Feature Story

UPDATE: GERMAN CAR WARS '98

by Bob Hagin

August 14, 1998

Another six weeks has passed, so it's time for automotive update Number 14. Things happen fast in the car world and most of the action lately seems to be happening across the Atlantic. The German automakers are involved in their own Battle of the Bulge and in this case, the Bulge is their bulging bank accounts. BMW, Volkswagen and Mercedes-Benz are buying up strong as well as weak auto makers around the world and things happen over there so fast that you must keep a score card to stay on top of who does what and to whom. These are the latest developments in the Teutonic Car Wars:

ROLL-ROYCE/BENTLEY TO SPLIT - In 1933, the financially troubled British Bentley Motors was acquired by the more solvent Rolls-Royce company and the famous Le Mans winner of the '20s became an only slightly-less expensive version of whatever Rolls was producing at the time. Now the British twins will be split in 2002 after a union that will have lasted almost 70 years. Each will hitch up with a new "mate" and in both cases, the other party will be German. You've no doubt been following the bidding battle for ownership of Rolls between Volkswagen and BMW. VW won the knockdown-dragout competition by bidding $785 million for Rolls lock-stock-and-barrel and that included Bentley. But BMW is currently supplying V8 engines to Rolls and stated in no uncertain terms that if any company other than itself won the bidding war, the supply of engines would stop immediately. Rather than face the prospect of having to hustle up an engine for the current Rolls model, VW assigned the name over to BMW for $66 million and will continue to make the R-R Silver Seraph and its companion, the Bentley Arnage, for BMW for a period of four years. After 2002, VW will supply incomplete bodies to a yet-to-be-built Rolls/BMW factory in England. After that, VW is on its own to produce and market an all-new ultra-luxury car as well as carry on the Bentley name.

ROLLS-ROYCE BOSS TAKES A WALK - More than a bit miffed over the fact that the above-mentioned splitting of the spoils took place without his knowledge much less his consent, Rolls-Royce head man Graham Morris tossed his keys to the executive bathroom on the desk of VW boss Ferdinand Piech and hit the bricks. Seems Morris had been assuring his "lads" on the R-R line that production of the Rolls would stay where it is but was later told that it would go with BMW to some other unnamed British city. Rather that have to go back on his word, Morris struck his colors and is moving on. How very British! Piech's rational for the Rolls/Bentley split was that he wasn't interested in getting VW involved in a protracted legal battle with BMW over who said what to whom about the R-R name and would spend the $66 million he gets from BMW to develop new products. At one time it was hinted that the Horch name would be resurrected to become another super-luxo, but that idea was dropped. What a relief. That way, Morris wouldn't have had to face the ignominy of having to produce a German-brand carriage-trade car where the once-mighty Rolls-Royce was King.

RETURN OF THE RILEY - The amount of money the German companies are willing to toss around on British brands is amazing to me. Besides its recent feeding frenzy over the acquisition of Rolls-Royce, BMW has, in recent memory, bought the Rover Group which includes Land Rover and the soon-to-be-resurrect Mini (as in the Mini Cooper of the early '60s). British car buffs will recall that the British amalgamations of the past four decades resulted in the Rover Group having ownership of the MG, Morris, Wolseley, Triumph, Austin and Riley nameplates. Reports that we've gotten from our British associates relate that Bernard Pischetsrieder, current chairman of BMW and a longtime admirer of Anglo- automotive things historical, has given his Rover Group a year to put together a Riley that will rival Jaguar as a high-speed, high-class, British-built touring coupe. Having been a British car mechanic in the days when the Riley was imported to the U.S., I can only hope that the proposed new Riley/BMW is more performance-oriented than the overweight, underpowered sedans and convertibles that I worked on in the '50s. Why doesn't Pischetsrieder simply buy Jaguar or even the ultra-high performance British Aston-Martin? Too late. Ford already owns those two venerable British companies.

VOLVO STANDS FIRM - It was also with considerable interest that we observed that Volkswagen has recently been making buy-out overtures towards Volvo, that staid producer of near-bulletproof Swedish cars. VW has already invested heavily in the Czechoslovakian Skoda (there's one for you historians to look up) and is the current owner of the exotic Lamborghini, so buying Volvo would be another jewel in the VW crown. But Tuve Johannesson, president of Volvo has turned down the overtures of his German neighbor and says that Volvo is doing fine the way it is. That statement probably means that the two will merge in the next couple of years.

Come back in six more weeks and we'll review what has happened during that time. Who knows, in the crazy world of auto making, maybe Ford and General Motors will merge.

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