Bentley makes largely handbuilt
ultra luxury rides that are Rarely seen outside of the
wealthiest zip codes. But now Bentley is enjoying its
strongest sales in its 102 year History. If you want a massive 5
or 6000 pound vehicle with a 12 Cylinder engine that can top 200
miles per hour and accelerate as Fast as many Porsches, Bentley
might be the car for you, but it Will cost you. The most
affordable Bentley's start Around $175,000, but few are
bought at that price. Some Buyers may choose to buy off the
lot, but others can specify and Customize their cars to an
astonishing degree. Bentley says There are 17 billion ways to
specify options and choices on a Continental GT for example.
Beyond that, there are still Further options within Bentley's
portfolio of Mulliner cars, Which are its coachbuilt
vehicles, revived classic Models, and special limited
editions. Pricing on these cars Is controversial. Bentley
Mulliner Bacalar and Blower Continuation Series cars both
command prices around $2 million And Mulliner has produced cars
with even larger price tags. Bentley is also mounting a
powerful campaign to completely Transform itself. Bentley's
performance raises several Questions. How sustainable is it
success? What makes this brand Stand out against competitors
like a Rolls Royce or Mercedes Maybach and will the brand be
able to pull off its transition To EVs? Bentley was founded in 1919 by
Walter Owen Bentley. W.O. Bentley wanted to build a brand
that combined quality Construction with high
performance. He and his brother Started a business importing
cars made by the French company Doriot, Flandrin, and Parant.
During that time he created a Lighter piston from an alloy of
88% aluminum and 12% copper. Performance success came
quickly, adding the new pistons To the DFP vehicles gave Bentley
several victories between 1912 And 1914. That included several
at the Brooklands racetrack in England where he said 12 Class B
records. Bentley also had a
Series of victories at Le Mans
in the 1920s. In just 11 years, a guy had an
idea to build a car, created a Brand, made it globally famous
and successful. In just an 11 Year period as a guy in his
early 20s. For about 70 years, Bentley was
owned by Rolls Royce and for Much of that time, as one writer
observed it very much played Second fiddle to the prestigious
double R. Volkswagen Group Bought Bentley in 1998. The
German automaker meant to Acquire both Bentley and its
parent Rolls Royce but VW ended Up with most of Rolls Royce's
assets, and rival BMW got the Rolls Royce brand name and logo.
Bentley is similar to Rolls Royce in many ways, but Rolls
Royce's emphasis has always been On extremely customizable luxury
cars with rides that feel as Though they float over the
ground. Rolls Royce does also Tend to start at a higher price
point. And while Bentley Certainly does offer luxury and
customization, it places much More emphasis on high
performance alongside luxury. Bentley has benefited from being
under the aegis of the Volkswagen Group. The
arrangement allows Bentley to Share resources with others in
the group and it gives them Access to capital markets. It's
also quite unique in the Volkswagen Group in terms of
what it offers, so it helps VW Cover another corner of the
market without competing too Much with any other brand VW
operates. The association with Volkswagen has been especially
useful during the semiconductor Shortage. Because we're small, and because
we have a huge order bank. And Because our products profitable,
we've been blessed and Prioritized to get pretty much
every single component that we Need, whereas other brands in
the group have had to close down Factories As of 2020, the company only has
three basic model ranges, the Continental, the Flying Spur,
and the Bentayga. The Continental is a two door coupe.
the Flying Spur, which started
Out as a variant of the
Continental is a four door Sedan. The 2020 Bentley Flying
Spur held the honor of being the Fastest production sedan on
Earth with a top speed of 207 Miles per hour. The Bentayga is
an SUV. All come with large Engines. The V8 engine is
considered a small power plant For Bentley and its competitor
Rolls Royce. That is in contrast To more mainstream vehicles
where V8s are typically the Largest engine sizes available.
But these are not sleek, sporty, Hypercars. A Bentley Flying Spur
is about 209.29 inches well over 17 feet long with a curb weight
of 5373 pounds. The Porsche 911 Carrera, a classic small sports
car, is about two and a half Feet shorter and 2000 pounds
lighter. So in this category it's really
Rolls Royce, Ferrari, Lamborghini, Aston Martin and
Mercedes Maybach. And within That, you really have two
categories of supercar like Sports cars, and then you will
have luxury cars. More for like Chauffeur cars. Bentley really
splits in between these two Again it has its racing
heritage, which makes it maybe More comparable to someone
getting a Ferrari perhaps, but At the same time, it has this
ultra luxury aspect which makes It a competitor to a Maybach or
a Rolls Royce. Bentley's are also mostly hand
built. It takes around 110 hours To build a Continental GT and
around 130 to build a Flying Spur or a Bentayga. Building the
12 cylinder engine alone takes a Team of 45 workers about six and
a half hours not including Testing. On average, Bentley
makes 50 Continentals and flying Spurs and 40 Bentaygas in a day.
For comparison, Volkswagen pumps Out 2,200 units of its high
volume of Golf, just one model Out of its Wolfsburg, Germany
factory in the same amount of Time. The Bentley Mulsanne
originally took 400 hours to Produce. Bentley's Mulliner
custom built cars can take much Longer depending on the vehicle.
It will for example, take a full Year to build all of the 12
vehicles in the company's Blower Continuation Series.
