare cars, says “what attracts me to a car is beauty.” Above all, he doesn’t worry about the residual value. That’s a good thing because an ultra-luxury car is a poor investment. Rolls-Royce and Maybach only retain half their value after 24 months.
Volkswagen, which lost rights to the Rolls-Royce brand name last year, is still committed to the Bentley marque. However, it targets much higher Bentley volume. That’s the reason the Continental GT Coupe was launched last year with a price that’s about $100,000 less than the Arnage, its flagship model that costs more than $240,000.
Even after a year on the market, buyers must wait about nine months for delivery. “The new Bentley GT Coupe is selling as quickly as we can get it,” says Brian Miller. “The big money is still out there.” Average transaction prices for the GT range $10,000 to $15,000 over MSRP. “I’ve been buying them at $25,000 over list [price] for customers who don’t want to wait on line,” he says.
A Bentley spokesman says the company has already received more than 800 orders for a sedan version of the Continental that doesn’t go into production until July.
The Bentley Continentals are hand-built in a Crewe, England, factory that is more like a collection of artisan shops than a modern manufacturing facility. Even though the cars are less expensive than the Arnage, much of the same customized detail is used in the Continentals. It takes an average of 160 hours to build a GT vs. 270-290 hours to build an Arnage.
Because of limited budgets, the Bentley and Maserati cars were launched without expensive introductory advertising campaigns. Maurizio Parlato, president of Ferrari Maserati North America, devised a strategy to gain exposure with small expense. He got the Quattroporte placed in the last Neiman Marcus Christmas catalog, the most expensive car the book has ever featured. A limited edition of 60 coupes sold out in 36 minutes after it went online. Maserati also has placed its cars on “The Sopranos,” “Desperate Housewives” and “Nip/Tuck” on an ongoing basis.
Like Maserati, Bentley created a feeding frenzy for the GT with word-of-mouth buzz, eschewing expensive conventional promotion. The GT appeals to many first-time Bentley buyers. They are younger, ages 35-50, compared to Arnage buyers whose ages are 45-65. GT buyers’ net worth ranges from $4 million to $10 million, while Arnage buyers have an average net worth of $14 million. The GT has a higher percentage of women buyers compared to the Arnage. Also, Arnage owners have about seven other cars in their garage compared to the GT owners, who have two or three other cars.
If this tier of Bentleys and Maseratis can be more than shortlived fads, they will help increase dealer volumes and profits. But the carmakers want to accomplish that without diminishing sales of more expensive Bentleys or Ferraris sold in the Maserati stores. The new brands also have to maintain their differentiation from mainstream luxury BMW 7-Series and Mercedes S-Class models that are in the same price range.
Complicating matters for Bentley, VW has the Phaeton, a luxury model that bristles with extraordinary engineering and uses the same engine block as the Bentley Continental. But its sales have been under target worldwide. Only 2,000 Phaetons were sold in 2004, even with an astonishing $699 monthly lease price available.
Of course, the few very wealthy individuals who don’t shun ostentation have the new Rolls-Royce Phantom, Mercedes Maybach and Bentley Arnage to fall back on. The Rolls, produced in Goodwood, England, is probably the most technologically advanced model the brand has ever had.
A large percentage of the $350,000-plus Phantoms are customized to give owners just about any color, interior design or material they might want. Rolls also uses under-the-radar promotion to get exposure. One Phantom was auctioned off for $800,000 last December in Naples, Fla., to benefit a group of charities.
Maybach has gotten off to a slow start in the U.S. “We’re rethinking the brand,” says Wayne Killen, a Mercedes marketing executive. The company is using special gatherings of long-time Mercedes buyers, such as a recent one at the Guggenheim Museum in New York, to spread the word on Maybach. It has taken as little as four hours to as long as eight months to sell a Maybach, Killen says. Buyers are very demanding, such as one who wanted to use interior wood from a favorite tree that had fallen in his backyard. Ultimately, the wood didn’t meet Maybach quality standards and the customer settled for something else.
Luxury car connoisseurs have a wide range of exotic and expensive toys to choose from. Many are little-known, except to the cognoscenti. Catering to racing enthusiasts are the Saleen line, made by a 20-year-old Irvine, Calf., company, and Panoz, a 16-year- old specialty car company based in Hoschton, Ga. While designed primarily for competitive driving, these brands are also street-legal vehicles. Saleen also produces the Ford GT, a $150,000 speedster that the Dearborn, Mich., manufacturer hopes will become a halo model for the entire brand. Later this year, the world’s most expensive car, the Bugatti Veyron made by a VW subsidiairy, will become available. Production is limited to 300 preordered cars costing 1 million euros. Certainly not the VW Bug, it would make quite a trophy in anyone’s garage.
1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.