BMW Buys Rolls-Royce Brand Name

Rolls-Royce, the grandest name of British motoring, was shaken up Tuesday in a deal that will see two different German automakers producing Rolls-Royce and Bentley models in the next decade.

Rolls-Royce PLC said it would sell the Rolls-Royce auto brand name for $66 million to BMW, which plans to create a new Rolls-Royce company.

Meanwhile, Volkswagen AG will keep the old Rolls-Royce factory it just bought and continue producing the Bentley line of luxury cars.

Rolls-Royce Motor Cars Ltd. had made both Rolls-Royces and Bentleys.

VW paid $790 million for that company early this month, but it remained unclear why Europe's biggest automaker didn't even try to buy the Rolls-Royce brand name and logo from the British owners.

Those were held by Rolls-Royce PLC, the jet engine maker, which had hoped the luxury carmaker would be sold to Germany's BMW.

BMW said VW can use the Rolls-Royce name for free until Dec. 31, 2002, but after that BMW will take the name away and create a new Rolls-Royce Motor Cars Ltd.

The VW chairman, Ferdinand Piech, disputed suggestions that the deal was a defeat, insisting at a news conference that VW paid a fair price for what it got. Piech said Tuesday's accord was a better solution than a drawn-out legal fight over the name.

"I would have preferred to keep both brands, but the way how it developed today I am very satisfied," Piech said.

Analysts said that if VW had tried to get the brand name, it would have faced a tough battle against Rolls-Royce PLC and BMW that probably would have been more trouble than it was worth.

The uncertainty over what would happen at Rolls-Royce has pushed new orders of Rolls-Royce and Bentley cars down by about 30 percent over the past six weeks, but Rolls-Royce Motor Cars chairman Graham Morris predicted they could rebound now that the rival German carmakers have made their peace.

VW will keep the Rolls-Royce factory in Crewe, England, but the company's name will be changed in 2003 to Bentley Motor Cars Ltd. and VW will produce Bentleys, the other line of luxury cars now made by Rolls-Royce that accounts for about 70 percent of the cars sold by the company.

It remains unclear how much BMW will spend to set up a new Rolls-Royce company or precisely where it will be located.

BMW chairman Bernd Pischetsrieder would say only that Rolls-Royces would be made in England, but probably not in any of the manufacturing plants it now owns through its Rover subsidiary.

Rolls-Royce Motor Cars was put up for sale last autumn by the British conglomerate Vickers PLC, which wanted out of the automotive business to focus on other operations including defense contracting.

As part of Tuesday's deal, BMW withdrew its earlier threat to cut off engines it supplies to Rolls-Royce Motor Cars.

Written By Dirk Beveridge