Bentley says its customers like
different things about the Experience of owning one. They love the fact that they can
pull up at the finest event and Get the best parking place
without having to ask, or they Can cover long distances with
friends in absolute comfort with The best sound system the most
people have ever had in the Homes, let alone a car. So it's
that experiencial aspect of it As well. But the thing that
really, really stands out when You look at any feedback that we
get is our interiors. Phil Brooks has owned Bentley
cars for decades. He bought his First in 1963 when he was
courting his wife in England. He Has had Bentley cars from every
era of its history and is Involved with the Bentley
Drivers Club, an international Organization of fans. The Bentley is just a glorious
car to drive. And it's one of Those cars where you can feel
the road, you know everything That's going on as you're
driving along, and you record This in your in your memory
bank, but you're not getting Jarred and knocked all over the
place by it. Brooks has also owned Rolls
Royces. And you can compare the styling
of the GT or a Spur to the Styling of Rolls Royce. And even
the really snazzy looking Rolls Royces don't have that panache
they just don't have it. The vehicles can have their
quirks and challenges but for Fans like Brooks Bentley's have
an all around excellence that is Just tough to find elsewhere. Even with just a few basic
models, Bentley might be doing Better than it ever has. Sales
reached a record 11,206 units in 2020 despite the pressures of
the Coronavirus pandemic. The Brand attributed its success to
new model launches and the Greater global availability of
existing ones. All of its Current generation of models
were launched in the last one And a half years. Bentley's
previous record sales year was 2017 when it sold 11,089 cars,
but the company was also
Suffering financially in 2018
and 2019. It undertook ambitious Restructuring efforts which it
wound up around the beginning of 2020. Going into the pandemic at
the start of 2020, Bentley it Had its largest order book in 20
years. Closing the factory for
effectively 12 weeks in terms of Lost capacity means that we only
had 75% of production available. Bentley's order book was even
stronger at the beginning of 2021 than it had been a year
earlier, and the first half of 2021 brought record sales. Just to put in context of how
well Bentley's been doing of Late in H1 21 it's sold already
7,000 units so if you annualize That, it's already ramping well
above their normal trajectory in Their normal levels. The first half of the year also
yielded more profits than the Company has earned in any full
year before. They actually were a loss leader
in recent years and but now in H1 21 their profit margins have
been the highest we've seen in Many years. It is important to point out
that the company only sold about 100 more cars in 2020 than it
did in 2017. It is a very low Volume manufacturer, but each
vehicle is very profitable. Bentley success is also coming
amid a spike in demand for Luxury goods and luxury vehicles
specifically. We've had this lift in overall
demand for luxury products that No one expected. And it's
probably given us another 10% Boost over and above what we
thought we were thinking 25% to 30% growth in the market, it's
more like 35-40% globally as we Stand. The average age of the Bentley
customer has dropped about a Decade in the last 20 years. Our average age now is mid-40s.
And bearing in mind when we Launched the GT, back in
2003-2004, it was mid 50s. So Over 20 years, we've got a lot
younger. Bentley's total addressable
market might actually be far
Greater than its current
customer base. The market size for the ultra
high net worth luxury market is About 2 million customers. And
then Bentley makes only about 10,000 vehicles a year. So the
penetration level they need to Hit is actually quite low and
ultra high net worth growth is Like 4% to 5% per year. At the end of 2020, Bentley
unveiled its big plans to become A leader in sustainability. The
Flying Spur and Bentayga are Available as hybrids and the
Continental hybrid will join Them by 2023. A fully electric
Bentley is due to launch in 2025 And Bentley says it will be the
first luxury car in the world to Be carbon neutral across its
entire life. That means parts For the car will be sourced
through carbon neutral tier one Suppliers. It will be built
through a carbon neutral Manufacturing process and will
not emit any carbon itself Because it is an EV. The company already has a solar
power field from which it Sources 30% of its energy, and
it recycles 95% of the water its Factory paint shop uses through
a reverse osmosis process. Bentley says it will also have a
strategy for the car at the end Of its usable life, that could
be quite some time. Bentley says 80% of the cars it has produced
since 1919 are still on the Road. The company is involved
with a project to develop a Fully recyclable electric
powertrain. Its entire range Will be either hybrid or
electric by 2026 and fully Electric by 2030. Its factory in
Crewe England has been carbon Neutral since 2019. Bentley says
it was the first of Britain's High end automakers to have a
carbon neutral factory in the UK. Some in the automotive industry
think the move cannot come fast Enough and say Bentley and other
high end vehicle manufacturers Might be a bit behind the rest
of the auto market and Electrification. Bentley
management said this themselves In interviews as far back as
2018. Then again there are those
Who think that as with other
high end brands, there is some Essential Bentley-ness or at
least high end touring sedan Flavor that is lost when
swapping out that distinctive 8 Or 12 cylinder engine for an
electric powertrain that sounds Practically like nothing at all. To kill every nameplate that we
have, every engine that we have, And rip out the factory to be
able to build a completely new Set of cars with different
powertrains and different Components in a five to eight
year period is I would say a Once in a lifetime opportunity.
It's also one of the biggest Challenges we face. The company says at least 55% of
current Bentley customers and Potential buyers would want an
electric Bentley within the next Five years. When we started looking at
sustainability credentials and The future of luxury actually
bigger than Bentley we could see Either an existential threat to
luxury consumption or we could Be role models for
sustainability. And by Neutralizing any negatives about
consuming luxury products, Automotive in particular, we can
create a unique selling Proposition. In addition, being one brand in
a big stable allows Bentley to Enjoy the spoils of massive
Volkswagen investments in Electric vehicle technology. For Bentley being connected with
Volkswagen is critical here. They can share platforms with
Audi, which now it's included Inside. Porsche as well is also
part of VW. A unified battery Sharing these sorts of things
and parts and components should Help it transition in its
electrification campaign going Forward. Bentley's high prices can also
help it absorb the costs of EV Technology development.
Nevertheless, the company's Timeline is breathtaking. Then
again, it wouldn't be the first Time Bentley managed rapid
change. Between 1919 and 2003,
Bentley built and sold 36,000
cars. Four years later, it had Sold another 36,000. The company does not share sales
or profit projections but told CNBC it is very optimistic.
