Bugatti & Bentley please Billionaires

Luxury Automotive | Editorial

A$3.5 million saloon launch excitement builds.

A leaked picture with an abstract shot of the new car’s rear end forms the cover of an invitation to a ‘reveal’ party for customers prior to the world-premiere at the Frankfurt Motorshow in September.

You can clearly see the in influence of Bugatti’s past in the longitudinal crease line (spine) down the middle of the rear of the car and the multiple exhaust pipe array – in this case 4 each side – which draw clearly from the Bugatti Atlantic of 1936.

Bugatti Atlantic

The new car will likely be called the Bugatti Royale, taking its name from the original Type 41 Royale from the 1930s, of which only 6 examples were ever produced. There are rumours the name could be Bugatti Bordeaux, let’s wait for a few weeks to see. The saloon will replace the 2 door Veyron as there simply aren’t enough customers prepared to spend regularly at this end of the market to justify the expense of development and production of two concurrent model lines. Very few individuals can even afford a pre-owned example, if any came on the market – this is a collector’s car in the true and authentic tradition. Only 300 Bugatti Veyron will be produced prior to production ceasing at the end of 2010 to make way for the Royale – the 200th example was delivered a few months ago. Only 50 Veyron are hand-built each year at the production facility in Molsheim, France.

The car will be stunning, as befits its status as the soon to be ‘world’s most expensive car, with pricing confirmed as significantly higher than the current Veyron, meaning a sticker price well high of A$3.5 million if any make their way to Australia. Extremely exclusive annual volumes of 30-35 units are assumed. Bugatti must be hoping the global economy will have recovered enough by 2011 for owners to take delivery without fear of social ostracisation or recrimination.

The original Bugatti Royale – this version a Type 41 coupe from 1929

The saloon will share its platform with the New Grand Bentley – itself a stunning, resolved, elegant motor car with a price tag nudging A$800,000 and sure to be a hit in Australia, recession or no recession. The New Grand Bentley will be launched (as opposed to the reveal for the Royale with an as yet unconfirmed production date) at the Pebble Beach Concours d’Elegance next month. It seems only logical the car will be powered by the same all-wheel drive system and 8.0-liter quad-turbo W16 engine as the Veyron, due to the incredulous development costs that have been sunk into that engine.

The latest New Grand Bentley teaser shot:

The car will be a success as the company has all the right ingredients, not least of which has been a parent with deep pockets (thus far!). The design is stunning, there is the appropriate dose of innovation, the very best materials and the all important ‘most expensive’ tag which appeals to the target customer base. Whilst the car will be a resounding success, the financial future of the company will depend on several factors. It is hoped the current boardroom brawl between VW (Bugatti’s parent) and Porsche will not affect the brand’s viability but parent company debt levels could become an issue. Piech was previously the CEO of VW Group and the key architect of the brand pyramid strategy – to complement the VW and Audi brands with luxury and uber-luxe brands above (Bentley, Bugatti and Lamborghini) and value brands below (Seat & Skoda).

For many investors, however, Bugatti has been a pet project too far and symptomatic of the relentless product development drive, and sky-rocketing R&D budgets, which contribute to VW’s lower ROI than other competitors (Porsche now being the industry benchmark for profitability, having overtaken BMW a few years ago). If Piech does not win the day, a group strategic review will ensue and, even though Bugatti does not present any brand overlaps, the fact that every car loses money (even at stratospheric prices) could lead to brand repositioning or worse.

For now the company is in safe hands under the management of VW Group veterans who have the right temperament for managing luxury brands – the CEO and head of Sales and Marketing are successful former Bentley CEOs and retain significant influence in the parent group corridors of power.

Douglas Smith

Bugatti Veyron