Rolls-Royce CEO Says Covid Deaths Led to Record Sales. He's Not Wrong
Take a look at the past, and it's clear this sort of thing has happened before.
If the ongoing COVID-19 pandemic has shown us anything, it's that we're all pretty bad at predicting stuff. After a brief market contraction when the virus first hit our shores between March, April, and May, demand for cars has come roaring back with gusto as consumers are proving that they are willing to buy more than automakers and dealers currently have to offer. High-end automakers in particular have been posting bulletin after bulletin crowing about their record sales in 2021, patting themselves on the back and attributing their successes to killer products and wise investments—which brings us to Rolls-Royce boss Torsten Müller-Otvös.
Rolls-Royce also enjoyed its best-ever sales year in 2021, delivering 5,586 cars globally—more than it's ever delivered before in its century-plus history. This prompted Müller-Otvös to offer the following observation to the Financial Times: "Quite a lot of people witnessed people in their community dying from COVID, that makes them think life can be short, and you’d better live now than postpone it to a later date. That also has helped [Rolls-Royce sales] quite massively.”
It's a morbid thing to say, for sure. Here's a man who is essentially claiming that his company of luxury cars found a helping hand in mass death and tragedy during some of the shittiest and most difficult times of the modern era. That because so many people have experienced or witnessed death and loss more intimately than presumably ever before, it's time to finally pull the trigger on that Phantom. YOLO.
And yet, he's not wrong.
If I were Müller-Otvös' PR handler, I probably would have told him to read the room and pick his words with more care. (There's also a non-zero chance that Müller-Otvös simply does not give a shit about the room, let alone what you or I think.) But this has happened before—historically, terrible things like pandemics have resulted in a surge in spending. When the 1918 influenza pandemic hit, it killed 50 million people and infected 500 million. What came after was a cultural and economic boom in Europe and the United States that lasted a decade. Similarly, after the cholera pandemic claimed significant British and French casualties in the early 1830s, both countries responded with respective industrial revolutions.
"After periods of massive non-financial disruption such as wars and pandemics, GDP does bounce back," The Economist wrote in April. "Today, even as COVID-19 rages across poorer countries, the rich world is on the verge of a post-pandemic boom." With more and more people getting vaccinated and reducing both hospitalizations and deaths, authority figures are removing lockdown orders. The outlet expected the U.S. economy to increase by more than six percent in 2021. Its Before-Times trend was only supposed to be two percent.
So it really should be of no surprise that in the face of our current pandemic, buying trends are going a bit crazy. Less surprising is the fact that it's the majority of luxury brands—ones who depend on a clientele that already has excess disposable income and doesn't have to worry about an hourly day job—that are seeing the most returns. Good for them.
But as with everything else, there's cause and then there's effect.
"... as anyone who has read Les Misérables knows, the pandemic also contributed to another sort of revolution," The Economist story went on. "The city’s poor, hit hardest by the disease, fulminated against the rich, who had fled to their country homes to avoid contagion. France saw political instability for years afterwards."
Stephen King, a senior economic advisor at HSBC, told CNBC that, yes, the Roaring 20s worked out for the "real-life Gatsbys." But "many rural citizens were left behind. Meanwhile, an inexperienced Federal Reserve struggled to cope with a combination of low inflation and surging stock prices. When it all came crashing down, depression followed."
Rolls-Royce is far from the only luxury brand to benefit from last year. Porsche delivered the most cars it's ever delivered. Lamborghini had its "best year ever." BMW reported an all-time sales high. Bring a Trailer, which has morphed into a low-mileage-for-top-dollar extravaganza with seemingly no plateau in sight, blew its competition out of the water. Even Lotus, against all odds—because of reasons both having and not having to do with Lotus itself—had the best year in a decade.
If the ongoing COVID-19 pandemic has shown us anything, it's that we're all pretty bad at predicting stuff. I'm not saying we're definitely headed for an economic crash (though I do find myself hoping for one so I can finally afford a damn house). But I am saying that we can't expect things to keep going the way they are, not with the financial gap worsening the way it is. Who knows? Maybe Torsten Müller-Otvös will wake up one day and be forced to eat his words. Hopefully before someone eats him.
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