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Marque of Excellence

Can Rolls-Royce, Britain's Name of Distinction, Weather Separation from Its Kid Brother, the Bentley, and Adoption by the Germans?
Paul A. Eisenstein
From the Print Edition:
Orlando Hernandez, Mar/Apr 99

(continued from page 2)

In Crewe, the announcement brought stunned, if mixed, reaction. No one was satisfied with Vickers, but there was no way to guess what a new owner would bring. With morale sagging, then CEO Morris made the bold promise that production would "never move" from Crewe. The declaration ultimately caused the well-liked executive to announce that he would step down.

The bidding war proved disconcerting, and a bit too unseemly for many potential Rolls and Bentley buyers as well. As it played out in the press last year, sales fell 30 percent, despite the introduction of the new Arnage and the Rolls brand's Silver Seraph, the company's first completely redesigned vehicle since 1980. With an average of five other cars in their garage, potential buyers could easily wait to see what happened. In March 1998, Vickers tentatively accepted BMW's bid. A day later, Volkswagen upped the ante to £430 million pounds ($835 million), £90 million more than BMW. In April, the board gave a seemingly final nod to BMW, but Volkswagen chairman Ferdinand Piëch threatened to take his case to shareholders if his bid was rejected. Piëch was a man possessed. Descended from the legendary Porsche family, he was intent on shedding Volkswagen's image as "the people's car." He had already bought an Italian supercar maker, Lamborghini, was bidding on Bugatti, had upgraded VW's Audi division and was toying with a $150,000 Volkswagen sports car. But Rolls-Royce Motor Cars would be the capstone, the feather, the affirmation. Knowing it would have to up its bid or fold its cards, BMW gave in. On May 7, Piëch claimed victory. Or so he thought.

Though BMW appeared to have given up, "We were saying we had four aces," BMW chairman Bernd Pischetsrieder now recalls with a laugh. "VW thought it was saber rattling." The card that was up Pischetsrieder's sleeve was Rolls-Royce PLC, the aerospace operation that was spun off in 1971. In an Alice in Wonderland twist, Rolls-Royce Motor Cars didn't own its own name. The jet maker did. Even as VW was proclaiming victory, BMW was quietlynegotiating its own deal, buying the Rolls name for $66 million. Rolls-Royce PLC chairman Sir Ralph Robbins delivered the unsettling news during a golf outing with Piëch.

Though Volkswagen continues to suggest that there may be yet another twist in the plot, it appears the deal making is done. Piëch, who declared a truce through clenched teeth, gets to continue building cars with each nameplate through the end of 2002. Then he keeps the Bentley marque but hands over the Rolls brand to BMW, which has announced plans to build its own factory, most likely in England. In the end, apart from bruised British egos, Morris was the only casualty of the bidding war. Feeling that he couldn't maintain credibility after failing in his promise to keep Rolls at Crewe, Morris said he would step down as CEO, though neither of the two new owners seems to be in a rush to replace him.

With the takeover battle behind it, Rolls is recovering in style. Sales of the Seraph and the Arnage are soaring, and in September the automaker rolled out the Bentley Sedanca Coupe, which features a removable T-top roof over the front seat and a fixed yet expansive glass roof over the rear seat. Notably, the Sedanca body is unique to Bentley. Like Siamese twins, Rolls's two brands have, throughout the years, shared virtually everything except their badges. With the Seraph and the Arnage, Rolls is trying to create separate identities. For example, the Seraph features a BMW-built V-12 instead of its Rolls-built supercharged V-8.

Now, with separate owners, it's likely that Bentley and Rolls will finally achieve true individuality as they develop their future models. Indeed, Piëch has some aggressive plans in the works. A "Baby" Bentley is in the wings, he says, which will carry a price tag of around $150,000. With the new model, Piëch would like to push sales up to between 9,000 and 10,000 cars a year, more than triple the all-time Rolls-Royce sales record and about five times today's volume for both marques combined. "We believe the Bentley marque has more stretch in it than the Rolls-Royce marque," suggests Julian Hadril, the brand manager for Bentley. Bentley accounts for about 70 percent of the company's volume, up from just 5 percent a decade ago, prior to the introduction of the Turbo R in 1988.

BMW's Pischetsrieder admits he would have liked to own both brands, but insists that he's satisfied with Rolls, "the summit of the Himalayas." Pischetsrieder expects to improve on the brand, giving Rolls a much-needed infusion of capital and an equally important upgrade in its technology. He's likely to expand its model range, but is reluctant to attempt the same down-market move VW plans. Instead, he says, "BMW can grow up into the Bentley segment."

The bidding war may be over, but a new battle is about to begin. For the better part of a century, the Rolls-Royce and the Bentley have represented the ultimate--not just in automobiles but in life. In the years to come, with two separate owners, the two marques will be competing to present their own distinct interpretations of what it's like to drive to the pinnacle of the automotive world.

Paul Eisenstein runs The Detroit Bureau, an automotive news service, and publishes an Internet magazine at www.thecarconnection.com.


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