Keep on rolling

The luxury carmaker launches a (slightly) cheaper model


DEEP in the West Sussex countryside, a stone’s throw from the horseracing at “Glorious” Goodwood, the elegant home of Rolls-Royce Motor Cars, designed by Nicholas Grimshaw, seems a long way from the gut-wrenching turmoil in Detroit. But even Rolls-Royce and its wealthy customers—who in normal times wait up to six months for one of its handmade vehicles—are not immune to the financial crisis.

Last year was a record for Rolls-Royce since its reincarnation seven years ago under the wing of Germany’s BMW. Despite the recession, it managed to sell 1,212 cars. Tom Purves, its chief executive (pictured), says he still hopes to match that this year, but admits it is unlikely. Rolls-Royces are built entirely to order and production of the Phantom and its drophead and coupé derivatives has just resumed at a rate of 25 a week after a five-week halt. Another pause is due in June, which Mr Purves hopes will be the last this year, other than the usual shutdown in August.

In these hair-shirt times, selling the ultimate statement of automotive luxury is tricky. Rolls-Royce’s customers can still afford the £300,000 ($450,000) asking price. The problem, as Mr Purves acknowledges, is that for some buyers, the “atmospherics” of splashing out on such a conspicuous symbol of wealth do not feel quite right. The firm has data going back to 1904 that suggest there is no link between Rolls-Royce sales and either stockmarkets or GDP, but there is with property prices. In 2007 Beverly Hills was Rolls’s best market, beating London, Dubai and Riyadh. But last year Beverly Hills was relegated to fourth place behind Beijing, with oil-rich Abu Dhabi claiming top spot. Mr Purves says that America accounts for about 40% of Rolls-Royce sales, and California was one of the first markets to soften.

Significantly, Mr Purves chose last month’s Shanghai motor show to reveal that the new “baby” Rolls (bigger than any BMW 7-Series or Mercedes S-Class) will be known as the Ghost, after a car first produced in 1906. Stronger growth in emerging markets and the Ghost’s arrival are likely to be the main fillip to sales next year.

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Now you’ve seen a GhostNot only is the new car in a different price category from the stately Phantom—it will go on sale for about £170,000—but it is also aimed at the keen owner-drivers to whom Bentley (owned by Volkswagen since 1998) has successfully appealed in recent years. That said, despite more than 20 years spent selling BMWs, Mr Purves is adamant that no Rolls-Royce should be overtly sporting. “The qualities we must deliver,” he says, “are silkiness and waftiness.”

If the Ghost is a success, production will ramp up quickly in the last quarter of the year. By the end of 2010, if the world economy is showing signs of recovery, cars could be leaving Goodwood at a rate of 3,000 a year, two-thirds of them Ghosts. Although Mr Purves will not reveal the financial targets set by BMW, Rolls-Royce should by then be at least self-funding.

Mr Purves is confident that Rolls-Royce can surmount the other obstacle in its path: public and regulatory disapproval of cars with hugely powerful engines. Unlike a Ferrari, for example, a Rolls-Royce is defined not by the sound its engine makes, but by silence and torque. Those, as it happens, are precisely the qualities of electric motors. A hybrid Rolls in the near future is a virtual certainty. Invoking the firm’s founder, Mr Purves smiles: “I’m sure that Henry [Royce] would not have minded.”

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