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Business English: China's new rich drive sales of Rolls-Royces

High local taxes have not deterred luxury-car fans. Rolls-Royce has three dealerships in China's leading economic centres - Beijing, Shanghai and Guangzhou - and will add three more this year. von Tom Mitchell

China has overtaken Japan to become carmaker Rolls-Royce's third-largest market in 2006, providing yet another measure of the communist country's economic emergence and the enormous spending power of its nouveaux riches. The iconic British company - owned by German carmaker BMW - expected to sell about 70 Phantom models in China and 50 in Japan, Ian Robertson, Rolls-Royce chairman and chief executive, said recently in an interview with the Financial Times. The company's China sales figures include Hong Kong. The Phantom's retail price is about $400,000 but comes in at about twice that amount after tax in both China and Hong Kong. Bespoke requests from individual buyers can also increase a Phantom's cost substantially. In early December, Rolls-Royce sold its most expensive car yet to a Beijing property developer, who paid $2m for his custom-made Phantom. "China's market dynamics are totally different," said Mr Robertson, noting that his company's sales there were increasing at a 50 per cent year-on-year pace. "That's what's so exciting. This is new territory for us." Rolls-Royce has three dealerships in China's leading economic centres - Beijing, Shanghai and Guangzhou - and will add three more this year in Hangzhou, Chengdu and Shenzhen. While China will account for just under 10 per cent of the 800 Phantoms Rolls-Royce expected to sell in 2006 - its highest total in 16 years - it still trails the company's two leading markets, the US and UK. In 2006, Rolls-Royce has sold about 130 cars in California alone, driven by the Hollywood set's capacity for conspicuous consumption. At the other extreme, Rolls-Royce has no dealers and minimal sales in Thailand, where government taxes can raise the cost of a luxury car to four times its list price. "One potential Thai buyer said he wasn't going to buy one car for himself and three for the government," said Graham Biggs, Rolls-Royce's spokesman. The overall sales figures for Rolls-Royce still lag behind its initial forecasts for the Phantom of 1,000 sales a year. Such forecasts are important because they determine how many cars need to be sold to make a profit or justify investments, although BMW has said it does not need to sell 1,000 models to do this. Mr Robertson said sales were now benefiting from a feeling of confidence among the super-rich, although such sentiment could be fickle. "It can vary - not according to whether the super-rich are rich but whether they are feeling confident."

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