Hiring staff 'much more complicated' post-Brexit, says Bentley

Bentley Flying Spur front quarter tracking rain

Brexit costs Bentley between £4.4m and £6.1m per year

Rotating Audi Group staff takes as much effort as hiring someone for three to five years, complains CFO

Brexit has made it “much more complicated” to manage staff and make new hires, according to Bentley chief financial officer Jan-Henrik Lafrentz.

Speaking on a call with journalists following the release of the Audi Group’s financial results, he said: “It’s not necessarily the money; it’s the effort it takes to manage the business now. 

“For example, changing people [within] the Audi brand group is much more complicated. It takes six months to get visa. You can’t change people for just six months, because the effort is the same as hiring people for three or five years.”

Lafrentz hinted that this makes the UK’s automotive industry less attractive to investors, saying: “What is absolutely needed is stability. You can discuss what the right political strategies are to reinforce the UK automotive industry. But what’s absolutely necessary is stability. If it’s a high investment or car business investment – heavy industry – with a long-term perspective, you only invest if you have stability, and I think that’s urgently needed. Hopefully we’re on the right track for the UK.”

Although this “admin burden” is the main challenge introduced by Brexit, there’s also a financial cost added – “somewhere in the €5 million (£4.4m) to €7m (£6.1m) per year [region]”, according to Lafrentz.

Nonetheless, this amounts to a small dent in Bentley’s balance sheet. The British brand made an all-time high operating profit of €708m (£620m) last year at an operating margin of 20.9%.

That figure is almost double the previous record of €389m (£340m) set in 2021 on a 13.7% margin – a remarkable turnaround from 2018’s €288m (£252m) loss.

The spike in profitability despite industry headwinds (including rises in energy, material and logistics costs) was thanks to a sharp uptick in the value of each car sold, according to an official statement.

Customers chose higher-specification cars (including limited editions) more often, selecting more optional extras and taking greater advantage of the Mulliner personalisation programme.

Lafrentz commented: “We’re in the market where we offer interesting options, interesting specifications, interesting versions of personalisation to our customers. They’re happy to step in; they’re happy to go that route.

“So the clear driver is value per car, including Mulliner, which we’re now [for the first time] probably starting to realise the full potential of.”

Mulliner will begin deliveries of its third bespoke model, the Batur, later this year. It follows the Bacalar, which was unveiled in 2020, and the state limousine built for Queen Elizabeth II.

The Bentayga was Bentley’s best-seller last year, accounting for 42% of the brand’s deliveries (around 6370 cars). It was followed by the Continental GT and Continental GT Convertible with a further 30%, while the Flying Spur made up the remaining 28%.

Bentley CEO Adrian Hallmark said: “We’ve built a sustainable financial basis for the long-term, a competitive cost structure and [a] unique market positioning, resulting in an historically strong cash generative that’s providing the funding for the most ambitious race to full BEV and carbon-neutrality in the luxury sector.

“Our order bank and order intake rate so far in 2023 show strong potential to sustain our performance, although the business environment is becoming more volatile and risk factors are increasing.

“We will maintain focus on customer value rather than sales volume and adapt our plan according to the emerging market situation. However, our well-balanced export success, disciplined cost-management structure and ability to maximise personalisation in an industrialised way, driving profitability, are good foundations to continue this success.”

In the coming year, Bentley will make further progress on its electrification strategy, phasing out the W12 engine for which it has become famed under Volkswagen Group ownership.

It expects orders for such variants of the Continental and Flying Spur to stop in December, while a final production run of the engine is earmarked for use in the Batur.

The last Bentley W12 will roll off the production line in April 2024, leaving the company to focus on its twin-turbocharged V8 and plug-in hybrid V6 powerplants.

Every model in the Bentley line-up will have a PHEV variant by 2025 – the same year the brand will launch its first electric car.

Source: Autocar

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