Chris Brownridge, the CEO of Rolls-Royce (BMW.DE), shares a common apprehension with many global businesses regarding the incoming President Donald Trump’s proposed tariffs. Yet, he doesn’t seem overly concerned. Why? Because Rolls-Royce is enjoying one of its best periods, with its luxury cars starting at a cool $370,000.
As the auto giant marks its 121 years in the industry, it reported sales of over 5,000 vehicles in 2024, the third-best in its history. This achievement stands out, especially considering the mid-year launch of the refreshed Cullinan SUV and Ghost sedan. Typically, introducing new models can dampen sales as customers hold out for the latest versions, but for Rolls-Royce, this wasn’t much of a setback.
The company highlights its bespoke services—customization options where clients can personalize features extensively, such as unique stitching or dashboard-mounted custom clocks. This segment saw a 10% growth year-over-year. To capitalize on this trend, Rolls-Royce is investing $370 million to enhance these bespoke offerings and set up more Private Offices globally, where clients can design their ideal cars.
“There’s been a noticeable surge in demand for our bespoke vehicles,” noted Brownridge. “Clients are increasingly asking for motorcars with highly personalized features, a trend fueled by our expanding network of private lounges.”
Catering to bespoke demands takes more time to produce these meticulously enhanced vehicles, yet it’s a lucrative venture for Rolls-Royce, boosting both revenue and profits. Even though the company keeps its margin details under wraps, it’s no secret that the bespoke business is typically more profitable than standard manufacturing.
However, the potential imposition of tariffs in the U.S.—Rolls-Royce’s largest market—poses a challenge to its expansion plans. “Imposing tariffs could affect demand, especially for luxury items where consumers exhibit higher price sensitivity,” Brownridge commented. Essentially, this means these additional costs could make buyers hesitant.
Consider a 10% tariff; this could bump up the price of a Rolls-Royce by $50,000 to $100,000, particularly for cars heavily customized and priced around the $1 million mark. Even for the ultra-wealthy, parting with an extra $100,000 isn’t an easy decision.
For further reading, you may want to explore how tariffs function and who ultimately bears their costs.
