Rolls-Royce Sees Record China Sales Despite Worst Slowdown in a Generation

(Bloomberg) -- Ultra-luxury carmaker Rolls-Royce is predicting record sales in China for this year, confident it can navigate the world’s biggest auto market’s worst slowdown in a generation.

The unit of BMW AG is seeing strong demand from wealthy clients such as entrepreneurs and celebrities who aren’t as affected by a slowing economy as the broader consumer base, Rolls-Royce Chief Executive Officer Torsten Mueller-Oetvoes said in an interview with Bloomberg TV in Shanghai on Wednesday. He also expects the company’s new Cullinan sport-utility vehicle to help boost sales.

“We are to a certain extent decoupled from what happens in the ordinary car market,” Mueller-Oetvoes said. “I am very confident that we should see again this year a record year in the Chinese market.”

Luxury cars have been a bright spot in China’s auto market, with sales continuing to rise even as vehicle demand slumps amid a slowing economy and trade tensions with the U.S. Volume for luxury vehicles rose 8 percent to 2.82 million units last year as more motorists opted for high-end models when replacing autos, according to the China Passenger Car Association.

Rolls boosted sales in China by 43 percent last year, outpacing other European luxury brands. Porsche’s volumes gained 12 percent, and Ferrari’s sales rose 13 percent.

China Headwinds

While Rolls isn’t necessarily affected by the trends of the broader car industry, it isn’t shielded from a slowing economy, Mueller-Oetvoes said. About 80 percent of the carmaker’s customers are entrepreneurs, and what happens in the economy also affects their purchase decisions, he said.

In a sign of the headwinds the Chinese market is facing, Nissan Motor Co. is cutting a future target for car sales in the country by about 8 percent, people familiar with the matter said, suggesting that the slowdown may be an extended one.

Mueller-Oetvoes said Rolls-Royce is “strictly against” a so-called hard Brexit, citing concern that it could disrupt the company’s supply chain. The British company has a plant in southern England.

The carmaker has been preparing by training suppliers in new import procedures, and it has also arranged for some parts to be flown in if ports become snarled by customs disruptions. He said delays in car deliveries are possible should the U.K. divorce from the European Union without a structured agreement.

“We are to a certain extent worried,” he said. “My biggest concern is our logistics chain.”

To contact Bloomberg News staff for this story: Emma O'Brien in Beijing at eobrien6@bloomberg.net;Tian Ying in Beijing at ytian@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen, Anthony Palazzo

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With assistance from Bloomberg