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Bentley’s Profits Soar After Cars Sink

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Despite the fact that several vehicles were lost at sea and trapped in China, Bentley made a profit during the first quarter of 2022.

Bentley, a prestigious British automobile maker, reported a 162 percent increase in first-quarter operating income over the same period last year, owing to growing vehicle costs offsetting the loss of some ships at sea and China pandemic-related delivery difficulties. The Volkswagen (VOWG) subsidiary said strong consumer demand for new models drove a 13 percent increase in vehicle sales to 10,207 cars during the January-March period. Chief executive Adrian Hallmark said in a statement. “Our strong performance in the first quarter is testament to the hard work of our colleagues around the world.”

Chinese sales were badly hit by pandemic factory closures, which hampered the ability to move vehicles across long distances by road. The effects were most keenly felt in China, which is Bentley’s largest market. Bentley’s sales in China plummeted by 65% in the first half of 2020 as a result of the pandemic. However, despite this devastating blow, the company’s profits soared by 25%. Following a record year in 2021, Bentley sales were expected to decline due to ongoing pandemic travel restrictions. Conversely this led to more disposable income for wealthy customers and boosted premium and luxury vehicle sales in important global markets like China and the United States. The pandemic has been a mixed blessing for the company. On the one hand, it has severely hampered sales in China, Bentley’s largest market. On the other hand, it has led to increased demand for luxury vehicles in other markets as wealthy customers look for ways to spend their extra disposable income.

Looking forward, Bentley is optimistic that sales will rebound as the pandemic eases and travel restrictions are lifted. In the meantime, the company is focusing on its new line of electric vehicles, which it hopes will appeal to a new generation of luxury car buyers. Vehicle sales fell 5% to 3,203 units in the first three months of the year, with revenue dropping 9% in the Americas and 29% in China. The company’s operating profit margin rose to 11.4% in the first quarter from 10.9% a year earlier, helped by cost-cutting measures. Bentley is owned by Volkswagen Group (VOWG), which has been hit hard by the pandemic with its sales falling across all its major brands. The German carmaker is banking on a shift to electric vehicles to revive its fortunes and has said it plans to invest about 33 billion euros ($40 billion) by 2025 in the development of new technologies.

Bentley’s sales had been declining since hitting a peak of 11,020 cars in 2018. The average revenue per vehicle rose 15% to 212,000 euros (nearly $223,257) from 184,000 euros a year earlier as customers chose for more personalized choices. According to Hallmark, clients have embraced the ability to customize seat leathers, stitching, seating layouts and a variety of other features. Dealers are doing limited editions, special packages for individual clients, and demand is growing,” he said. In terms of revenue, Bentley’s earnings increased by 41% to 813 million euros from 578 million a year earlier, while operating income rose to 170 million euros from 65 million. Profits were also bolstered by an organizational transformation that began in 2018, when the brand cut around 1,000 jobs.

The company is also working on an all-new electric vehicle, due to be released in 2025. Despite a challenging macroeconomic environment, we have delivered a strong performance” said Bentley Motors Chairman and CEO Adrian Hallmark. “We have continued to invest in our product offensive, which is now bearing fruit with the launch of new products such as the Bentayga Hybrid and Continental GT Convertible. Our focus on operational excellence is also paying dividends, with a substantial improvement in our cost base. We are confident that we can continue to make progress in the second half of the year and deliver another strong financial performance.” Bentley will continue its product offensive later this year with the launch of the new Flying Spur and the all-new Bentayga V8. The Flying Spur will be Bentley’s first ever four-door sports car, while the Bentayga V8 will offer customers a more performance-focused option in the SUV range. Both cars are due to be revealed later this year.

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