Sales of Rolls-Royces have fallen “pretty close to zero” in China because of the coronavirus, but the company sees early signs of possible recovery, the company’s CEO told CNBC.
Rolls Royce said sales in China, its second largest market after the U.S., were hit especially hard as many parts of the country effectively shut down over the coronavirus.
“It’s not quite zero, but its pretty close to it,” said Torsten Muller-Otvos, CEO of Rolls Royce Motor Cars. “But we also see some of the first signals of recovery in certain areas.”
Muller-Otvos said it’s too early to estimate the impact on sales for 2020. Before the outbreak, Rolls Royce was expecting sales roughly in line with last year’s record of over 5,100 vehicles, driven mainly by the launch of its new SUV, the Cullinan.
“It is impacting our business, that’s for sure,” he said. “I fully understand that people in these circumstances have other things to think about than to buy a Rolls Royce.”
The ultra-luxury segment of the car business can be especially sensitive to shocks to economic confidence, since buying a $400,000 Rolls Royce is almost always a purely discretionary purchase. And since 80% of Rolls Royce buyers own or run a company, they react quickly to declines in the global economy. Aston Martin’s share price plunged to a record low this week after the company warned of weaker sales in the first half of 2020, due mainly to China.
But Muller-Otvos said Rolls Royce, owned by BMW, is more insulated and more accustomed to sudden drops in sales. He said the company can react quickly to big swings, given its small workforce of about 2,000 people at its Goodwood factory in England and its strong pipeline of sales from loyal customers. The company also said it doesn’t have any component shortages that would currently affect production.
Still, he said the uncertainty of how far the virus will spread, and how deeply it will affect the global economy, makes this sales shock different from many others.
“We are sitting on a very good order book in the U.S.,” he said. “But we are highly adaptable, we are vigilant. We are looking at it daily, and we are in close contact with all the markets worldwide.”