The Life of Luxury

Rolls Royce Motor Cars chairman Ian Robertson has only been at the helm for four months, but is already making a dramatic impact on the luxury car maker. As he tells Anil Bhoyrul, the company is about to embark on a brand new road.

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By  Anil Bhoyrul Published  May 29, 2005

THE LIFE OF LUXURY|~|BIG-PLANS-200.jpg|~|BIG PLANS: Rolls Royce chairman Ian Robertson is planning to introduce a cheaper model of the famous luxury car.|~|Ian Robertson is passionate about cars. He drives a Rolls Royce, a convertible six series BMW and even has a 1200cc motorbike for cruising along the highway during sunny afternoons. “It depends on my mood which one I drive,” he says. Right now, Robertson is in a very good mood. The chairman and chief executive of Rolls Royce Motor Cars is only four months into the top job, but appears to be having the time of his life. Sales of the Phantom — the only model which the company produces — are close to 1000 a year. Not bad considering these cars cost over US$350,000 each. His paymasters at BMW, which own the Rolls Royce brand, have given Robertson the go-ahead to venture into new markets, which is likely to result in the birth of a “baby Rolls Royce” within a couple of years. While the rest of the world’s car makers jostle for market share and profit, Robertson’s Rolls Royce appears to be winning the race for the super luxury car market with ease. “I like what I’m doing, of course a do. I like the idea of being the main man. There’s always an element of appeal to that. Power is important. I have a view as to where this business is going, and it is on a very sound footing. When we look back in a few years time we will see how close or not that view has turned out to be.” The next few years are likely to see a significant shift in the company’s direction. The company’s history of high culture and high priced cars goes back 100 years. The aircraft engine maker Rolls Royce Plc sold its car-making operation to Vickers in 1980, and the company was then sold to Volkswagen AG in 1998 — although Rolls Royce Plc still retained the rights to the name. Then, two years ago BMW swooped and snapped up the brand and its manufacturing operation for just US$40 million, putting it in direct competition with Volkswagen’s Bentley models. And the competition has been intense: Whilst the Phantom’s sales are still hovering below the predicted 1000 a year, Bentley’s Continental GT — priced at US$165,000 — sold 6896 units last year. Admittedly that’s the lower end of the “luxury” market, but it’s a segment that is being joined by Aston Martin, Porsche and the BMW 7 series. And Robertson is set to develop a smaller, less expensive version of his own cars to compete against the likes of Bentley and Aston Martin. Robertson explains: “We are populating the market with super luxury products. Taking the next step is what we are in the process of developing. If you look back over 100 years of history, Rolls Royce has made everything. They’ve made roadsters, they’ve made six-seat limousines. In our reception at Goodwood (in the UK) we’ve got a car that was made for an Indian Maharajah that was built as a Tiger hunting off-road Rolls Royce. So there is plenty to look at. What that means is that over the next 12 months or so we will decide where we want to take the brand and the family of products will expand. The commitment of my board and the BMW board is that we will continue to invest and we will continue to grow the family of products in the future. There will be other versions. What we are doing at the moment is unchartered territory.” He adds: “No-one has sold cars worth US$350,000 in these sort of numbers. Ever. The car that is coming along next is US$400,000. The convertible will be in those sort of numbers as well. There is a likelihood that we will find another segment, at a lower end.” Robertson admits that with annual sales as they are, the company’s manufacturing plant at Goodwood in England is under-utilised, and he is examining ways to make it produce a cheaper version of the Phantom. This will take considerable investment from owners BMW, but right now, it is likely that Robertson will get his way. The Munich-based car giant reported an 11% rise in profits last year to hit a record US$4.56 billion. This year first quarter sales rose 7.8% to 239,387 vehicles, beating the 226,400 units sold by Mercedes. Overall, BMW’s global sales — including the Rolls Royce and Mini brands, went up 8.2% in the first quarter of this year, with profits of US$668 million. “I speak to our people in Munich all the time. I am there a lot in person. And they are committed to Rolls Royce, and they are behind the strategy 100%. What we are doing is building on the launch of the Phantom, which has positioned the brand back where it rightly belongs. There is no doubt about that. And everyone, from motoring journalists to consumers, are very, very happy about this car,” says Robertson. One of the big questions for Rolls Royce is that if it chooses to enter the lower end of the super-luxury market, there is a danger it might damage its own brand. As Robertson says: “It is a very interesting point as to how low our prices can go. It’s something we have to be conscious of. There is an expectation that when you are delivering a product in this segment it has to live up to people’s aspirations. But at the same time I think we are in a market place that has to understand value as well.” In the short term, the game plan is to bring out to more versions of the Phantom, which first came on stream in January 2003: a long wheel base version, which is already in limited production, and a convertible, due out in 2007. Robertson says: “The long wheel base version was really a Middle East requirement. In the US and UK, these cars tend to have owner-drivers. Here in the Middle East the owners prefer to sit in the back because they let their chauffeurs drive them. So we brought the long wheel base out for that purpose.” Indeed it’s the Middle East where the company is looking for growth. The region accounts for around 15% of global Rolls Royce sales (compared to 50% in the US), but that figure is likely to rise. Robertson says: “I think this region has a very strong history with the Rolls Royce brand, and there are some exceptional motor cars. As a result we take this region very seriously in our strategic thinking. Maybe Dubai and the rest of the UAE is slightly different to the rest of the Middle East. Because of the huge economic growth and the rise in the stock market we are getting a lot of entrepreneurs buying the product here. We’re also getting a lot of expats buying the product here, which is maybe not the case in other parts of the Middle East.” Another area of growth could be the introduction of hydrogen-powered cars, something Robertson says is not out of the question for Rolls Royce. BMW has been at the forefront of this technology, and it may spread one day to the luxury sector. “For Rolls Royce if you look at the history it has not only has a record of engineering excellence, but in pushing the envelope. Alternative fuels could be an interesting development there,” says Robertson. Whatever changes the company makes, it is likely that Robertson will be at the helm to oversee them for some time to come. A self-confessed car enthusiast, he joined the British car maker Rover in 1979 to work in the company’s purchasing department, working his way up to become managing director of Land Rover Vehicles by 1994. Five years later, he took over BMW’s operations in South Africa, and made a dramatic impression: in the space of six and a half years, he quadrupled the size of the business, and took the company from a South Africa-oriented operation to one that became 85% export-oriented. And then in February this year came the call from BMW, to take over Rolls Royce. He says: “I had been in South Africa for six and a half years and the time was right for moving on. When the chairman said to me I’d like you to take over at Rolls Royce, it wasn’t a difficult decision. You see, I’m absolutely a car man. I have been in the industry for 26 years. I am very passionate about cars. I suppose you could say it’s my dream job.” At this rate, Robertson will continue to live the dream for some years to come. ||**||

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