27 February 2015
Clarke Gable was a big fan of iconic British sports car maker, Aston Martin. Legend has it that he once visited the factory in Newport Pagnell to see the latest model being built. Following a tour of the workshops and an agreeable lunch, the Hollywood legend turned to David Brown, the then entrepreneurial owner, and said “I’d like to own one of these new Astons. But as a famous movie star, I’ll bring valuable publicity to your company, so I’d only like to pay cost price.”
“That’s awfully decent of you Mr. Gable” replied Brown. “Most of our customers pay around £2,000 less than that.”
I’m reminded of this story because Volkswagen Group has just sold the 450th and final Bugatti Veyron, marking the end of one of the most exclusive supercars ever built. The last Veyron (imaginatively named La Finale) will be on display next week at the Geneva auto show before heading off to its new owner somewhere in the Gulf.
In all 450 Veyrons were sold for an average price of about EUR 2.3m each. Sounds good? Analysts Sanford Bernstein estimate that VW lost a jaw-dropping EUR 4.6m on every Veyron sold, putting David Brown’s negative margins in the shade and making the mighty Bugatti one of the biggest financial failures in the history of car-making.
Assuming the analysts are right, the group would need to sell more than 5,000 Polos to recover the cost of selling one Veyron. VW, which shifted 10.14m cars last year, can easily afford this kind of vanity project. Even losses of EUR 200m per year amount to less than rival OEMs spend on Formula 1.
And like F1, the theory is that prestige projects such as the Veyron showcase the technological excellence of the parent company. But is anyone really buying a Golf on the strength of the fact that a tiny, elite sub-set of the VW group is able to make a car which is capable of 253mph and convey its owner to the opera in comfort and style? I’m not convinced.
Mazda famously used the now iconic MX5 roadster as a “halo car” to raise the sporty credentials of its otherwise ordinary family models. But the MX5 is a perfectly attainable proposition for most Mazda customers. It could easily be a second car, or retirement treat. It’s a common sight on the roads, helping to lend the marque a more youthful, fun image. And whether it actually raises the status of Mazda’s saloon car range or not, the MX5 has always made a healthy contribution to the bottom line. It makes sense. I’m not so sure the same can be said for Dr. Piech’s masterpiece, brilliant though it is.
Personally, I think I love and hate the idea of the Veyron in equal measure. I admire the undeniable feats of technical excellence and refusal to compromise on the part of the engineers who created it. At the same time though, I can’t help but find it vulgar, excessive and a little pointless. 10 radiators? 8mpg urban? EUR 28,000 for a set of 4 tyres that have to be changed every 2,500 KM?
VW is already working on a successor to the Veyron. No doubt it will be even more spectacular than its predecessor. Doubtless the well-heeled of Moscow and Dubai can’t wait to find out what it will look like. I’m more interested to know if VW will find a way to make it pay for itself.
Author: Ian Dickie