Downturn will not hurt us, says top car dealer
Sparkle Roll, a luxury car dealer on the mainland, expects the impact of a global economic slowdown on the high-end market to be small, as it believes more Mercedes-Benz and BMW owners will be trading up to pricier brands.
Ivan Tong, chairman of Sparkle Roll, which sells Bentley, Rolls-Royce and Lamborghini brands, said mainland customers' demand for super-luxury cars has remained strong. However, sales of other luxury goods are softening amid an increasingly uncertain global economy.
The dealer, which sells luxury brands in Beijing, Tianjin and Dalian, said car sales last month reached a monthly record high of nearly 100 units, but sales of its jewellery and watches slowed down.
'We are still quite optimistic on the luxury car market in 2012,' said Tong. 'It proved itself to be resilient during the global financial crisis in 2008 and also in the face of the Beijing government's restrictions on issuing car licences last year.'
He said luxury cars only account for 0.05 per cent of total car sales on the mainland, which is low compared to the developed world. Tong believes the growth potential is huge as mainland millionaires may purchase more new cars and trade up from their Mercedes-Benz and BMW cars to more high-end brands.
Tong said the cars Sparkle Roll sells are priced around 3 million yuan to 8 million yuan (HK$3.65 million to HK$9.74 million). Most of its customers are mine owners, property developers and senior executives in the finance industry.
Sparkle Roll, which was previously in the animation business, ventured into the luxury-goods industry in June 2008 when it acquired two high-end car dealership companies in Beijing.
It then went on to expand its luxury business into top-end watches, jewellery and wine. Sparkle Roll is now the mainland distributor for timepiece brands like Richard Mille, DeWitt and Parmigiani, jewellery brands Boucheron and Royal Asscher, and top French wine brands.
In the six months to September, the company recorded a nearly-70 per cent growth in turnover to HK$2.08 billion. Net profit more than doubled to HK$112 million. The car business, which amounts to 94 per cent of its total turnover, grew 67 per cent year on year.
While the European economy struggles, many luxury brands from the continent are eyeing the fast-growing China market.
'There are now around a dozen European timepiece and jewellery brands queuing up to work with us to get into China, but we don't want to rush,' said Tong.
He said it usually takes around three to five years to establish popularity for a relatively new brand in the mainland market, and the working capital required is significant.
Looking forward, Tong said the company plans to introduce an Austrian brand of top-quality timepiece display and storage cabinets to the mainland Chinese market this year. Also, two large Sparkle Roll shops in Beijing and Tianjin are expected to open this year.