Rolls-Royce drives into cash-strapped, petrol-scarce Kazakhstan

By bne IntelliNews November 4, 2014

Naubet Bisenov in Almaty -


The ultra-luxury car brand Rolls-Royce has ridden into oil-rich Kazakhstan's commercial capital of Almaty, lured by the lingering gleam of an economic boom experienced in the noughties. Unfortunately, Rolls-Royce’s first showroom in Central Asia is opening even as the economy continues to struggle and the country is plagued by petrol shortages.

At a news conference "celebrating such a landmark occasion" in Almaty on October 30, Torsten Muller-Otvos, Rolls-Royce Motor Cars’ CEO, said the country's oil-fuelled boom had created increasing demand from discerning customers for pinnacle luxury products such as Rollers. "[Kazakhstan] has witnessed a surge in the number of high-net-worth individuals and is also experiencing strong demand for luxury goods. It is fast becoming a major destination for top-end luxury products," Muller-Otvos said. "We see a lot of potential here in Kazakhstan and look forward to realising that potential together with our new partners here in Almaty."

Muller-Otvos said that the BMW-owned image-conscious brand had picked as its Kazakh partner Astana Motors, which is already operating dealerships for BMW, Toyota and Hyundai, because it shared "the ethos of our founding fathers". "I have full confidence that we have chosen the most appropriate partner here in this country," he said.

While it has taken pains to carefully choose a dealer to market Rollers in Kazakhstan, the company could have a bigger problem with the "very special clientele" who will own and drive the cars.

Bad drivers

The driving habits of wealthy and influential people, mostly close to government, and their relatives has periodically caused public indignation in Kazakhstan.

Last December, for example, a 24-year-old son of a senior manager at the Expo 2017 national company in Astana knocked down six people standing on the pavement in Almaty with his four-wheel drive, killing one on the spot. After the incident the young man drove away from the scene; he was eventually fined for an administrative offence, while criminal charges against him were dropped. This sparked outrage on social media. The handling of the case was seen as a "flagrant manifestation of corruption" in the country's justice system, and prosecutors in Almaty were forced into appealling the court ruling. As a result, the driver was jailed for 45 days on administrative charges.

This and other traffic incidents involving officials or their relatives have even spurred President Nursultan Nazarbayev to demand tougher punishment for children of government officials and public servants who violate the law. "I'd like to stress that there are many cases when traffic accidents involve children and relatives of well-known people. Everyone is equal before the law, which is why in such cases both children and parents should be punished more harshly," Nazarbayev said in March.

Asked by bne whether Rolls-Royce would apply the same diligence to its Kazakh customers as to its partner and whether he wasn't worried that some of them might generate headlines, Muller-Otvos said that he saw the same pattern of ownership as the carmaker has in other markets: 80% of Roller owners worldwide are business owners who are "pillars of economic growth," with the rest being celebrities. "We welcome every customer at Rolls-Royce," he said. "Somebody who wants to fulfil his dream to buy a Rolls-Royce is a desired outcome for us and we are not, in a way, safeguarding [our cars from] what might be his background."

However, observers in Kazakhstan point out that as well as business leaders and celebrities, Kazakh officials and government agencies with their insatiable appetite for huge and expensive cars could also be customers for Rolls-Royce – even at a time of economic belt-tightening due to lower-than-expect global oil prices. Tenders posted by local government departments and some ministries on the state purchases website often welcome bids to purchase cars worth millions of tenge (tens of thousands of dollars) for courtesy purposes to ferry esteemed visitors around. One tender posted by the South Kazakhstan Region administration this summer advertised the purchase of a car for KZT12mn ($65,000). Muller-Otvos said the price of a typical Roller starts from €250,000 – not out of the reach of a particularly lavish ministry.


With an engine size of around 6,000cc, petrol-gulping Rolls-Royces cruising across Kazakhstan's congested cities will surely expose government hypocrisy.

In September in the midst of acute petrol shortages, Energy Minister Vladimir Shkolnik urged local motorists to stop "carrying the air" and pool cars. "We should be saving [petrol] as the rest of the world does. I call for this. If there is a possibility, then don't drive a huge SUV to work... but neighbours get into one car to drive to work," Shkolnik said. "Let's be more prudent. One should replace their cars with smaller ones, in particular this concerns all kinds of officials and people driving alone in SUVs and carrying the air."

But the calls made by Shkolnik, whose ministry is responsible for energy security in the country, appear to have fallen on deaf ears. The president of Astana Motors, Nurlan Smagulov, blamed a Soviet mentality for people being ashamed about wealth and hailed Rolls-Royce's arrival in Kazakhstan as sign of it "becoming a civilised country". "We [still] feel shame about opulence," said Smagulov, who bragged about owning one of the first three Rollers the new outlet has sold. "We should stop feeling ashamed... and we should get rid of complexes and phobias.”

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