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Rolls-Royce forecasts record global sales, local growth

Lean on me: Rolls-Royce Motor Cars CEO Torsten Mueller-Oetvoes with the Cullinan SUV at the Melbourne dealership last week.

Market declines, Brexit, US/China trade tensions no hindrance to sales growth: Rolls

5 Mar 2019

ROLLS-ROYCE Motor Cars chief executive Torsten Mueller-Oetvoes has forecast another record year of global sales and a return to growth in Australia, despite difficult trading conditions and uncertainties brought with Brexit and trade negotiations between the United States and China – its two biggest markets.

In an interview in Melbourne last week, Mr Mueller-Oetvoes pointed to strong demand for the hallowed British brand’s first SUV, the Cullinan, orders for which now extend into the fourth quarter, as well as an influx of new customers – including increasingly younger buyers and women – as indicators of its continued success.

He said he had no qualms about pushing Rolls-Royce to new heights in terms of global sales volume – up from a record 4107 deliveries last year – so long as it met the high expectations of its rich clientele, while the Australian market could push up to around 50 sales this year after dropping 11.1 per cent to 40 units in 2018.

Mr Mueller-Oetvoes described last year’s decline in Australia, which equates to five units of the exclusive luxury cars, as “seasonal” – more to do with delivery timing rather than slowing demand – and said that the market here was seen as “stable” and apparently immune to the current premium market downturn experienced by most major manufacturers.

“It’s early days, but on the back of Cullinan, which was extremely well received here in Australia, I think we are going to see a great year again for us,” he told GoAuto.

“The Australian market is really, as far as I see, in a good shape for us, and the reason why you have seen us going slightly down from here to 2017 was just the availability of cars.

“We brought Phantom pretty late here into the Australian market last year, there were zero Cullinans in this market here at the end of the last year and so on, so it is just what I would call ‘seasonal’.

“It’s not in any way affected by economic downturns or whatever – we don’t see that.”

Asked whether slowing market conditions in various markets – including Australia – would impact the company’s sales results this year, Mr Mueller-Oetvoes said: “I don’t think so. I am, anyhow, more an optimist than a pessimist, and particularly on the back of Cullinan, we have an unbelievably strong order bank which is already reaching into the fourth quarter this year worldwide.

“I am pretty confident that we should see again a record year for Rolls-Royce Motor Cars this year.”

Australia is Rolls-Royce’s fifth-biggest market in Asia behind China, Japan, South Korea and Hong Kong, and Mr Mueller-Oetvoes emphasised that “both (Japan and Korea) markets are growing tremendously well for us, and we will also see, I bet, growth this year in Australia”.

This confidence comes despite turmoil in Britain with the Brexit negotiations, which have forced Rolls-Royce to prepare for a ‘hard’ Brexit arrangement which could see the UK give up full access to the European single market and instead take full control of its own borders, meaning new trade deals will need to be struck.

He said Rolls-Royce is ready if the UK falls back on World Trade Organisation rules for trading with its former EU partners, that it had pulled forward a planned shutdown at its Goodwood factory to minimise disruption and had contingency plans in place for handling logistics such as overseas parts supply.

He is also optimistic that the company will not be thrown into chaos.

“I don’t think anything will happen. I think as it looks, postponement probably will happen, but let’s wait and see,” he said, noting that trade uncertainties between the US and China also appeared to be easing.

“Given that Brexit and trade deals are not disrupting, in a bigger sense, the world, then I think we are in a good shape to do again a record year,” he said.

“Nobody knows what the outcome of Brexit is – sorry, nobody knows that currently – and trade deals currently are running in the right direction, at least between China and the United States, and the same is apparently happening also between Europe and the United States, so let’s cross fingers that everything pans out in the right direction.

“It’s anyhow part of business today that the world is far more volatile, uncertain, very hard to predict. You need to be prepared for that.

“I think we have catered internally for being quite a lean company, very cost efficient, cost effective, and so that’s what you can do. And also I am a true believer that you shouldn’t put your eggs in one basket, so we are nicely spread all over the world, and as long as the world isn’t going, let’s say, in a complete recessionary development, I think you always find markets which are going up, others are going down, that’s normal.”

As much as Mr Mueller-Oetvoes is pushing for more sales growth, the Goodwood factory is not capable of building more than 10,000 vehicles per annum and the Rolls-Royce chief categorically ruled out entering lower-price segments, introducing smaller powertrains than its staple V12 or building cars anywhere else in the world.

On the question of how many sales are too many, given the sensitivities around exclusivity with such a prestigious brand, Mr Mueller-Oetvoes said: “We are not into volume, but I think if you sell 4000, or when I joined nine years ago it was around a thousand, of course we added more product over the last year but I think 4000 is still a minute number given the overall car business world, right?

“It can also be 5000, that doesn’t make a difference. For me, what matters is what you experience here. Customer attention, customer care, that kind of ambience.

“We are not selling ‘cars’. It’s not a ‘car’ in our customers’ mind. This is a luxury good. Yes, it sits on four wheels, but nobody needs us to come from A to B, nobody. They have multiple cars in their garage, and for that reason you need to create that ambience of high and prestigious luxury and that’s the reason why we are interested in high-end pricing, bespoke capabilities which is a big part of the brand so that every customer can really build his own masterpiece.

“Together with our clients that’s the philosophy we have at Rolls-Royce. And it’s not a big difference if it is 4000 or 5000 or whatever.

“There is no chance in any way to expand production in Goodwood because we are sitting in an area of natural beauty and it’s an inbuilt guarantee for exclusivity. If we would see even higher demands, then we would just raise prices.

“I also think Rolls-Royce belongs to Britain. Full stop. Whatever comes. It’s part of the British culture.”

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