You Need to Be Rich to Buy a Bentley. In China, Extra Rich.

Source: Bentley via Bloomberg

The 2014 Bentley Flying Spur

 

Volkswagen AG expects it’ll sell more Bentleys in China next year, thanks to a refresh of its Silver Spur starter model. The affordable Silver Spur V8 sells in China for the very affordable price of …

… 3.94 million yuan, or $640,000.

Yes, you read that right. Bloomberg’s Alexandra Ho dug up that number, via Autohome Inc. If you’re wondering how much a Silver Spur costs in the U.S. or Europe, it’s less. Much, much less. Motor Trend lists the starting price in the U.S. at $200,500. Taxes account for part of the difference: There’s a 17 percent value-added tax, a 25 percent levy on auto imports and an additional 40 percent tax on cars with the biggest engines (even a starter Bentley easily qualifies for that).

Even with 82 percent in taxes over the base price, we’re still far from that $640,000 price tag. Tesla Motors Inc. — who else? — has made an issue of how cars are priced in China and emphasized that with a $121,000 price tag it earns no more from selling cars in China than it would in the United States. Volkswagen can blow off the trash-talk from Tesla. A bigger concern for the makers of Bentley and other luxury cars: accusations of price gouging from China’s state TV, which has been carving out a niche as a consumer watchdog, at least when it comes to foreign products.

On top of that, China’s anti-corruption campaign has been taking a toll on luxury car sales. Many high-end cars have been hit by new rules that ban military license plates (an only-in-China kind of perk) on luxury cars — though that’s probably less of an issue for Bentley than for BMW.

The Market Now has no good explanation for how luxury car prices in China could be so high. Bentley wasn’t able to comment immediately; I’ll update this post if the company’s PR folks can provide more insight. It’s conceivable that some of the buyers are not paying for luxury cars out of their own pockets. It’s also possible that with taxes already limiting the market to the ultra-rich, it makes sense to up the price and make more on each car sold.

Either way, it’s likely that over the long run the big price gap isn’t going to be sustained, since Chinese buyers know how much the same cars cost abroad. There’s status in having a fancy hood ornament on your car, but there’s no status in having everyone know that you overpaid.

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