Downturn for the downtrodden only as luxury carmakers report record profits

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Prestigious carmaker Rolls-Royce reported record annual sales ever in its entire history?thanks to the penchant of the newly rich from the emerging markets for luxury cars.

The BMW owned outfit reported it delivered 3,538 cars to customers in 2011, compared to 2,711 it sold the previous year. Previous record was in 1978 when it sold 3,347 cars.

China was the top market for Rolls-Royce but reportedly had higher sales across all the regions where it sells cars. Rolls-Royce?s overall Asia-Pacific sales were 47 per cent higher in the Asia-Pacific region, 31 per cent in the Middle East, and up 17 per cent in North America.

BMW, the world’s biggest premium car making group in the world reported on Monday the highest group sales in its history.

Bentley, UK-based luxury car maker owned by Germany?s Volkswagen, reported its best annual sales since 2007, and said that it sold more cars in China than the UK for the first time in its history.

?It is definitely a nice investment to put your money in a Rolls-Royce, because on the one hand it is something that keeps value, and on the other, it is something that really gives pleasure,? Torsten Muller-Otvos,?Rolls-Royce CEO, told CNBC in an interview.

?That is one of the reasons we saw many people buying Rolls-Royces last year,? he added.


Luxury carmakers had good sales last year. United Arab Emirates alone accounted for a quarter of Bugatti sales worldwide.

“We sold the kind of volumes that we had sold in 2007, before the global financial crisis,” Karl Hamer, the managing director Al Habtoor Motors – the exclusive distributor of Bentley and Bugatti in the UAE, said while adding that?2011 has been a very good year for the company.

The first batch of 28 Maclaren cars which was launched in Dubai in November last year was sold out quickly.

“When the big downturn hit a couple of years back, the market was on its knees. The first area that always recovers is the luxury sector because those people are not affected to the same degree as the man on the street.”

Torsten M?ller ?tv?s, the chief executive of Rolls-Royce, said more entrepreneurs and business executives were buying the company’s cars as a reward for a strong showing last year.

“We have all the celebrities, royals and famous people buying our cars but we are seeing more captains of industry and entrepreneurs buying; people who set themselves targets that they made, so they are now rewarding themselves.”

On future outlook, not everyone seems optimism if the tide will continue to rise. “I’m optimistic, but I’m realistic because there’s a lot going on with unrest in the region and continuing troubles in the euro zone,”?James Crichton, Rolls-Royce’s Middle East director, said.


The US might be the word?s fastest growing car market ? but China is becoming the leader in the luxury car arena.

Rolls-Royce revealed in 2011 for the first time ever that China over took the US as its biggest market. Of a record 3,538 car sales over the year, 31?per cent were to Chinese buyers ? more than a hundred vehicles bought in the US.

The former British brands are also enjoying burgeoning demand from the east. Bentley last week reported that its sales in China had doubled in 2011, while in November, Aston Martin said it expected a quarter of its sales to come from the Asia Pacific region within two years. Italian sports-car maker Lamborghini, meanwhile, told China Daily newspaper?that it planned to grow its Chinese dealerships from 11 to 20 by the end of 2012.

Arndt Ellinghorst, an analyst at Credit Suisse, expects the trend to continue. As China?s super-rich class continues to grow in number and are determined to exhibit their wealth, the demand for ostentatious vehicles will inevitably expand.

?A car is a huge way of demonstrating personal wealth ? a status symbol,? he said. ?Demand for brands like Rolls or Ferrari are driven by strong brand awareness that can be very difficult to replicate.?

Even more so when an already iconic brand gets royal approval. Catherine Middleton arrived at her wedding last April ? watched by hundreds of millions of people worldwide ? in a Rolls-Royce.

Ellinghorst also pointed to South Korea, Turkey and South America as regions where demand was likely to expand rapidly. The proportion of sales across the luxury vehicle universe from ?non-traditional? markets could grow to 60-70 per cent of total sales, he added.

Rolls highlighted that growth in its established markets had been strong, too, with North American and UK sales up 17 per cent and 30 per cent respectively.

But it is clear that emerging markets were the standout performers. Rolls Royce Asia-Pacific announced sales surged 47 per cent, while the size of its Russian market doubled. In the Middle East, where ‘bespoke’ vehicles are particularly popular, sales climbed 23 per cent.

Rolls seems determined to sustain that growth into 2012. Chief executive Torsten M?ller-?tv?s has revealed plans to expand in less-developed markets, including South America. Meanwhile, to mark the Chinese New Year starting from 23 January, the carmaker will roll out its ?Year of the Dragon Collection?, with the mythical creatures painted on each vehicle?s wheelbase and embroidered onto the leather.

Sources: Reuters, Financial Times, The National, China Daily

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