Making Rolls-Royce Relevant Again

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SANTA BARBARA, Calif. — On a recent drive through the canyons and back roads near Santa Barbara in a 2004 Rolls Royce Phantom, Rolls worldwide sales and marketing chief Howard Mosher calmly and in a state of total sobriety compared the first Rolls-Royce developed by owner BMW to the...Ford Taurus.

It's Mosher's notion that the Phantom may be viewed by and Consumer Reports as a “Best Buy” because if he and his mates do their job correctly and with Bavarian British aplomb, the Phantom will be cheaper to drive than the Dearborn Doggy cum Hertz rental Taurus. It’s all about residuals. If the Phantom holds its value after three years, as is the hope, owners will drive for free when a bumper-to-bumper warranty and free maintenance is factored in. A Taurus during the same time period will drop by more than 50 percent in value.

Mosher knows of what he speaks. Rolls Royce Silver Seraphs, Silver Spurs and Cornices have been dropping by 50 percent in value in 36 months. That kind of depreciation makes a 401k full of Lucent, XM radio and Bingo Bob’s hydrogen fuel cell shares look like a reasonable gamble. “We have the product now. This is the best, most sophisticated and hopefully the most reliable Rolls-Royce since the 1930s,” says Mosher. “If we hold the line on supply, and not exceed demand, we should be able to return Rolls-Royce to the status of investment, not just image,” says Mosher.

More demand, less supply

Rolls is planning on selling 1000 a year starting next year, and every year for the next ten years after that give or take a dozen. If demand slips, either because of soft economy, war or because people opt for a Bentley or Maybach, then "I think we have the resolve to limit the supply," says Mosher.

That wasn't the case in 1989, for example, when Rolls sold over 1,000 vehicles in North America alone, as the factory cut prices to dealers and the dealers discounted even more on their own — all while the U.S. was gearing up for war with Iraq under the first President bush and the economy was still in the dumper two years after the 1987 stock market crash. Sound familiar?

What Rolls-Royce has going for it these days is a good crew, not be confused with Crewe, a healthy parent company in BMW and financial discipline to get profitable while the Monarchy is still in Buckingham palace. Rolls-Royce, for example, has five U.S. employees, counting president Jim Selwa and communications director Bob Austin. And BMW keeps even that lean group on a short leash. “Now you won't make excuses about not hitting your numbers because of a soft economy or a war, will you?” BMW chairman Helmut Panke recently “asked” Selwa.

Selwa and Mosher are recent refugees of Ford’s Premium Auto Group, specifically the Land Rover unit. Mosher ran Rolls-Royce in the late 1980s under British owner Vickers plc, and he ran Land Rover’s North American business for the last several years. It was at Land Rover that the two got a dose of working with BMW via the backdoor with the BMW-designed Range Rover and former BMW product boss and PAG chief Wolfgang Reitzle. The chief engineer on the Rolls, Tim Leverton, a Brit, was the engineer seeing the Range Rover to market at BMW before the whole business was sold to Ford. He is also the son of a former Rolls-Royce engineer who grew up around the marque and had Rolls-Royces in his driveway growing up.

Get serious, thanks very much

Rolls CEO Tony Gott, who was the only executive BMW plucked from Crewe last year when it was clear that Crewe and Bentley owner Volkswagen wanted their own man in Britain, says the task at hand is to “get Rolls-Royce taken seriously again.” Neglect by Vickers for the decade it owned Rolls before selling the brand to BMW, the last four years under VW’s care and the fifteen years of financial chaos before Vickers bought it “is something well short of Rolls-Royce’s finest era,” admits Gott. “We had nothing to work with. Very little in resources.” Under Vickers’ watch, the company shifted strategy in 1989 to build up Bentley, effectively turning the company upside down from a Rolls-dominated company to one dominated by Bentley vehicles.

During the last decade, says Gott, compromises were made to Rolls’s suspension, quality, and craftsmanship. “And the cars got smaller, especially inside, because of proportional needs of the Bentleys.” To come up with a Rolls-Royce under BMW that would garner credibility, designers in 1999 leased an old bank building on Basewater Rd. north of Hyde Park. There, the designers, often seen out on the sidewalk sipping espresso with pads and pencils in hand, observed many a Rolls-Royce and the people who owned them.

Among the misconceptions, says Leverton, is that most Rolls owners don’t drive their own cars. The vast majority do, and they enjoy driving. “But the people you see photographed in Rolls-Royces are usually chauffered, so that’s where the image comes from.”

Besides maintaining healthy residuals on the Phantom, Rolls spent about $80 million Euros building the Rolls-Royce plant at Goodwood, the estate of the Duke of Richmond, in Chichester, England. Eighty percent of Rolls buyers will go to Goodwood to customize their Phantom and then drive their car before having it shipped to their own estate. The facility is state of the art with much of it underground to preserve the views that local townspeople were concerned about losing.

It’s worth noting that when Volkswagen bought Bentley and Cosworth from Vickers, it also bought the Crewe factory, such as it was, and the workforce. And a gentleman's agreement prevented people poaching. There is no automobile trade in Southern England. But there is a world-class premium yacht building trade. Rolls plucked dozens of craftspeople from the boat trade to build the coaches around the Bavarian hardware. It may account for the closure on the glove compartments shutting more like sailboat cabinets than those found in a Lexus. Drivers of the new Phantom may find themselves with an irresistible urge to substitute pretzels for chips with their fish. And no jokes about boat builders working on a 19-plus-foot BMW barge.

Impressionism at $325,000

The Rolls Royce Phantom may look like the locomotive driving the Twentieth Century Limited, but it drives much smaller. And with 75 percent of the power available at 1000 rpm, it has plenty of giddyup and makes 100 miles per hour on the 405 in California feel more like 55 mph. Craftsmanship throughout is superb with only a few niggles that could be ironed out during customization. The Teflon-coated umbrellas that store in each of the rear doors are just the sort of elegant touch a $325,000 car should have. Okay, that’s a lot of money, but the umbrellas are sweet.

The “weenie” auto transmission stalk lifted from the BMW 7 Series is not my favorite touch on either car. But I wouldn’t call it a deal breaker. Even the “command center” adapted from BMW’s iDrive system didn’t push me over the edge, as the driver can control everything but the navigation system without it.

Rolls-Royce is clearly banking on the talents of good British yacht builders and even better German engine builders to justify the three-and-a-half large price tag. With a war on, and everybody but Daewoo seemingly getting into the super-premium segment, only time will tell if Rolls-Royce can be the Rolls-Royce of cars again. Don’t look for any advertising for the Phantom with our without zero-percent financing. Gott, Mosher, Leverton and their mates have already done nearly 200 “closed-door” sessions with buyers and serious prospects. Those will go on for some time. And even product placements may not happen any time soon. Mosher says if Mike Myers calls about using the Phantom in his next Austin Powers film, he’ll say, “Sorreee baby. No can do.” And even Grey Poupon commercials are not on his early to-do list. “Maybe down the line, but I’m not sure about that,” says Mosher. If Grey Poupon does shoot a commercial with the new Rolls, though, make sure to tell the ad agency that it goes great on a Bavarian pretzel.

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