More and more it’s a younger set buying rich cars
Average age of people acquiring top-line luxury sedans dropping steadily
Rolls-Royce may not strike you as a brand that’s ever more spry. After all, the 111-yearold institution takes its sweet time on its stately, half-million-dollar cars. Its three-ton Phantom sedan, for instance, undergoes more than 800 hours of work by the team in Goodwood, England, before being personally delivered to its intended dignitary in some exotic locale.
But, according to CEO Torsten MüllerÖtvös, the bulk of the brand’s buyers are surprisingly young.
“We are seeing in that segment of ultrahigh-end-growth individuals a fast decrease in average age,” Müller-Ötvös said. “It’s fantastic, it really is.”
In practical terms, that meant the global average age of a Rolls-Royce customer was 45, down from 56 seven years ago, he said. That’s lower than the average age of car buyers overall, which hovers around 52, and younger than the average age of luxury-car buyers, too, which is 50, according to data provided to Bloomberg by Kelley Blue Book.
Buick has an average new-buyer age of 59. At Cadillac it’s 52, at Mercedes-Benz 51, and at BMW 50, according to KBB. Land Rover’s average customer is 45, the youngest of any included in the data. Rolls-Royce was not among the brands reviewed in that report — its numbers are internal. Bentley, a closer competitor to Rolls-Royce, reported an average buyer age of 56.2 years in 2014, although that number would be younger now.
Why does attracting a young(ish) buyer pool matter?
For one thing, it prevents against the hypothetical eventuality that your customers eventually die off. Older buyers tend to be loyal buyers, but as they age, their numbers dwindle.
More immediately, it has to do with brand image. If pensioners are the ones driving your cars, the rest of the world inevitably associates the brand with their age set. That doesn’t exactly foster future buying excitement.
“If you’re appealing only to older buyers, you’re not growing that back end,” said Stephanie Brinley, senior analyst for the Americas at IHS Automotive. “If you’re not connecting at least on the aspirational level with a younger buyer, chances are when they get to 45 or 50 and are able to buy your product, they won’t think of you.”
The reason for the relative youth of Rolls buyers had to do with how they were amassing their wealth, said Müller-Ötvös.
Rather than in previous decades when acquiring it from Daddy was a viable, and respectable, option, the people turning up at his dealerships were now self-made.
“It’s no longer inherited money,” he said. “The majority is all self-generated money among very young people who are already making fortunes, be it in real estate, engineering, IT, entertainment, whatever.”
That’s promising. Experts have warily anticipated in recent years a slump in car sales as millennials begin to overtake baby boomers in the marketplace as the world’s biggest spenders. The theory was that they cared less about owning things — houses, property, cars — than in just being able to access them at any given time.
The success of shared-access businesses Uber, Airbnb and Rent the Runway, plus the rise in the development of self-driving cars and other forms of urban transportation, seemed to support that idea.
But further studies have indicated the contrary. According to JD Power & Associates, millennials’ share of new-vehicle purchases in the US hit 27% in 2014, up from 18% in 2010. They’ll comprise 40% of the US car market by 2020.
In China, the average age of new-car buyers hovers around 34. Thirty-eight percent of all buyers of new luxury cars there are under 40. Last year, Cadillac boasted widely about its 34-year-old average buyers in China.
Rolls-Royce developed the Wraith coupé and continues to expand its range of exclusive Black Badge cars, both of which are aimed at younger drivers and sold predominantly in the US.
“We are now catering to all the different kinds of set groups when it comes to customers,” said Müller-Ötvös.
“These are customers who for the first time said: ‘Oh, guess what. I like this Wraith, and I put it into my garage in addition to my Ferraris, because Ferraris can be stressful from time to time.’ ”
It’s no longer inherited money. Now self-made money is going big in luxury marques Torsten Müller-Ötvös Rolls- Royce CEO