BUSINESS CASE
20th April 2012
Eterniti knows that the automotive industry has seen many small car companies fail. However, its business case is founded on sound principles.
Eterniti is not launching a with 350kph supercar pipedream. The company’s strategy is to exploit an expanding area of the automotive market, super and ultra-luxury vehicles, where there are high profit margins, and its first product is focused on a specific gap in that market – for luxury SUVs. This has huge potential, particularly in the Asia-Pacific region but also in the Middle-East, Russia, South America, world capitals like London and hot-spots such as the Cote d’Azur, Florida and the USA’s west coast.
In addition Eterniti has identified a specific demand for an SUV with additional rear legroom to make it suitable for both chauffeuring and driving, so it has provided that as standard, allowing it to exploit this segment in a more targeted and effective way.
Eterniti has not tried to create a car from the ground up. A new, independent company could never invest in R&D on the same level as the major OEMs, which are predominantly part of large groups with huge resources and economies of scale. So the Artemis is deliberately based on an existing platform - the most suitable version of that platform for meeting the needs of buyers in the Super-SUV market - with ample technical proficiency and proven engineering integrity. Investment has been focused on the areas of the car which will provide a USP and best meet the needs of the market.
This strategy also allows Eterniti to create the Super-SUV niche by bringing the car to market ahead of competitors from the major OEMs. Eterniti has first-mover advantage, with deliveries commencing this year. However, the company knows it that it will not be able to compete absolutely head-on with the likes of Bentley when it launches its SUV, projected for 2015. Production capacity and a powerful brand with a decade of heritage make that unrealistic.
Nevertheless, Eterniti can compete in ways which are significant in the high-luxury segments. By definition its lower volumes mean that its products will be more exclusive. That also allows a more personal service to be provided, which is valued by wealthy customers. Eterniti’s size means that it will be able to react swiftly to customer requirements, and because it is not burdened by a large corporate culture or a century-old history it can provide precisely what individual customers demand. Eterniti’s independence will be appealing to customers who would prefer not to deal with a brand which is part of a large group selling commodity products, elements of which may be used in its luxury vehicles, and it allows Eterniti to source the best technologies from the most attractive brands to create a compelling and unique package.
Finally, and most importantly, Eterniti can provide bespoke specifications to a degree which does not make business sense for a larger carmaker. Creating a dedicated car for heads of state, celebrities or the super-wealthy does not fit easily with large-scale, small-tolerance procurement and build processes, which is why many luxury brands outsource short-run vehicles to external coachbuilders and other technical providers – companies rather like Eterniti.
Luxury car demand
The super-luxury and ultra-luxury ‘F’ segments of the car market, which Eterniti is targeting, are traditionally far less sensitive to unfavourable economic conditions than other parts of the market. There will always be super-strata of extremely high-worth individuals, and typical buyers own between three and six vehicles. If they want it they buy it.
In the recent global recession, the ‘F’ segments have not only countered the general economic trend but are thriving. The wealthiest sectors of society are growing, especially in the emerging economic powers of China and the Asia-Pacific, which are driving the growth in these segments, and forecasts suggest that the growth trend will continue.
Globally the market grew by around 500% between 1995 and 2005, from around 5800 units to over 25,000 units, and over 350% from 2002-2007, when volumes peaked at over 30,000. Growth did slow following the global economic downturn, but forecasters are predicting another surge to over 33,000 units by 2015, with the global market reaching over 38,000 in 2017 – an increase of 56% from 2010.
China and Asia-Pacific demand
Eterniti is being careful to establish a presence in the Asia-Pacific region for good reason - the principal growth market over the last 10 years and the period to 2020 is China. No F-segment vehicles at all were registered in China in 2000, but 2005 saw 272 registrations, and this grew by over 700% to exceed 2000 units by 2010. That already outstripped Italy, which had been the fourth-largest F-segment market. Japan has grown progressively too, also eclipsing Italy by 2010.
Forecasts suggest that Chinese sales will reach over 3300 units in 2015, close to 10% of the global market and second only to the USA. And, unlike the almost all other significant F-segment markets around the world, Chinese growth will not begin to flatten out after 2015 so its share will increase.
Between them China, Hong Kong, Japan and Taiwan, the four markets outside the UK where Eterniti is setting up showrooms, accounted for 13% of the world’s F-segment sales in 2010, and are forecast to increase their share to over 15% by 2015.
SUV demand
Eterniti’s decision to launch with a high-luxury SUV and to include another SUV in its future product plan is endorsed by the fact that major brands are entering these segments. Bentley, Maserati, Lamborghini and Aston Martin are all studying the high-luxury end of the SUV market, while Porsche now relies on the Cayenne for half its sales and will add a smaller SUV in 2013. Demand for luxury SUVs has nearly doubled since 2000, and analysts forecast that the market for large, luxury SUVs will grow by 24% to 1.1 million vehicles by 2015.
Market Representation and Volumes
Eterniti knows that its wholly-owned network of showrooms in London, Hong Kong, Tokyo and Taipei will not generate sufficient sales volumes on their own, and the cost of establishing representation in all the major wealth centres in China would be prohibitive. It will therefore operate through partners in China, allowing it to target the regional cities where many of the country’s one million USD millionaires are located.
Eterniti will also accept trade-ins, allowing it to retail suitable used luxury vehicles, and will be able to offer servicing, specialist technical and trim work and parts to any customers. Finance and insurance products will provide another revenue stream.
Eterniti is aiming to sell around 30 new vehicles in 2012, with a target of 60 in 2013, rising to 150 in 2015.
Beijing Auto China 2012 Press Kit:
WORLD’S FIRST SUPER-SUV
BRAND
CREDENTIALS AND PEOPLE
ETERNITI PRESS CALL
PRODUCT
IMAGES