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Named for the largest gem-quality rough diamond ever discovered, the Rolls Royce Cullinan is the Goodwood brand's if epic response to the SUV genre of automobiles. During the early days of the SUV's growth spurt, Rolls Royce briefly courted some controversy when they declared that it was a utility vehicle and all its connotations of "practicality" and "utility". Nevertheless, when Rolls Royce sets out to make it a sport utility vehicle, by damn, it's going to be SUV worthy to carry the Rolls Royce badge. The result is the Cullinan is the Goodwatch marque's first SUV, and thus the brand's first all-wheel drive vehicle.
When you pay a certain price, it comes with certain expectations and we spend over 800 hours making a single Rolls Royce to ensure that it is immaculate. This is our competence. – Rolls Royce CEO on build quality of his cars
Swinging through the East, starting in Japan, spending some time in Seoul, LUXUO's Jonathan Ho and YACHT STYLE's Gael Burlot eventually caught up with CEO Torsten Muller Otvos in Singapore to talk about the direction of Goodwood and the potential of the Rolls Royce Cullinan.
Rolls Royce CEO Torsten Müller Ötvös on the Cullinan brand potential
In fact, with the Cullinan, we've begun to use words at Rolls Royce that we never thought we would use like "utility" and "practicality" – Rolls Royce CEO Torsten Muller Otvos on the new Cullinan
You have enjoyed great success in 2018, especially in Asia, could you share some of the factors which contributed?
It was a record year for us historically. In comparison to 2017, we had full availability of the Phantom in 2018 and it had fantastic reception, becoming our main driver of revenue for that year. We were also helped with the launch of the Cullinan which brought lots of attention to the brand as you can imagine. Ghost, Wraith, and Dawn of the Phantom. Furthermore, many markets are in excellent condition, the United States, our biggest; the Middle East is recovering while China is growing from strength to strength. Meanwhile in East Asia, Japan and Korea in particular, show amazing growth rates, totaling up to 1700 cars last year in all [laughs],
How has this exuberant growth affected your operations? Have you had any more apprentices to the program?
We've had to employ 200 more crafts people to deal with the demand for the Cullinan. Our brand is running in the car industry, we're in very good shape. We want to continue our growth rate. We are looking for more and more apprentices for our products. Mark court, famed coachline painter; hence, we are always on the lookout for new people to train in all artistic fields required: embroidery, marquetry, etc. We've had a record intake of apprentices this year as well, we will probably continue for a number of years to come ,
Do you share craftsmen in common with British shipyards like Princess and Sunseeker?
No, we have done so in the past. The teak decking can be found on models like the Dawn and the Phantom drophead. Back then, we had to get the marine skills to make that decking. Because they are quickly snapped up by Princess and all the others. For this reason, we are no longer sharing but we have amicable relations. When you pay a certain price, it comes with certain expectations and we spend over 800 hours making a single Rolls Royce to ensure that it is immaculate. This is our competence.
You have the ability to offer really bespoke products …
Indeed, I dare say Rolls Royce would not exist to deliver this experience. 98% of all cars leaving Goodwood are heavily bespoke because once you have decided that you want a Rolls Royce, a lot of creativity goes into making the ultimate car your own. Your imagination is our limit. The bespoke division alone employs more than 100 people: engineers, designers, consultants and so on.
With this level of hyper luxury, do you find any synergies or similarities with other industries like watchmaking or the arts?
Very much like that. In fact, many of our clients are very interested[hewearsa[hewearsaVacheron Constantin Patrimony], These timepieces are commissioned by them and just for them, over a million dollars or more by watchmakers. We share common ground in our attention to details and artistry. Art and even tailoring inspires us, I'm glad that luxury exists because of it's an enriching lifestyle.
We have seen C-level executives from yachting companies crossing over to luxury automotive brands, are there crossovers in design or more potential collaborations?
We deal with Burgess. So we attend all the relevant boat shows (Monaco Yacht Show, etc) because client profiles are very similar. We've also launched cars on the decks of yachts and provide a great experience on the Sydney Harbor. Amazing photo opportunities. There is no such thing as a Rolls Royce is in the car business, we are in the luxury goods business, nobody actually needs us and they have absolutely nothing to worry about. It's all about inspiration at the end of the day.
On your yachts?
What we have seen is the Rolls Royce feel for their Gulfstream. Sometimes certain colors and key details are commissioned to match. As you get to know your customers better, you will want to get involved in his helicopter, home and private jet. His DNA is reflected in his environment.
The media landscape changes often, is there a platform you find?
It's very much driven by private functions and can not buy invitations. We do a lot on social media and electronic direct marketing. Broader advertising is not very effective for us. Rolls Royce, for us, it's all about targeting customers. The potential customer needs to test-drive it. You can talk about a Rolls for hours but nothing compares to the experience, especially on a model like the Cullinan. This model approaches customers so they do not know what they are doing.
Rolls Royce, is the Cullinan more for personal driving or driven into the car?
