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BMW Bid for Rolls-Royce Car Line Beats Volkswagen's

Automobiles: The firm offers $570 million and vows to keep production of the luxury models in Britain.

March 31, 1998|T.R. REID | WASHINGTON POST

LONDON — The makers of Britain's most prestigious product, the Rolls-Royce, said Monday they will sell the luxury car line to a German competitor, BMW, which has promised a major increase in production of the $200,000 sedan.

BMW's offer of about $570 million for the auto maker beat out competing bids from Germany's Volkswagen and from two groups of British investors who had fought to keep Britain's best-known car in British hands. One of the British consortia said it would try to get stockholders to spurn the BMW sale, but industry analysts here predicted the deal would go through as announced.

There is a separate British company called Rolls-Royce that makes jet aircraft engines--once a corporate sibling of the auto maker but now independent. The jet engine company controls the rights to a priceless asset--the name "Rolls-Royce"--but has reportedly agreed to allow BMW to continue putting the label on cars.

Rolls-Royce Motor Cars, the maker of Rolls-Royce and Bentley, has been owned since 1980 by Vickers, the big British engineering and manufacturing firm. Although the unit has been profitable in most recent years, Vickers reportedly found the relatively tiny auto operation to be a distraction from its efforts to compete in the defense industry.

Since the self-taught engineer Henry Royce and super-salesman Charles Rolls turned out their first sedan in 1905, Rolls-Royce has always catered to the carriage trade, positively bragging that it sold the most expensive general-production car on Earth. The company maintains its own forest in Italy to produce the burled walnut for its hand-polished dashboards, and the rugs in each car are numbered so that identical wool can be used in case a passenger drops a cigarette or spills Dijon mustard.

The company's latest model, the Silver Seraph--with a V-12 engine built by BMW--is priced at $216,400 in the United States, for what a company spokeswoman called "the basic model without extras."

At that price, of course, Rolls-Royce never aimed at the mass market. The company reported worldwide sales last year of 1,918 cars--less than one one-thousandth of the annual output of General Motors, Ford, Toyota and other major car makers.

But BMW reportedly has ambitious plans to make Rolls-Royce a slightly more common sight on the streets of the world. In announcing the sale Monday, Vickers' Chairman Colin Chandler said the German auto maker intends to increase production, eventually reaching 6,000 cars a year.

Vickers said the German auto giant has promised to keep building Rolls-Royce and Bentley models at the existing factory in Crewe, near Liverpool, and to increase employment there well beyond the current 2,500.

With the exception of boutique makers turning out a few dozen cars per year, Rolls-Royce is the last of the famous British automobile firms still owned by the English. Vauxhall belongs to General Motors, Jaguar is a subsidiary of Ford and BMW bought Rover in 1994. The fastest growth in Britain's auto industry in recent years has been among Japanese makers who have set up plants here to reach the European market.

Yet, there was surprisingly little flag-waving or breast-beating in London when the sale was announced. Judging from the British media and Monday's debates in Parliament, there was much greater concern about new outbreaks of hooliganism among soccer fans than about the foreign sale of Britain's most famous car maker.

This was due in large part to assurances by Vickers that the Rolls and Bentley would still be produced in Britain. Beyond that, though, Britain is not in a breast-beating mood these days: It has the strongest economy, the strongest currency and the lowest unemployment rate in Europe.

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