Detroit Auto Show: New Rolls Royce

DETROIT, Jan 6, 2003; Madeline Chambers wrting for Reuters reported that with the mighty Rolls Royce, German automaker BMW has successfully reinvented its second British brand in less than two years, even as investors are left wondering why it bothered.

The bulky new Phantom Rolls Royce, the world's most ostentatious limousine, won plaudits from bystanders when it was unveiled outside its British home this week in Detroit.

Viewers praised the way the 320,000 euros worth of metal combined Rolls Royce's traditional splendor with bold modern lines.

And the attention to detail is breathtaking. Even the umbrella holders, fitted neatly into the rear doors have a coating to protect a wet umbrella from rotting.

BMW took control of the Rolls Royce brand from German mass car maker Volkswagen at the start of this year. The Munich-based group created a new team which had just over four years to come up with the 19-foot motor car.

"Seven years worth of blood and sweat went into this in just four years," said BMW head of design Chris Bangle. Normally a manufacturer might hope for longer to get a completely new vehicle, especially one of the Rolls Royce complexity, onto the road.

Once again the Germans seem to have beat the British at their own game. The Phantom comes only about 18 months after the Bavarian group launched its version of that other well-known British brand, the new Mini small car, which has proved to be a hit and boosted the group's overall unit sales.

Equipped as it is with a 6.75 liter V-12 Bavarian-built engine, the Phantom may not look like a BMW from the outside but under the hood, it is little else.

"The British content is high in value but the rest of the car is brought in from Germany," said Garel Rhys, a Motor Industry researcher at Cardiff University in the United Kingdom.

"It is a German interpretation of what a British car should be. Rolls Royce is quintessentially British -- it's a bit like Burberry," Rhys said, referring to the British luxury fashion label.

WORTH IT?

But with an annual sales volume target of just 1,000 motor cars, some shareholders may be asking what BMW will gain.

BMW declines to disclose how much it has spent on research and development for the limousine, but it paid about 100 million pounds for the brand name and for a new plant built in the rolling southern English countryside.

"From an investors point of view you do have to ask whether it is worth it," said one London-based analyst.

Sceptics would argue that vanity was the main reason behind the investment, especially given the messy nature of the spat with VW which thought it had bought the rights to the name when it had not.

"I think this would make a wonderful case study of how corporations sometimes act like spoiled children," said Rhys.

BMW executives argue Rolls Royce helps the BMW to achieve its aim of being represented in as many luxury auto segments as possible.

"We want to be the king of the premium segment. And if you are king, you need a crown," said BMW board member Michael Ganal.

The group preferred to use the Mini, a luxury small car, and Rolls Royce brands for the top and bottom ends of the market rather than stretch the BMW brand and executives say the brands will remain distinct.

"There is a saying that equality can be defined as letting everyone be different rather than making them all be the same," said Bangle.

Executives also said they were not planning to do what VW is doing with Rolls Royce's former sister brand, Bentley, and making a smaller, more affordable version.

However, BMW Chief Executive insists the investment will pay off.

"With 1,000 cars the profit or earnings contribution will be lower than when you have a million BMWs," Panke told Reuters.

"But Rolls Royce has the same profitability targets as each of our other models," he added.

"Of course in this launch phase of positioning the brand and having the upfront investment in manufacturing (Rolls Royce) will not hit our general targets yet. But even in the the first generation we will not lose money with Rolls Royce," Panke said.