Ferrari has company
The number of models in this rarified price bracket is expanding. In the past the market was pretty much left to Ferrari, which produced exotic, track-honed road cars such as the F40, Enzo and, most recently, the LaFerrari.
Now competition exists not just from established brands such as Aston Martin, Lamborghini and McLaren but also mass-market companies such as Mercedes-Benz, which is developing the Project One hypercar using its own Formula One engine making a promised 1,000 hp.
Niche hypercar-only companies such as Sweden’s Koenigsegg Automotive and Pagani Automobili in Italy are becoming more established, while the design house Pininfarina, under Mahindra & Mahindra ownership, is branching out into hypercars, as is VW Group-owned Italdesign Automobili Speciali. Brazilian race ace Emerson Fittipaldi has put his name on a new track-only hypercar, while the family of former Australian racer and F1 team owner Jack Brabham has just launched its version, again track-only.
Bugatti, meanwhile, learned from its early mistakes and eventually sold 450 Veyrons, up from a planned 300. By the time production finished in 2015, the price had climbed from 1 million euros to about 2.3 million euros.
Bugatti replaced it in 2016 with the related Chiron, costing 2.4 million euros and with a planned build run of 500 cars over seven to eight years.
The rise of the rich
The market is being fueled by a wider pool of rich buyers who can easily lay their hands on a million or more euros. “These super-bespoke racecars for the road are priced today where superluxury cars were a couple of decades ago,” said Christoph Stuermer, global lead analyst at PwC Autofacts. “The ultraluxury brands have slid down in terms of relative purchasing power. They are still expensive, but they are much more affordable.”
McLaren’s Flewitt quoted research that estimates that nearly 16 million people in the world can be categorized as high-net-worth individuals, meaning those with a liquid $5 million. “It’s a rapidly growing market. There are a lot more people out there with the ability to buy” hypercars, he said.
The ultrawealthy are more spread out geographically these days. But when it comes to automotive tastes, the newly rich are little different from traditional buyers in Europe and the U.S.
“It’s a fairly homogeneous market in that what appeals to us in the UK or U.S. also appeals to someone in China, in Russia, in the Middle East,” Flewitt said.
The deeper pool of rich buyers is having another effect – creating a healthy market for existing hypercars. So much so that it’s possible to buy a new hypercar and actually make money.
“The P1 was launched in 2013, and since then they have about doubled in value,” Flewitt said. Rather than being a frivolous purchase, it can make financial sense. “It means they don’t become an irrational waste of money for people,” Flewitt said.
At the unveiling of the Valkyrie in 2016, Aston Martin CFO Mark Wilson boasted that it “won’t depreciate.”
Pricey, yet not much profit
The hypercar is good business for ultraluxury automakers, but its contribution to the bottom line isn’t perhaps as big as the price tag would suggest. Flewitt said the Senna would earn roughly double the margin of McLaren’s mid-range supercar, the 720S. “It’s not the multiple you might expect at that price point because they are very expensive cars to design and develop, and you have very limited volume to recover that investment,” he said.
While the Senna is limited to 500 cars, McLaren expects to sell about 5,000 to 6,000 units of the 720S. “That is the most important car to us in our range from a financial perspective,” Flewitt said.
The traditional ultraluxury brands are thriving financially, perhaps more so than ever before. In 2002, the combined global car sales of Aston Martin, Bentley, McLaren, Rolls-Royce, Ferrari and Lamborghini was 6,475, according to market analyst JATO Dynamics. Last year, that figure was 29,554. The 2002 figures lack data from China, which had yet to make its mark on ultraluxury sales.
In 2017, McLaren, Ferrari and Lamborghini boasted record sales. Aston Martin, McLaren, Bentley and Ferrari posted profits for the year, with Ferrari claiming industry-leading margins of 30.1 percent. BMW Group doesn’t break out Rolls-Royce in its financials, but the company boasts it is “highly” profitable. Lamborghini is still an unknown.