Bentley Luxury-Car Sales in China Cool; Global luxury goods market to cool in 2013: Bain

May 15, 2013, 11:07 a.m. ET

Bentley Luxury-Car Sales in China Cool

By COLUM MURPHY

BEIJING—The maker of Bentley luxury cars is the latest high-end auto maker to warn that ebbing confidence among Chinese consumers and a government-led drive against conspicuous consumption has hurt demand for its expensive rides.But Jan-Henrik Lafrentz, member of the board, finance & systems for U.K.-based Bentley Motors Ltd., said it expects its New Flying Spur to help sales perk up for the rest of the year.

“In the first quarter our volume decreased a bit, but now with the launch of the New Flying Spur, this will come back,” said Mr. Lafrentz in an interview in Beijing this week.

The unit of Volkswagen AG VOW3.XE -0.31% said China briefly became its No. 1 market early last year, at a time when Chinese growth looked more surefooted than in the U.S. But the U.S. has since regained the top spot, Mr. Lafrentz said, underscoring the need for the company to have a balanced approached to its markets.

“It’s important we don’t only bet on the Chinese market and forget the rest of the world,” Mr. Lafrentz, adding: “America is still the biggest.”

Bentley sold 438 cars in China in the first quarter, down 20% from 547 in the same period last year, according to data provided by the company. It attributed the decline mainly to a model changeover—it is introducing new versions of its bestselling model in China this year.

Bentley sales in China and Hong Kong almost doubled year on year in 2011. Last year sales in China alone increased 25.9%.

“Currently the luxury or premium market in China is getting lower growth rates,” Mr. Lafrentz said. “Maybe it has to do with people just seeing how the country develops with the new government, how the economy and political scene develop.”

Maturing growth in China has taken some of the momentum from the high-priced car market. BMW AG BMW.XE -0.86% sold 86,224 cars in China in the first quarter, up 7.5% from a year earlier, compared with a 37% jump in the year earlier period. Sales of Volkswagen’s Audi rose 14% to 102,810 cars in China versus a 41% gain in the year-earlier period. Daimler AG’s DAI.XE +1.32% Mercedes-Benz bucked the trend, as sales rose 9% compared with a 13% decline in the year earlier period.

The new Bentley model will sell beginning at $200,500 in the U.S. In China, the same car could cost $550,000, the company said, noting the price differential was due to high duties on imported cars.

Bentley sales in the U.S. in the first quarter were up 32% to 594 cars from 450 last year.

Globally 2,100 Flying Spurs were sold in 2012, more than half of which were in China and under one fifth were in the US.

Some analysts worry that China could enact a tax on luxury cars, which they estimate could be applied to cars costing around two million yuan ($322,000).

Mr. Lafrentz said it wasn’t a concern for Bentley. “At the upper end of the market it’s a bit easier to absorb tax increases compared to the volume segment,” he said. “But of course it will slow down growth rates.”

Global luxury goods market to cool in 2013: Bain

PARIS/MILAN – Growth in sales of luxury goods is expected to ease slightly this year, hit by subdued spending in Europe and slower growth in China, consultancy Bain & Co said in a study on Thursday.

BY – 57 MIN 17 SEC AGO

PARIS/MILAN – Growth in sales of luxury goods is expected to ease slightly this year, hit by subdued spending in Europe and slower growth in China, consultancy Bain & Co said in a study on Thursday. Bain, whose forecasts are closely watched by the industry, sees luxury goods growth cooling worldwide to 4 to 5 per cent in 2013 from 5 per cent last year at constant exchange rates. The consultancy, which conducted the study with Italian luxury trade body Altagamma, forecast global luxury goods sales would rise at a compound annual growth rate of 5-6 per cent between 2013 and 2015 at constant exchange rates. The total size of the market, which was 212 billion euros (S$342 billion) in 2012, would reach 250 billion euros by mid-decade. The study covers worldwide spending on luxury ready-to-wear, perfume and cosmetics, watches, jewellery, and accessories such as belts, ties and shoes. In the first quarter of 2013, global luxury sales rose 3 per cent at constant exchange rates and 1 to 2 per cent at current exchange rates, against 10 per cent in 2012 at current rates. Bain forecast luxury goods sales would remain sluggish in Europe this year, rising by a maximum of 2 per cent at constant currencies compared with 3 per cent in 2012 Chinese tourists were spending less in Europe due to narrowing price gaps with goods at home and were travelling to new destinations such as Australia, it said, while local demand in Europe, particularly in the south, remained depressed. Bain forecast growth in the Asia-Pacific region, excluding mainland China, would reach 7-9 per cent this year, down from 10 per cent last year at constant currencies. For mainland China, it forecast growth of 6-8 per cent at constant currencies. Watch demand in China, the industry’s biggest growth engine, dropped sharply in 2012, Bain said, as the government stepped up its campaign against corruption and conspicuous consumption. REUTERS