Demand for luxury cars flatlined last year but the British marque’s profits were its second highest to date
Last year was Bentley’s second most profitable year yet. Speak to boss Adrian Hallmark, though, and you get the sense that the pride comes not from what the final profit figure was, but from knowing how bad it could have been.
The previous six years on Hallmark’s watch have been fruitful in setting the company up for success even in challenging market conditions. Last year was indeed challenging for Bentley and all other luxury car makers. Hallmark said global demand for luxury cars was flat, and the only growth came from premium cars with luxury pricing – the likes of Range Rover and high-end Mercedes models.
Yet Bentley was able to prosper, for three key reasons: a restructure in 2020, increased pricing structures on its cars, and an increase in the amount of bespoke content fitted to them.
Hallmark took over Bentley when it was loss-making and in his first full year in charge in 2019 (he joined the company in February 2018) made a €300 million swing in profitability to take Bentley back into the black. Last year’s profits were almost 10 times more than 2019’s €65m figure, at €589m, even though volumes were only up just over 2500 cars to 13,560 units.
The first underlying trend in its success is the long-term impact of a successful restructure of the business in 2020 as part of Bentley’s ‘Beyond 100’ plan to prepare the business for going all-electric and paying its own way to do so, something that would require huge investments in technology and facilities.
Linked into this was the need to make each unit sold more profitable, to allow the firm to not be so reliant on simply increasing sales as a way of growing profits and revenues.
“It’s a great indication of the business model that we’ve created over the last four years after restructuring,” Hallmark said in a briefing call announcing Bentley’s latest financial results. “We’re just a few thousand more cars than we used to sell in the 2000s, but we’re now making three to four times the profit per year that we used to make.”
Hallmark is simply selling every car Bentley makes for more money, something not achieved by upping list prices but by increasing the amount of bespoke Mulliner content – on top of the factory-fit options that are offered on standard price lists.
Each Bentley comes with around €39,000 of factory-fit options, and 70% of cars have bespoke Mulliner content on top of that. The Mulliner business has developed to the point where Bentley is able to integrate some bespoke processes into its production lines.
“We managed to industrialise some of these technologies and options and fit them in the same process that we do regular options on a production line,” he said. “So the quality is the same, the speed of fitting them is the same and it means the customers can get them without delays, and we make very personal bespoke cars without any fuss.”
One buyer of a £250,000 GT Convertible managed to pay the list price again solely in optional bespoke content on top. “Special paint, special embroidery, veneers from specific trees in his own forest, including tree emblems on the headrests…”
More limited-run special models like the £2m Batur and Bacalar models have also been made to boost exclusivity and profitability.
“In the old days, it would be one person in Brunei,” said Hallmark. “Now, we’ve got a handful of people we actively engage with creating unique cars just for them.”
They’re priced for scarcity but even these models can be made more exclusive – and expensive – still. One customer has been quoted €400,000 on top of the list price for what they wanted to do to make it their own. “A lot of that was carbonfibre… everywhere,” said Hallmark.
While labelling the firm’s results as “fantastic”, Hallmark still noted there were huge challenges in selling cars in 2023. “We ended up still with a good order bank but not as strong as we started with, but with a great performance overall.
“China had a terrible time in the first half, but recovered in the second. The US was similar. The UK and Europe had a decent first half but suffered in the second half. So we had uneven performance for the first time in about four years.
“We started to see volatility in the order intake rate and volatility around the world as a result of economic challenges, geopolitical issues and rocketing interest rates, even though our customers can still afford our cars.”
Hallmark said the increase in interest rates had added as much as $1000 to monthly payments, making for a “level of emotional sensitivity that slows down the demand for what we’re now seeing”. Things have now stabilised, he said, “and we’re actually back on the up”.
This year won’t break any records for Bentley, given it is a changeover year at Crewe for every model apart from the Bentayga. Hallmark expects the firm’s sales to sit between the 15,000-20,000 marks once the fifth model line (a new electric car) is launched from 2026, averaging at around 17,000 units, and profitability will be further solidified by a desire to put Bentley back into higher-priced segments. It certainly won’t be dropping down the pricing ladder below the Bentayga.
“There is no numeric limit to exclusivity other than don’t oversupply the market. That’s something we are absolutely committed to maintain.”
