Industry analysis: HR Owen backs the luxury car market

HR Owen, one of the UK’s oldest and best-known top-end car dealers, is backing its belief in the underlying strength of the luxury car market by adding a new, £30 million cross-brand “statement site” in Hatfield, Hertfordshire, to its rapidly expanding portfolio of outlets.

Built on a 5.4-acre site, newly acquired for £10m and close to prosperous St Albans, the complex is intended to complement the company’s central London headquarters by providing space, easy parking and an ambience not easily available in Mayfair.

Under current plans, it will bring together the Bentley, Lamborghini and Maserati marques plus at least one other still to be confirmed, and it’s expected to open in autumn 2022. Ferrari looks like a strong candidate but is not confirmed.

“We want to add a special experience to what we offer customers who know us at Berkeley Square,” said CEO Ken Choo, a confirmed car enthusiast who has led an impressive expansion of HR Owen’s business since 2013.

“Our customers will have easy access to driving roads, fresh air, space, greenery, a fine view – all things that are quite different from inner London. That doesn’t mean we’re giving up our focus on London – far from it. Our customers love that place. But soon they will have the option of something different, 40 minutes out of the city in the countryside.”

Choo seems very sure of the long-term strength of UK luxury car demand, despite the recent interruptions of Brexit and Covid-19. He readily acknowledges the difficulties (“at times we’ve had to burn our own cash reserves”) but is still impressed by the way luxury car demand is staying strong and durable in the most difficult circumstances.

“We recently rang a number of clients who had ordered a £1.6m Ferrari Monza,” said Choo. “We were fully expecting some to say times had turned a bit tough and they weren’t going to be able to take the new car for a while. But not one of them wanted to give up their order. They all said ‘no way’.”

Even so, Choo expects the wider UK economy to take up to five years to recover completely and admits that HR Owen’s own super-luxury new car sales were down about 25% last year compared with pre-Brexit, pre-pandemic levels. And that was despite an acceleration of demand from a new breed of customers with businesses in transport, medical supplies and logistics, who have been doing very well during the pandemic.

Choo attributes about 10% of the reverse to the influence of regular model cycles (such as the fact that the super-successful Lamborghini Urus SUV has passed its mid- life phase) and puts the rest down to a straight-forward weakening of demand. “Not everything is hunky-dory,” he said succinctly.

“Still, the signs of a potential recovery have been there all along. After the first lockdown last year, in July, August and September, we had a significant upturn and our bottom line reached £5m for six months – a stunning result. Add to that the fact that used car demand stayed pretty flat all the way through and you can see why the potential for recovery is there. It’s not all doom and gloom.”

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Since HR Owen was acquired in 2013 by Malaysian entrepreneur Vincent Tan, it has consistently invested in improving existing dealerships and new premises in five counties circling the capital.

Last year, it opened a new Bentley dealership in Ripley, Surrey, and it will soon complete what it describes as a Rolls-Royce “global flagship” dealership in Berkeley Street, Mayfair, just up the road from Berkeley Square. Choo’s company will operate this premises – twice the size of HR Owen’s former West End Rolls-Royce showroom – on behalf of the Goodwood- based manufacturer.

However, it’s Hatfield that looks like being the pinnacle of HR Owen’s expansion so far. And Choo said, rather mysteriously, that there will be more new facilities to announce once its full complement of marques is announced.

“Who knows,” he said. “Maybe the quality of coffee at Hatfield will be even better than in Berkeley Square.”