Rolls-Royce Motor CEO Says Higher China Prices Due Mostly to Tax

Rolls-Royce Motor Cars Ltd. said greater taxes means it makes about the same profit on a car sold in China as in other countries, despite the higher sticker price in the world’s largest auto market.

A Rolls-Royce Ghost sedan is priced starting at 4.19 million yuan ($688,500) in China, according to autohome.com, a vehicle-comparison website. A similar vehicle costs from $256,650 in the U.S., based on quotes from motortrend.com.

“One should not be mistaken by the absolute price,” Rolls-Royce Chief Executive Officer Torsten Mueller-Oetvoes said in an interview in Beijing yesterday. “The difference in price is very much taxes.”

Foreign luxury automakers have come under scrutiny after Chinese media reports that some imported cars sold in China can cost two to three times more than in other markets. State-run broadcaster China Central Television on Oct. 20 ran a report criticizing foreign brands including Starbucks Corp. and Jaguar Land Rover for discriminatory pricing in the country. Rolls-Royce wasn’t named in the report.

China’s tax levels are “extremely high” and exceed other markets like the U.S., Europe, the Middle East and Russia, Mueller-Oetvoes said. There are also other costs and fees that add to the final retail price in China, he said.

“For us, it is not a big difference between a car sold in China than a car sold in the U.S. or Middle East, profit-wise,” he said.

China, currently the automaker’s second-largest market, behind the U.S., may regain the top sales spot at the end of this year, according to Mueller-Oetvoes. China was Rolls-Royce’s biggest market in 2011 before being overtaken by the U.S. last year.

The company, owned by Bayerische Motoren Werke AG (BMW), currently has 16 dealers in China and will add four more in the cities of Changsha, Taiyuan, Kunming and Nanning by the end of this year, he said.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net; Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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