Why QE has been so good to Rolls Royce

Sales of Rolls Royce have quadrupled in the last five years as the 'one per cent' get richer and demand greater luxury.

By Adam Creighton - The Australian

The global economy might have struggled since the financial crisis but Rolls-Royce is booming thanks to a growing army of Asian entrepreneurs and central bank policies that enrich the wealthy.

Torsten Muller-Otvos, chief executive of Rolls-Royce, said the 110-year-old British luxury carmaker was poised to sell a record 4000 cars this year — up 10 per cent from 2013 — and had been an excellent investment for BMW, which bought the struggling firm in 1998. “We have, basically, since 2009 quadrupled our sales worldwide, up from around 1000 cars in that year,” he said, during a week-long Australian tour that includes launching a new showroom in the Gold Coast, the first in Queensland (Perth's first one is also imminent).

“For me it is a Sleeping Beauty we are kissing awake here (in Australia),” he said, revealing sales have jumped 180 per cent here in 2014 but remain below three digits. Rolls-Royce doesn't reveal national sales figures, reluctant to irritate customers who value exclusivity.

Mr Muller-Otvos, chief executive since 2010 after a distinguished career at BMW, said the number of high net worth individuals (with assets “far beyond” $30 million) was expected to grow by up to 4 per cent a year for the next decade — almost four times as fast as the global population.

“I can tell you under Abenomics our business has soared this year (in Japan) — really soared,” he said, referring to the Japanese Prime Minister's policy of pumping newly created money into the financial system.

“There is a lot of wealth creation around and this is beneficial for us,” he added, noting new, less expensive models such as the Wraith and the Phantom (priced around $600,000) had helped boost demand and lowered the average buyer age by around a decade.

Mr Muller-Otvos said Australia's luxury car tax — designed to protect Australia's obsolescent car industry — was peculiar, unfair and irrational.

“Sector taxation is not the right way, especially when you are talking about the people who are the pillars of economic growth in countries,” he said.

“Why not allow them to reward themselves,” he said, noting French President Francois Hollande's new wealth taxes had pummelled luxury car sales in France in recent years.

China was the marque's biggest market in 2013 but has dipped back to 21 per cent behind the US's 25 per cent this year — a little above the Middle East's 20 per cent.

“China has cooled because of government investigations into corruption,” he said.

“It is rarely inherited (wealth) in China; the majority is self-generated,” he said.