Rolls On an Expansion Roll

January 15, 2008

While it's been stormy weather for makers operating at the lower end of the markets, things are sunny for purveyors to the carriage trade. Rolls-Royce Motor Cars is coming off its fourth year of sales increases since the introduction of its Phantom model in 2003, which marked the debut of the new Rolls of the BMW takeover era. Rolls-Royce saw sales in 2007 increase by 25 percent, compared to 2006, with 1010 cars delivered in 50 countries – the first time annual sales have been in triple digits. This mirrors increases at Volkswagen’s Bentley brand, selling more than 10,000 cars also showing a 7 percent increase.

Virtually the entire Rolls sales rise is from the Drophead -- convertible in ‘merican -- introduced last year. Even in this rarefied ultra-luxury world the adage that new product sells holds true. Moreover, the U.S. remains the largest market in the world for super-luxury convertibles. North America continues to be Rolls-Royce's largest market. China now ranks third. The Beverly Hills dealership is the company's most successful followed by London and Abu Dhabi.

Ian Robertson, Chairman and Chief Executive, Rolls-Royce Motor Cars, appearing at the 2008 Detroit auto show, expects the good times to keep rolling. The Drophead coupe’ is now sold out until the summer of 2009. Robertson also says that development of a new a new sport version of the Phantom line first shown as a concept in at Geneva 2006 is proceeding apace. The four-seat coupe, code named 101EX, is scheduled for production this summer in Goodwood, England. The Coupé joins the other three Rolls models--Phantom, Phantom Extended Wheelbase and Phantom Drophead Coupé.

While not an outright performance car, Chief Designer, Ian Cameron says that the firm wants to offer the world’s “foremost transcontinental tourer.” Combining “refined drive combined with a bit of fizz.” Translation: higher damping and spring rates, perhaps a more aggressive shifting schedule of the six-speed transmission, and a somewhat smaller and lighter – only in the relative sense – motorcar.

There certainly is enough engine to do this. The Phantom Coupé coupe will use the same 6.75-liter V-12 with 453 horsepower and 531 pound-feet of torque. The Phantom Coupé will be priced between the Phantom and Phantom Drophead Coupé, somewhere in the $375,000 range before the “coach-worked” buyer changes common in this league. The ongoing weakness of the U.S. dollar is squeezing European manufacturers, with makers so far choosing to cut margins rather than pass along the actual exchange rate increase in the sizeable U.S. market.

Robertson also says that the design work is now completed for the R-R4, a completely new small car for Rolls, that we speculate will likely share the architecture of the next generation BMW 7-Series. A new engine will power RR4. In addition, the Goodwood plant is being expanded with a second production line to build it starting vary late in 2009. Robertson declined to provide further details. The success of VW owned Bentley’s Continental GT no doubt has influenced the program, though Bentley through its racing heritage and current design is clearly the more performance-oriented brand.

Not all is fair weather, though. Storm clouds are on the horizon. Overall U.S. vehicle sales in 2007 were the worst in a decade. The consensus is 2008 sales will drop further. Cities world round are starting to restrict motor vehicle traffic. The European Union and some 16 U.S. states are battling with makers over fuel economy and carbon dioxide emissions. Economy and greenhouse gas emissions are directly related to the weight of the vehicle and the size and output of the engine needed to accelerate it. With Phantom weights in the 6000-pound range, fuel economy is -- not surprisingly -- poor and guzzler fines large.

Neither physics nor money is an ultra-luxury issue. Social stigma and regulations are. While the volumes of super luxury cars are relative small, their symbolic value is relatively high. If specific grams per-mile emission limits apply to these behemoths, they will go the way of the dinosaurs, although dinosaurs lacked the lawyers and lobbying talent that are now being deployed against the regulators. The R-R4 is coming no a moment too soon. -- Ken Zino

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