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Who on Earth can afford a Rolls-Royce anymore?

By Jim Trippon

Easy question. The Chinese can, and they’re buying them like hotcakes (compared to the rest of the world). In fact Rolls-Royce chose the Shanghai auto show to unveil the name of its newest sedan, the V-12 Ghost. Rolls-Royce acknowledges the unveiling in Shanghai was a gesture signifying the importance of the Chinese market for its ultra luxury cars.

While worldwide luxury car sales are slumping, China’s consumption of status-symbol automobiles continues to rise. The Wall Street Journal asked the question last month, “Can China single-handedly save the luxury car industry?” The answer appears to be yes. It might become the center of the industry.

For the first half of the year, luxury car sales are up a solid 7 percent in China. Sure, we have talked about much larger percentage sales gains for cheaper cars in China but that’s sure to taper off as a government tax incentive to buy fuel-efficient cars expires. Not so for luxury cars.

There’s no tax break for buying a Mercedes but that’s no problem for wealthy Chinese. China is the number one market in the world for Mercedes’ high-end S-Class sedans. Overall Mercedes sales in China are soaring this year – up by 50 percent in the first six months of 2009.

The growing wealth effect in China is helping to save some troubled luxury brands as well. Audi’s sales in China leapt by 37 percent last month, creating a new record for the company in terms of monthly vehicle sales. For the year to date, Audi’s sales totaled more than 108,000 vehicles in China, a jump of 20 percent from 2008.

Mercedes Benz and BMW do sell fewer units than Audi in China but their percentage gains were just as impressive. BMW sales were up 35 percent last month and Mercedes sales in China soared by 56 percent over the year before.

Recognizing that the world’s center of gravity for luxury is shifting to China, many high-end brands are unveiling their newest status symbols in Shanghai. The Mercedes S-65 AMG, one of the company’s most expensive high-performance cars, and a new Porsche sedan, the Panamera were first shown to the world at the Shanghai auto show.

During the Golden Week national holiday, China’s stock markets are closed. But as we’re seeing in the retail market and the luxury car market, there’s plenty of evidence that China is feeling the message that Deng Xiao Ping spread when he unleashed capitalism thirty years ago. “To get rich is glorious.”

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