18 March 2019

Super-luxury, super-profit SUVs save jobs

The news that Mercedes-Benz plans to build its Bentley Bentayga/Rolls-Royce Cullinan competitor super luxury Maybach SUV at its plant in Alabama in the southern US is of global market interest on several levels.

Firstly, it is a confirmation that the plant, opened in 1997 to make the strongly truck-based ML SUV, benefitting from generous local government assistance and a very large pool of low cost labour, has achieved world class and beyond ‘S-Class’ quality and productivity levels. This was not always the case. I edited a magazine that charted the first five years in Alabama and there were many quality issues with the SUV at the time, mainly caused by the lack of experience of carmaking in the region.

Secondly, it is testament to the ever-changing and sometimes quite extraordinary vehicle market; at the Geneva show recently, all talk was of EVs, hybrids and protecting the environment from exactly these types of gas-guzzling high-polluting vehicles. However, the super-luxury SUV market is completely bucking this trend; all the world’s luxury and sports players are joining the party - Aston Martin and Ferrari will soon have models to vye with super-SUVs already sold by Bentley, Rolls-Royce and Lamborghini. I travelled to Crewe in the UK to see the first Bentley Bentaygas roll off the line and I was informed by a very confident marketing executive that the SUV would become the marque’s best seller. And so it is - Bentley simply cannot make them fast enough to meet demand and likewise at Rolls-Royce, the Cullinan line is running at 100% capacity and is still not able to catch up with demand, even with the 200 workers that were added to the plant in 2018.

Over at Lamborghini, a sports car maker best known for its Countach, Diablo and Murcielago super-sports models, its Urus SUV is forecast by the OEM help double the brand’s sales this year.

Also, there is the question of scale and relative profit to consider; a $300,000-plus SUV does not cost ten times as much as a compact or full size SUV to design, source, manufacture and market. But it definitely makes more than ten times the profit, especially once development costs are amortised by the level of sales to those high net worth buyers who are obviously joining the US trend to SUVs, albeit at the highest levels.

Should we bemoan this super-luxury market and its vehicles? No, I don’t think so. These vehicles require more innovative and sophisticated components and systems from the supplier community, driving more employment there. The levels of hand crafting and customisation mean more man hours for the skilled and semi-skilled workforces at plants around the world. For once again, as in Hilaire Belloc’s poem: ‘It is the business of the wealthy man, to give employment to the artisan’ is a true and noble adage.

Simon Duval Smith

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