BMW to Make Engines for Rolls-Royces : Autos: The deal, a coup over BMW rival Mercedes-Benz, marks the end of an era for Rolls.
Germany’s BMW trumped its arch-rival Mercedes-Benz Monday by signing a deal with Rolls-Royce Motor Cars that will put BMW engines in the world’s most prestigious cars.
The coup over Mercedes marks the end of a high-profile year for BMW that began with its controversial acquisition of Britain’s last British-owned high-volume car manufacturer, Rover Cars, from British Aerospace.
The Rolls-BMW deal marks the end of an era for Rolls-Royce, whose cars convey the rich and the royal the world over. It has been making its own engines since 1904.
The link will save Vickers PLC, the engineering company that owns Rolls-Royce, the cost of developing new engines for badly needed revamps of the Rolls-Royce line.
The engines in current Rolls-Royce models have not been updated since the 1950s.
“We did of course fully exploit the competitive position (between the two German companies),” said Sir Colin Chandler, Vickers’ chief executive. “We took it to the wire.”
Chandler said Vickers could afford to design a new car, but that BMW’s expertise would help create a new engine that would be able to meet exacting new environmental standards, particularly in Rolls’ key U.S. market.
The Rover deal shocked Japanese car giant Honda, which had forged a 14-year relationship with Rover, lending its expertise and jointly developing two Rover lines. But it helped boost BMW’s position, because Rover supplies body panels to Rolls.
“The fact that we have worked together was a contributing factor,” Chandler told a news conference. BMW also supplies air bags and air-conditioning systems to Rolls-Royce.
The companies made it clear that the deal did not involve any immediate change in ownership of Rolls-Royce.
Chandler said an equity stake in Rolls-Royce was not currently an issue, but said he did not rule out anything in the long term.
The Rolls-BMW deal will also explore ways to develop the Concept Java car, a new high-performance Bentley coupe that has won praise from the automotive press.
BMW Chief Executive Bernd Pischetsrieder said that putting BMW engines in Rolls-Royces wouldn’t dilute its strong brand or detract from its hand-crafted image.
“It is Rolls-Royce’s and our opinion that another brand name must not appear in Rolls-Royce cars,” he said.
Rolls-Royce said the deal would eventually mean the end of engine-building at the company, but that the 350 to 400 workers specializing in that area would be retrained and redeployed in other parts of the company.
