BMW and Volkswagen Deal to Impact Rolls-Royce and Bentley Brands

Strategic Insights -

The deal between BMW and Volkswagen may lead to cheaper Rolls-Royces and Bentleys, as well as lucrative merchandising opportunities, according to industry observers. Professor Garel Rhys, director of the centre for automotive industry research at Cardiff University, predicted that BMW would develop "budget" Rolls-Royces and Bentleys selling for around $120,000 and $90,000, respectively. Meanwhile, Volkswagen is expected to produce Bentley models exclusively from 2003, and BMW will continue to supply Volkswagen with V8 engines.

Key Takeaways:

  • BMW will have complete control over the Rolls-Royce brand name, allowing it to produce a range of new models, including watches, T-shirts, and others.
  • Rolls-Royce has always been a better brand name than product, and BMW is expected to make more of it.
  • Volkswagen will reduce the size of the traditional Bentley and market it as a luxury sports car for around $90,000.
  • BMW will increase production and reduce the price of Rolls-Royces to around $110,000 while maintaining their opulent image.
  • There is a risk that BMW's plans to bring Rolls-Royce down market might alienate traditional and potential customers.
  • Bentley may become a stronger brand name in the future due to changing consumer values.
  • The Rolls-Royce is perceived as an ostentatious brand that does not fit with current values.

Statistics:

  • The deal between BMW and Volkswagen was valued at $40 million.
  • Rolls-Royce and Bentley are expected to be sold for around $120,000 and $90,000, respectively.
  • Volkswagen's top-of-the-range Audi model currently retails for around $60,000.
  • 70 years of partnership between Rolls-Royce and Bentley came to an end under yesterday's agreement.
  • Amount of V8 engines supplied by BMW to Volkswagen was not specified.

Sources:

  • Professor Garel Rhys, director of the centre for automotive industry research at Cardiff University
  • Keith Kirby, of Wolff Olins, a brand and image consultancy
  • Dave Allen, chief executive of Enterprise IG, a brand and identity consultancy
  • Peter Grunet, of Top Gear magazine
  • A spokesman for the Murray Motor Company, Scotland's sole supplier of Rolls-Royces and Bentleys