The Phantom Rises


1 March 2007


Even with a strong brand, if the entire infrastructure behind it has gone it can be tough to relaunch a product. Rolls-Royce CEO Ian Robertson tells Nigel Ash what it takes to put a brand that is synonymous with luxury back on the road.


Ian Robertson, chairman and CEO of Rolls-Royce Motor Cars Ltd, knows that his firm is perhaps the most famous brand name in the world. Some 60% of the references sent to him by a clipping service have nothing to do with the car: the name is synonymous with top of the range.

Rolls-Royce may be a byword for luxurious living, but in 2003 the recently BMW-owned super luxury carmaker did not have a product, a factory, any craftsmen or a dealer network. And while the car is renowned for its smooth driving experience, the company was facing a rough ride ahead. The first CEO, Tony Gott, whom BMW recruited in 2002 from Volkswagen's newly acquired Rolls-Royce-Bentley team, resigned two years later, reportedly over differences with then BMW chief Helmut Panke.

Gott had, however, overseen the development of the new model and the factory to build it. He was briefly succeeded by Karl-Heinz Kalbfell, a BMW man who had looked after the company shortly after its acquisition.

Finally, Robertson was transferred from BMW's South African operation, arriving in February 2005, just after the new Phantom was launched.

Robertson oversaw a dramatic expansion of BMW's activities in South Africa after joining in 1999. During his tenure, the business effectively quadrupled in size, thanks largely to the successful growth in BMW's export programme. His achievements were recognised when the automobile industry in South Africa named him Industry Man of the Year 2004.

Today, as Robertson looks out over the rolling acres of the Goodwood Estate in Hampshire, where Rolls-Royce now has its £65m state-of-the-art new works, he can say that he has successfully brought Rolls-Royce back to life.

REBUILDING A BRAND

"Rolls-Royce's Silver Ghost is a car of legendary smoothness and unprecedented reliability."

However, Rolls-Royce has broken all the rules to get to where it is now. "If you read the Harvard Business Review," says Robertson, "they say that if you are going to launch a brand new company, don't have a new product at the same time. They also advise that if you are going to recruit a new workforce, don't open a new factory at the same time. But we have initiated all of them and it has worked."

In 2003, while a factory was being constructed, designers and engineers worked on a new Phantom. At the same time, the company was desperately recruiting a workforce, and today many of its craftsmen come from the yacht-building industry along the UK's south coast. In all, £100m was invested in restarting the business from scratch.

To make it work, Robertson has had to be very tough on expenses. Despite the moneyed ambience of the product, Rolls-Royce has been strict on its own costs. Robertson says that last year the energy bill was cut by 20%, coming on top of a 15% reduction in 2005.

This has been possible partly because he is capable of delegation: "I am a great believer in relying on the people who actually do the job every day rather than those who sit in the office planning things."

Besides the environmental and bottom-line impact, Robertson says the campaign engaged the whole workforce in how they could contribute to the success of the business.

"Cost is an important element that we are trying to drive through our business every day."

He explains: "It meant everything from turning a light off when it is not needed to replanning the use of the paint shop so we didn't have to have the ovens on too early in the morning."

Rather than the standard 60-second car production cycle, Rolls workers have a two-hour cycle, meaning that an individual will fit a package of components, such as fuel tank, electrical systems and rear seats, before coming back to the same job on another vehicle.

This, says Robertson, demands higher levels of skill and craftsmanship. In a volume car producer, 25 different workers might do such jobs.

Current improvements include the reduction of walking time to stillage to fetch components by moving the storage nearer to the line. Robertson remarks: "Our clients don't want to pay for people walking about."

The new Phantom has a unique aluminium space frame and air suspension, and all the components are made at the Goodwood factory.

Last year's price hikes in aluminium, from which much of the car is made, were, explains Robertson, largely absorbed by better pressing techniques and a reduction in the metal's use. He says: "Cost is an important element that we try to drive through our business every single day. We are a business and we are here to make a profit."

Variations of the single-model Phantom have since been released. A model with an extended wheelbase was introduced in 2005, and in January 2007 a convertible, the Drophead Coupé, was launched at the Detroit Motor Show.

"We are trying to attract a unique and relatively small group of people."

In the pipeline is a smaller Rolls, likely to be in production by 2010. Robertson points out that within five years engine options may well have changed. BMW has just launched a hydrogen engine, which he claims has none of the limitations of hybrids and electrical cars.

APPEALING TO A SELECT MARKET

The new Rolls may be top of the range, but this is a sector with a discrete market to aim for. According to a Capgemini study, there are around 85,000 people worldwide with a disposable income of more than $20m. In the late 1990s the super luxury car market had around 5,000 sales. This grew rapidly to 20,000 in 2003 and 25,000 in 2006.

One marketing tactic employed by BMW has been the revival of the Rolls tradition of experimental EX models. The brand's centenary EX100 in 2005 was unveiled at the Geneva Motor Show. It was, in essence, the longer wheelbase vehicle now in production. The EX101 in turn was the precursor of the convertible. The EX102 is likely to be the smaller Rolls.

"I am a great believer in relying on the people who actually do the job every day, rather than those who sit in an office planning."

Robertson points out: "Most concept cars are, in the main, clay models with no engines and therefore could not possibly go outside a showroom." In the restarted EX programme, Rolls-Royce is producing a one-off, which has to be an extremely powerful marketing tool.

He explains: "We are trying to attract a unique and relatively small group of people. They do not tend to be attracted by traditional marketing techniques – 'come and have a nice glass of champagne with us' – why would they? They can do or buy whatever they want.

"But we have found it is very effective to say: 'would you like to come and see a one-off experimental car and give us your opinions?' They come forward very quickly. Firstly, because they cannot see it readily – it is not available to the general public – and secondly, because they do like to express their opinions and we value this. So the programme gives us a great marketing opportunity to talk to our customer base, which is extremely difficult under normal circumstances."

However, advertising your exclusivity can lead to heightened enthusiasm, as was witnessed by the advance orders for the Drophead Coupé. Robertson says: "Before the launch this January, we were sitting on several hundred orders and that was without us announcing a price or a delivery date. Most people will say to us that they have to be one of the first to own a new model. One of my biggest challenges this year is to optimise production to meet this demand because not everyone can be first."

"Although the name attracts potential customers, it is the design and engineering that wins them over."

Another important marketing tool, says Robertson, is existing customers: "In London, for instance, we have sold 40 cars within a 2km radius of Berkeley Square. Many of those customers know each other; they live in the same street and go to the same dinner parties.

"In addition, our dealership owner in that area mixes with them regularly, so you are talking about very strong ambassadorial marketing."

Although the name is enough to attract potential customers, it is the design and engineering that will ultimately win them over, and in the new Rolls-Royce, led by Robertson, both the technical and marketing are well covered.

The new Phantom design was revealed in 2003.
The Phantom Drophead Coupé was launched in January, the latest Phantom to come off the Rolls-Royce production line at Goodwood.
In 1919, after the First World War, Rolls-Royce launched the Phantom I and II.
During the Second World War, Rolls-Royce built aero-engines for the Air Ministry.
The iconic Spirit of Ecstasy will be cast in solid silver for this centenary Phantom.
The name Rolls-Royce is synonymous with top quality, and the new fleet driving out of the Goodwood Estate is no exception.