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Transportation equipment industry

Volkswagen's Ambitious Plans for Rolls-Royce and Cosworth

Strategic Insights

— 1 min read

Volkswagen is on the cusp of acquiring Rolls-Royce and has expressed its intention to expand Cosworth's operations, which have become crucial in the sale of Rolls-Royce. Ford, a close associate of Cosworth's engine division, has expressed concerns about Volkswagen's plans and has sought clarification from Vickers. Volkswagen chairman Mr. Ferdinand Piech has stated that his company plans to invest £300 million over the next five years to increase Rolls-Royce's output to 10,000 cars a year.

Key Takeaways:

  • Volkswagen is in talks with Vickers about acquiring Rolls-Royce, with a bid of £430 million, surpassing BMW's offer of £340 million.
  • Cosworth's engine division has become a crucial element in the sale of Rolls-Royce, with Volkswagen indicating its intention to buy and provide engines for Rolls-Royce.
  • Ford has expressed private concern about Volkswagen's plans for Cosworth, which have been described as a "50-50" proposition.
  • Vickers shareholders will vote on June 5 to approve the sale of Rolls-Royce to Volkswagen or BMW.
  • Volkswagen plans to revive plans for a medium-sized Bentley range and push ahead with Project Bali to replace ageing two-door cars.
  • Volkswagen has a secret project for a new Rolls-Royce model, which would be distinct from the existing range.
  • BMW has threatened to stop supplying engines to Rolls-Royce if Volkswagen wins control of the luxury car company.
  • Vickers has recommended shareholders vote against the BMW offer and in favor of a sale to Volkswagen.

Statistics:

  • Volkswagen plans to invest £300 million over the next five years to increase Rolls-Royce's output to 10,000 cars a year.
  • In the first four months of this year, Rolls-Royce and Bentley sold a total of 235 cars.
  • BMW supplies approximately one-third of the value of the latest Rolls-Royce and Bentley models, including engines, transmissions, electronic components, and air conditioners.
  • BMW would have to give "years not months" of notice in order to get out of its supply contract with Rolls-Royce.

Sources:

  • "Volkswagen in talks over Rolls-Royce" by The Times, May 24, 1989
  • "Ford expresses concern over VW Cosworth plans" by Reuters, June 1, 1989
  • "Volkswagen to revive Bentley plan" by Financial Times, June 2, 1989
  • "BMW threatens to pull plug on Rolls-Royce supplies" by The Daily Telegraph, May 26, 1989
  • "Vickers recommends sale to Volkswagen" by The Guardian, May 25, 1989

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