Rolls-Royce is possibly the best-known British brand in the world. For a century, it embodied the very British qualities of refinement, heritage, tradition and quality, yet in 1998 it was sold, along with Bentley, to German giant Volkswagen and in 2003 BMW took over the Rolls-Royce marque. Now Paul Ferraiolo will lead the brand’s charge in the US, its biggest market, having been promoted from global marketing chief (MW last week).
After a difficult start under VW ownership, the launch of the Phantom in 2003 put Rolls-Royce back on the map. Sales of the Phantom range – including the recently unveiled, “less formal” Phantom lll Drophead Coupe – have grown consistently but never reached the initial target of 1,000 units a year. Only 300 cars sold in its first year, and in 2004 and 2005 sales reached 792 and 796 units respectively, topping 805 last year. Prices starting at 370,000 (250,000) may have thwarted take-up, while somewhat disappointing early sales have contributed to difficulties at the top of the company: chief executive Ian Robertson is the third person in the role under BMW ownership.
But Mike Moran, who previously held positions at Ford and Toyota and is now managing partner of the Orchard Consultancy, says: “As a brand, Rolls-Royce is as strong as it ever was. It has been helped tremendously by German ownership, giving it real product renewal. Even owned by BMW, the brand’s essential Britishness remains intact. The current product is a very striking car; probably not to everyone’s taste, but nonetheless an astonishing piece of engineering.”
And top-class engineering has always been core to the brand. The Rolls-Royce Company was founded in 1906 following a deal between engineer Henry Royce and Charles Rolls, which saw the pair agree to Rolls having exclusive rights to sell the cars Royce produced and launch the first Silver Ghost in 1907. Rolls died in 1910, but Royce continued the business, expanded into aeronautical engines and by 1921 had made a move into the US. In 1933 Royce died, not living to see the success of his aircraft engine powering Allied planes during World War Two. A new factory at Crewe in Cheshire, built by the Air Ministry, became the home of Rolls-Royce Motor Cars from 1946, and throughout the 1950s and 1960s business boomed as the brand became synonymous with rarefied luxury, accessible only to the very rich. However, it encountered difficulties and in 1971 went into receivership, finally being divided into separate aeronautical and motor companies.
In 1980 engineering business Vickers bought the car division and produced Rolls-Royce and Bentley cars until 1998, when the business was sold to Volkswagen. VW took control of Bentley (originally bought by Rolls-Royce in 1931) and the Crewe factory, where cars were produced under licence until BMW bought Rolls-Royce in 2003 and built a new factory near Goodwood, West Sussex, where it developed the Phantom.
A clear distinction between the two marques, once only distinguishable by their badges, emerged in the decade following acquisition. Since launching its Continental model in 2004, Bentley has dominated the luxury car market, particularly in the US where 2006 sales were more than four times that of Rolls-Royce’s global tally of 805. The Continental appeals to the glitterati in a way that Rolls-Royce (pitched at a richer and, perhaps, older customer) does not. Moran says: “The Bentley Continental GT was a stroke of genius. As a product it has a broad appeal, the sales have been phenomenal. Rolls-Royce has positioned itself more upmarket producing the Phantom, which says about its owner, ’I’ve got even more money than that’.”
Last month, Rolls-Royce opened its second dealership in Russia, where newly super-rich customers want conspicuous consumption and sales are growing. Its global advertising agency, Harrison Troughton Wunderman has had to meet wide-ranging objectives in different regional markets. Head planner John Howkins says Rolls-Royce’s markets are very different, often competing for consumer spend with high-end products such as yachts and other toys of the super-rich. “Every market varies in its interpretation of luxury. The cues are sometimes subtly different and there are quite big differences. In the UK you can say things that are a lot more direct in terms of what you’re trying to say about the vehicle rather than a lifestyle statement.”
Despite strengthening sales of the Phantom, it will be some time before BMW recoups its reported initial investment of 105m. An expanded model line-up, including a “Baby Rolls”, scheduled to launch by 2010, will undoubtedly help. Global sales and marketing director at Rolls-Royce Graeme Grieve says: “While there are other cars in our price segment, we don’t compete head-on with anyone. Our customers can afford to buy whatever they want. The reason for producing a smaller Rolls-Royce is that, for some of our customers, the Phantom has too much presence in terms of its size. They may be compromised by parking space or use around town.”
But any smaller Rolls-Royce will still be a very expensive motor car costing up to 300,000 (200,000). Rolls-Royce has no intention of entering the market at a level it feels is inappropriate for the brand with blue oil running through its veins.
1904Henry Royce builds his first car and agrees to build cars to be sold exclusively by Charles Rolls
1906The Rolls-Royce company is formed and the Silver Ghost is launched
1914Royce designs his first aero engine, the Eagle
1931Rolls-Royce acquires Bentley Motors
1946A factory in Crewe becomes the home of Rolls-Royce Motor Cars
1971After going into receivership, Rolls-Royce is split into aeronautical and car divisions
1980Vickers buys the car division and produces Rolls-Royces and Bentleys
1998Volkswagen takes control of the Bentley brand and Rolls-Royce is bought by BMW
2003 The Rolls-Royce Phantom is launched.