2013 SHANGHAI AUTO SHOW

Rolls-Royce's China growth may slow as gov't seeks to brake lavish spending

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SHANGHAI (Bloomberg) -- Rolls-Royce said it's seeing slowing growth in China.

"Business isn't any longer as explosive as it was the years before, but we're still optimistic here with the market," CEO Torsten Mueller-Oetvoes said.

His comments also come as China's new Communist Party Chief Xi Jinping pushes for a campaign to rein in lavish spending. "Maybe some customers might think about that," Mueller-Oetvoes said in reference to the austerity drive. "But all in all, my feeling is that the culture here allows for the demonstration that you're successful in life and you have achieved certain things."

Rolls-Royce expects sales growth of 2 percent to 3 percent a year in China, a market where the company sells a quarter of its cars, Mueller-Oetvoes said at the Shanghai auto show.

By comparison, Rolls-Royce sales rose 16 percent to 998 vehicles last year, according to estimates at research firm LMC Automotive.

Rolls-Royce is targeting expanding its dealership network to 20 by the end of the year from 16 now, Jolyon Nash, director of sales and marketing, said.

Rolls-Royce sold a record 3,575 cars globally last year as the U.S overtook China as the brand's biggest market.

Mueller-Oetvoes said he's expecting growth from the Middle East, Russia, the U.S. and China. Demand from European markets will be flat, though the U.K. will probably be stable, he said.

Global sales of cars costing more than 100,000 euros ($130,000) are forecast to surpass the 2007 peak this year and will climb 35 percent to almost 540,000 by 2015, according to IHS Automotive. The jump is fueled by a 52 percent surge in demand in North America and 34 percent gain in China.

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