Bottom-Up at Bentley, Versus Top-Down at Rolls-Royce

(MoneyWatch)  Up where the air is thin, archrivals Bentley and Rolls-Royce are fighting over the shrinking "ultraluxury" segment, and hoping for better times ahead.

Interestingly, in terms of new-model introductions they are working from opposite directions.

Bentley started its current product offensive in 2003, launching the all-new and relatively inexpensive Bentley Continental GT, and moving upscale from the bottom of the ultraluxury niche, which starts around $130,000.

Bentley's newest entry will be the Bentley Mulsanne, a flagship sedan expected to go on sale in the U.S. market about a year from now, with prices likely to start around $300,000.

In terms of sales volume, Bentley's bottom-up strategy has paid off, with sales growing from about 1,000 in 2003 to a record of about 10,000 worldwide in 2007.

But with the recession, Bentley sales fell with the rest of the market. In 2008, Bentley sold about 6,600 cars worldwide. In 2009, Bentley sales so far are down another 50 percent -- about the same as the entire ultraluxury niche, said Christophe Georges, president of the U.S. sales and marketing company, Bentley Motors Inc. "They (customers) have lost confidence in the market. They are not rewarding themselves with a nice discretionary purchase right now. They are nice products; they don't need to replace them right away. But they want to be back, and they want to purchase again," he said in a New York press event Oct. 21, to introduce the Mulsanne.

Georges said Bentley is hoping sales pick up by the end of 2009, as the company adds new variants of its existing models, and as consumer confidence hopefully improves.

Meanwhile Rolls-Royce took the opposite tack, starting with the top-of-the-line Rolls-Royce Phantom and adding derivatives of the Phantom, like a convertible and a coupe. Rolls-Royce plans to launch the less-expensive Rolls-Royce Ghost next year.

Rolls-Royce sales are also down this year, by about 44 percent through the end of September, to only 461 worldwide. Rolls-Royce hopes that having a more affordable car next year will help. In the ultraluxury niche, affordable is a relative term. The Rolls-Royce Ghost will be around $250,000 to $280,000, versus the Rolls-Royce Phantom, which ranges from $380,000 to $434,000.

At the same time, Bentley is moving upscale. The Bentley Mulsanne in effect replaces the Bentley Arnage, which is going out of production after the company sells out the Bentley Arnage Final Series, a limited edition with a sticker price around $270,000.

The Mulsanne will be more expensive than the Arnage, Georges said, but he wouldn't be more specific. He said Bentley expects to produce an average of only about 700 Mulsanne units per year.

Bentley and Rolls-Royce are now keen rivals, but they have a shared history. Both Bentley and Rolls-Royce used to belong to Vickers PLC. Bentley cars were in effect rebadged Rolls-Royces.

In 1998, Volkswagen bought the British factory in Crewe that built both brands. However, BMW spoiled the move by separately buying the rights to the Rolls-Royce automotive brand from yet another company, aircraft engine maker Rolls-Royce PLC.

For five years, BMW let VW use the Rolls-Royce name. The two brands split for good effective Jan. 1, 2003, and went their separate ways.