Self-drive is the name of the game. You hardly see in Asia that our cars are operated in chauffeur mode with the exception of the Phantom. Nobody operates a Dawn or Wraith or Black Badge in chauffeur fashion. The Cullinan is 80% self-driven. Funnily enough, the demographics have changed as well, our customer profiles are skewing younger and younger over the last years. They are so much younger than they are, thanks to new business models, IT, apps, fintech and technology entrepreneurs. If you are smart and creative, it's much easier to make money today than 20-30 years ago hence, we are getting new customers.
How do you target this younger generation in Asia?
This is Rolls Royce by far. In a way, with all the influential celebrities and pop cultural influences, this becomes a self-fulfilling mechanism which helps us a lot. Influence influencers, this authenticity comes from natural, organic, influence. So we created a lot of marketing collaterals and assets which help support the eco-system. The Black Badge with a black Spirit of Ecstasy also helped to create "edgy" Rolls Royce which resonated with younger audiences. Success with the Black Badge has shown how to connect with these consumers.
We have seen Rolls Royce less developed markets like Kazakstan and closer to home, Cambodia, what are some of the considerations when choosing which market to enter? What would be the trigger to enter such a market?
We look at the market potential. We do not open a dealership because we have 5 or 6 ready customers, we look into the long term to see what potential there is and how many high net worth individuals are in the area. We look at mutual growth opportunities. Our partner invests big money and we want to make it a successful enterprise, especially for brand-wise. It takes a year at minimum to analyze, make a conclusion, develop a business plan and then execute. I would say that we are happily covered globally, there's no need for further expansion, we are currently sitting on 135 partners and representatives in 56 countries worldwide and that's sufficient. It's easy to harvest the first 4 or 5 customers but once they've bought you, they're in trouble. Having a luxury dealership close because there's no business does not convey the prestige of success if you fail.
Do you still want to buy the same situation with other car brands?
Yes we do. Cambodia and Africa are good examples. India is a long-running history between the country's maharajahs and the brand. A lot of infrastructure is being added to the market. In fact, Indian journalists often ask when India wants to overtake China so it's definitely the aspiration for luxury, just not the consumption.
China has not been down on luxury consumption?
They did it years ago during President Xi's investigation of corruption scandals and that for luxury goods. Things are now in good shape in China.
The Cullinan is out in the 3rd quarter 2019 and the beginning of the 4th quarter.
How do you measure success and importance of a model like Cullinan in Asia?
We have our business matrixes whenever we conceive a new model. We are not sales or volume driven. We are profit driven. My target for the BMW Group (our shareholders) is profit and we are tasked with how we want to reach it. When we overshoot these goals, we think we have more conservative plans. The Cullinan is out in the 3rd quarter 2019 and the beginning of the 4th quarter. The whole plant is doing extra shifts to cope with demand but there is a limit to how many we can produce. The Cullinan Appeals to Families and Customers – The Power, Strength and Safety of an SUV. In fact, with the Cullinan, we've begun to use words at Rolls Royce that we never thought we would use like "utility" and "practicality" – you can take the kids to school or throw the dogs in the back.
What is Rolls Royce's stance on the environment? Any plans to go electric?
We want to go full electric and not hybrid within the next decade. We are probably one of the last ones offering 12 cylinder combustion engines and there are a growing number of fuel cells in the current form fits very well with the brand in terms of instant full torque and silent running. I'm very optimistic that the evolution of battery technology is going to get that much wider than what we expect from a Rolls Royce. We are therefore part of the BMW group which has been massively into electric drives.
Where do you believe the next big opportunity for the brand?
I would say the next big thing is electrification. These technologies want to be developed in-house using BMW Group technology but most importantly, it has to be a proper Rolls Royce at the end of the day. This is one phase. The next phase is thus to enter real customer commissioned bodies and coachbuilds.
What is the biggest challenge for Rolls Royce in Asia?
Uncertainty in business – from lowering taxes or consumer sentiment. You only buy a Rolls Royce when you feel good because you are a business man and are worried about politics. international trade routes, trade relations, tax wars between countries. This is the biggest concern in general, not just Asia.
Any challenges due to Brexit?
It's extremely hard to forecast. We are very much worried and we are urging the government to create a smooth transition. A hard Brexit wants to break our logistic chains overnight, the flow of skilled labor from outside the UK – 30% of our staff are non-Brits. Going down the wrong alley would not be good for our business. Not from a tax or import tariff perspective but the super delicate logistics chains which will affect the flow of parts for our cars. We are importing 38,000 components daily, higher for some models and I only need to loose one part and we can not finish a product anymore. Only 10% come from UK suppliers and even these suppliers want sub-suppliers in Europe, this chain is very delicate and our products are super bespoke with specific configurations. I can not afford to go on a stock hold for components.
Is the contingency plan a Rolls Royce that is not Goodwood?
No. Definitely not. We do not move to our factory to Europe, our contingency plan is to use alternative routes for logistics and even the feasibility of flying components into the country to avoid jams on the border. But all this is limited because we can only sustain this for a short period.
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