Can an ultra premium product create an economy version and still maintain its cache?
Rolls Royce known for its flagship Phantom vehicle with starting prices of $380,000 is rolling out an economy vehicle.
The new vehicle called The Ghost will sell for a mere $245,000 – a discount of about 35%. Click the link above to see video of the car.
The Ghost will still be handmade, the trademark for Rolls Royce. However, with the car made using a steel shell instead of the customary aluminum and repurposed electrical and safety system technology from parent company BMW, is it still a unique Rolls Royce?
Lose The Tuxedo
In a recent Wall Street Journal interview Rolls Royce CEO Tom Purves said: “This is more of a car for the business suit that a tuxedo.”
I understand the company wants to increase sales volume to increase revenue. However, I do not think that Rolls Royce customers want to be stereotyped as tuxedo wearing elites.
Many of us have worn suits for years without the need to pay about five times the average U.S. household income for a vehicle.
Mystique and Brand Image
Bentley, another ultra luxury vehicle manufacturer, went down market with the Continental line a few years ago. Volume grew, but is the mystique and uniqueness of the vehicle compromised?
The Holy Grail for automakers seems to be more volume to drive efficiencies. As volume increases there will be additional capital expenditures to expand or build new plants.
I am struggling to understand how volume will drive anything but costs for a hand made vehicle. It seems unit costs would go up not down to cover the new costs.
You weigh in:
- Can an ultra premium product successfully move down market?
- Is the risk to brand reputation worth it for Rolls Royce?
- Would you buy a “less expensive” version of an ultra premium product to demonstrate you own the brand?