New Luxury Automotive: Going Beyond Performance?

The current luxury automotive landscape is shaped by a specific trend that has influenced various players and could increasingly define new products in the near future. In a way, it might even seem like the industry is going backwards. But the truth is that recently something has fundamentally changed in how the value proposition of luxury cars is conceived. And electric cars might be a big part of this.

In the early days of the automotive industry, cars were rare objects for the rich and the daring who wanted to experiment first-hand with this new technology. Cars were not thought for the mass market and were entirely built by hand and highly personalised, at least until the advent of the Ford Model T in the early days of the past century. In Europe in particular the trend of hand-crafted cars and coachbuilders who would specify a body according to the client’s specifications continued for a while. Along with the aesthetics, one of the defining characteristics of cars at the time was performance, and racing was a powerful marketing tool for it.

This is true today as well, but there is more going on. I have already touched previously on how customization is gaining more importance today, and how it has become a significant share of companies earnings (to know more check Tailor-made: What luxury car customers can't go without and One-off Supercars: What’s the next step for luxury automotive? ). In its Q2 2024 report, Ferrari quotes a +16.2% in revenues, and as it happened several times already, among the contributing factors is consistently mentioned increased popularity of personalisation programs, which also allows for the significant margins made on every single vehicle sold. But in the modern industry of supercars and hypercars it is becoming more and more common to see taglines about “the fun of driving” or “driving involvement" rather than the continued comparison of 0-100 km/h (or 0-62 mph) times and top speeds that has been the benchmark of most new performance cars’ headlines for many years.

The trend has been developing for a few years now. Ferrari is a prime and most successful example of this and it is visible in the comparison between revenues and sales figures over the last few years. Right after the pandemic and the quick 2021 recovery, revenue growth remained consistent at almost 20% while sales growth has been gradually limited toward the 15,000 units mark dropping significantly to around 3% in 2023 highlighting the increasing margins made on each model thanks to increasing personalisation demand. 

Ferrari's Sales and Revenues Growth Percentage by Year (2020-2023)

Enjoyment over performance

With the advent of electric performance cars, obliterating normal combustion engine cars in acceleration performance, some initially thought this new technology benchmark would be the driver for the future of the industry. But, at least for now, things are going in a different way.

Despite environmental regulations limiting emissions and engines’ size, which have been the main factors in the growing adoption of turbochargers and superchargers for automakers to keep boosting performance, we are seeing more “going back” to naturally aspirated large high-revving engines. This is naturally, in part, allowed by the fact that environmental restrictions are different for low-volume manufacturers, but hybridisation is one key enabler for this. Supporting electric power allows OEMs to maintain engines that become the centrepiece of a vehicle by offering more involving and immediate response when driving, along with the soundtrack that all collectors love.

The same goes for manual gearboxes. While dual-clutch transmissions and other more daring alternatives (from the likes of Koenigsegg) have reached high levels of refinement with smooth and lightning-quick gear changes, once again OEMs are finding a key selling point in the involvement and driving enjoyment that a manual stick shift offers. While more classics-inspired low-volume automakers like GMA had that single formula right from the start, others are going back to it. Aston Martin recently produced a few limited editions with manual gearboxes. The same goes for Pagani, which not only reintroduced it in its latest Utopia but also made it available for unique iterations of the Huayra. The Italian automaker also claimed that so far over 70% of the very limited Utopia production run has been ordered with a manual gearbox.

*Aston Martin Valour and Pagani Utopia reintroducing manual gearbox

All these trends suggest that as technology has improved and made a leap forward, unlike in the old days, some OEMs have understood that performance numbers can only go so far, and what counted the most at the end of the day for a car owner was the enjoyment and driving involvement, rather than 0.1 seconds less to reach 100 km/h.

Luxury OEMs changing plans

One of the most controversial pieces of news around the topic came a few months ago from an interview with Mate Rimac. The founder and CEO of Rimac Automobili has, in just over 10 years, become the one symbol worldwide for performance automotive electrification as discussed in previous articles on Rimac’s growth and marketing. Its Nevera has become the fastest-accelerating road-legal car in the world to the point where most other top-of-the-line high-performance supercars would seem slow in comparison and has also broken many records. After all this, however, a few months ago, Rimac has been quoted as saying that the future of electric hypercars is uncertain because clients simply do not want them. The reasons for this would apparently, be a refusal to accept a product that is seen as “imposed by politics” with environmental regulations pushing greener vehicles, and a lack of emotional connection with such cars. As mentioned earlier, clients today want more and more something that is unique. Electric vehicles are becoming mainstream, and at the same time instead loud cars with big engines that were already rare are becoming even more so. These would be the key reasons driving clients away from EV supercars and toward a more familiar experience of performance and sound involvement, even if this means inferior performance.

In this context, two companies are taking different but equally interesting action on the matter. On one side, Aston Martin recently announced that they delayed their upcoming EV by at least 1 year (from 2025 to 2026) due to low demand. They instead stuck with big V12 engines and a limited application of hybrid powertrains on the likes of Valkyrie and the upcoming Valhalla.

On the other, Ferrari is trying to “make the EV emotional”, by doing it differently from anyone else. A patent filed by Ferrari a while back shows a unique project for the potential development of an upcoming electric prancing horse.

 Ferrari's EV patent

The plans show how the new EV would feature an e-drive axle and a sound-transmission devise that uses air pressure and vibrations to send sound to the cabin via an acoustic conduit. No electronics or speakers were used to produce sound, making it not just an imitation like some proposed at times, but a proper sound, just likely different. Ferrari would also add resonators on the axles that should amplify the sound coming from the e-motors. Specific valves enabled by an ECU would allow the sound profile and volume to change and adjust in the same way as an active exhaust system opens and closes valves to increase the volume. According to Ferrari, the solution is not devised exclusively for added drama, but also to give drivers a better awareness of what the car is doing at any given time.

Conclusions

The industry seems to have come full-circle since its early days. On the marketing side, personalisation is an increasingly important requirement for clients and OEMs are getting an equally growing share of revenues from customisation programs along with unique limited runs of special editions, or unique models. And like in the early days of the industry, these cars have to be unique to represent the owner's status and identity.

On the other hand, though the technical driving force has changed. Technology for the sake of evolution and performance is being “refused”, with demand steering manufacturers toward larger combustion engines, manual gearboxes, and tactile analogue controls that one might have thought would start disappearing in favour of electric motors, automatic gearboxes (or none at all), and 100% of control integrated into digital infotainment systems. Performance is not as defining as it used to be, while experience both in the car and outside is so more than ever.