The Bond-villain’s-lair-meets-posh-car-showroom that is McLaren’s HQ outside Woking is not your regular desk-strewn British office space. It’s a pristine white crescent of a building, hushed, spotless and almost cinematically high tech inside. The cleaning bill doesn’t bear thinking about. Conceived by Ron Dennis, McLaren’s famously perfectionist patriarch, and designed by Norman Foster, entrance is gained via a series of subterranean passages and security doors. It even has its own lake.
A gleaming line-up of historic McLaren racers completes the look. If it all seems over the top, you can’t accuse the British F1-team-to-supercar builder of not walking its own talk. This is an operation where attention to detail really matters, and it has the workplace to prove it.
‘It’s modern, high tech, clean. It communicates exactly what we want to say. Customers come here and they can see that they are not being kidded, we are a tech-led brand and that goes all the way through the stick of rock,’ says Mike Flewitt, CEO of McLaren’s newest venture, McLaren Automotive.
McLaren’s gleaming 500,000m2 Woking HQ
McLaren’s debut in Formula One dates back, like MT itself, 50 years to 1966, but making cars for paying customers to drive on the road is a more recent wheeze. The £600,000 F1 – as owned by Rowan Atkinson, Jay Leno and Elon Musk – was the first, every 90s petrolhead’s dream thanks to it’s 240mph performance and racing-inspired quirks like gold-plated exhaust heat shields and having the driver’s seat in the middle.
Only 64 road cars were made and despite the enormous price tag they have proved a great buy. Atkinson reportedly sold his for a cool £7m profit last year, despite having crashed it twice.
Fast forward to 2011 when Flewitt joined the fledgling automotive business, and the £170,000 12C was the new outfit’s first model, later joined by the ‘Ultimate Series’ P1. The range topping P1 GTR, an improbable sounding Toyota Prius-style hybrid, but made of F1-style carbon fibre and boasting no less than 986 bhp, could set you back a couple of million. If you could still buy one – the full run of 50 GTRs, each essentially custom built, has already been spoken for and they are already going up in value. The super rich prefer their playthings to be highly exclusive and investment-grade.
What made Flewitt, formerly a high-up at Ford as VP of manufacturing, swap a safe gig at the Blue Oval turning out thousands of Focuses and Mondeos every day for the high-risk business of making handfuls of bespoke supercars instead? ‘Many try and few succeed,’ he admits. ‘I thought it would be thrilling to be part of making a great British sports car company. And I love smaller businesses – your individual impact is much bigger. I loved working at Ford too, but you know what? It hasn’t stumbled since I left.’
The rationale behind the road car business is simple – it gives the wider McLaren group another string to its bow, and helps to insulate it from the boom-or-bust vagaries of Formula One, dependent as it is on results on the track and big ticket sponsorship deals rather than sales. (Just as well you might say, given McLaren F1’s gruesome 2015 season.) It’s also an opportunity to exploit shared expertise in high-performance materials and technology and get more bangs per buck. The whole should thus be more profitable than the sum of its parts.
It’s owned by Mumtalakat Holdings (the Bahraini sovereign investment fund) and by McLaren Technologies (which runs the F1 team), and yes, it is profitable despite having only been up and running for four years. In 2014, the automotive business made a modest £15m on revenues of £475m. In the same year, British rival Aston Martin posted a loss of £72m on similar revenues of £468m, despite having been around for almost 100 years and having the huge marketing tailwind of the James Bond franchise behind it.
It’s all down to having enough money in the first place and absolutely rigorous control of supplier contracts, he says. ‘We have sufficient funding, you can’t underplay the importance of that. I should spend all day driving cars but I actually spend more time looking at the numbers. This isn’t just a fun business for our shareholders, they want a return.’
Over the next six years he plans to continue to reinvest around 25% of annual turnover in R&D – £120m in 2014. The industry average is around 8%-10%, so why spend so much? ‘When I look at other car companies which have struggled, the key is that they don’t prioritise investment in the next generation of product. For me, that’s the first thing we do with every penny, and then if we can afford it we invest in other things – marketing and so on.’
Hand built, no robots please: on the factory floor
But to be a serious player even in this exclusive world requires more volume as well as strong margins. Arch-rival Ferrari, whose prancing horse is the most coveted badge of them all and whose F1-to-road-car business model McLaren emulates, sold around 7,700 cars last year. That compares to 1,650 McLarens.
The firm has plans to more than double production at its factory (also on the Woking site and also spotless) to around 4,000 a year by 2017. By 2022, he reckons 50% of their cars will be hybrids like the old P1, with electric motors as well as petrol engines. What they won’t be doing is making an SUV, despite the huge popularity of such models as Porsche’s Cayenne, which now accounts for around 75% of the German firm’s output – McLaren’s, says Flewitt, will always be sports cars. ‘We make the best drivers’ cars. That’s my personal benchmark.’
Boosting production is something he knows all about. ‘The facilities are in place but it takes time for people to learn. I’ve made a lot of cars in my time and it’s easy for me to say, ‘Come on guys, 14 cars a day, how hard can that be?’ But when I was building 1,000 a day at Ford, no one ever came in and said, "OK, let’s do 2,000" we’d have thought they were nuts.’
The new range is now the classic three-point price strategy beloved of FMCG marketers everywhere. At the top is the money-no-object Ultimate Series, for those whose ‘other car’ is an executive jet. In the middle are the Super Series cars, the 650 and 675 models with price tags upwards of £200,000, and at the bottom the entry level Sports Series 540 and 570, which start at a bargain-basement £135,000.
All are based around similar carbon-fibre chassis (shipped from Austria) and V8 engines made for McLaren by Ricardo in Shoreham. They also share the same distinctive ‘butterfly’ doors, but the entry-level Sports Series cars have more steel and aluminium body parts and less sophisticated suspension and electronics to keep costs down.
It’s all pretty geeky and, well, alpha male. Isn’t McLaren a blokes’ brand in an increasingly gender-neutral world? ‘In Europe it is still generally 40- to 50-year-old men who buy the cars. In China they are a lot younger, in their 20s, and there are more women buyers,’ says Flewitt, whose wife Mia is, like him, a weekend racer of classic cars and a regular at McLaren customer events.
CEO Mike Flewitt with business secretary Sajid Javid among the historic racers
Whoever is buying, it’s a market where the personal touch is all important – Flewitt already spends much of his time visiting McLaren’s 80 dealers in 30 countries, getting to know the firm’s fanatical customers, some of whom are already on their seventh or eighth McLaren. ‘One of the things they really like is that they have a relationship with the company, it’s not just buying a product. Like the relationship with your tailor when you have a suit made.’
Will he be able to maintain all that face time and sell twice as many cars? The trick will be to convince less well-heeled petrolheads to trade up from their Porsche 911s, while also persuading those with the really deep pockets that McLaren is still exclusive and esoteric enough for them.
‘We have to compete with companies that are massively better funded than we are,’ he acknowledges. ‘But it’s healthy, like sport. I’m 53 now – when I retire in 10 years’ time we will be bigger and better, and we’ll still be here in another 50 years. That’s something to be proud of.’