The Hindu Business Line : Rolls-Royce pinning hopes on RR-4 model

RR-4 is designed and engineered in a slightly different way. The price will be below Phantom and it will be more engaging for customers with more dynamic character. – Mr Graeme Grieve

Manu P. Toms

Mumbai, Sept. 16 The formal inauguration of the second dealership in India, the upcoming India launch of Phantom Coupe and preparations for the relatively less pricey brand new model scheduled to be launched in 2010; the super luxury carmaker Rolls-Royce is stepping up its India operations.

It is the growing number of high net-worth individuals in the country that makes India important for Rolls-Royce which sells cars priced around Rs 3.5 crore. Mr Graeme Grieve, Global Director of Sales and Marketing, Rolls-Royce Motor Cars, was in India last week to formally inaugurate the new dealership in Delhi had personally met some of the supremely rich potential buyers.

“Sixteen customers in three working days, is that a good average?” asks Mr Grieve. He spoke to Business Line on Rolls-Royce’s India experience, business growth and future initiatives. Excerpts:

After a gap of 50 years you re-entered the Indian market in 2005. How do you view the last three years?

These three years were a classic surprise for us. We knew that there was a good knowledge about the brand even though we were absent for 50 years. When we entered in, we wouldn’t have been successful. But our dealers in Mumbai have represented us very well. They are well-connected to the class of people who buy Rolls-Royce. With the rapid development of wealth within India we can probably expect better growth.

What is the demand growth that you are seeing in India?

India is one of the world’s fastest growing economies. Last year in India we saw a growth about 60 per cent. We will probably expect more growth this year. What we are seeing is a huge interest in our cars as the brand is quite well-known within India.

But the number of cars you sell in India is far less than what you sell in other emerging Asian markets like China…

In terms of absolute volumes of cars, yes India is nowhere near other markets such as China. We sell about 100 cars in China. In relative terms, when we speak about growth, India is one of the fastest growing markets.

Why do your sales in India lag behind China?

Principally, two factors. One is, there is a growth mixture in India of traditional wealth and new wealth. In other markets such as China, where we are successful, it is all new wealth. The car is appealing to certain customers, particularly, business people who have grown successful. All said the number of available customers in China is far larger than in India.

The second reason is we started there early. We started in China in 2003. Both markets are important for us for different reasons. Our expectation is that the Indian market will grow stronger as long as the economy continues to grow.

Do macro economic conditions affect your sales as you are targeting a niche segment?

It does generally. Our business is strongly linked to the global distribution of wealth. We look how many ultra high net worth individuals are in a country… and we take measures.

Now you have a second dealer in India. Do you plan to expand your dealership in the country?

Not an issue at all. We believe certainly for next two years Mumbai and Delhi is sufficient. As the market develops, we will monitor the growth rate carefully. We need to test the customer reaction. We have really good indication that the market would grow. Probably in next two years time we would start to think about where our next dealer would be.

What growth do you expect in the current year in terms of volume?

We sold 12 cars last year. We have already reached this number. A number of negotiations are going on. In India, I think with the effect of New Delhi, we would probably sell more than 18 cars. We started in 2005 with five cars. Not many businesses are projecting something like a 400 per cent growth.

What are your plans for the upcoming models?

Now we have a dealer in Delhi. That is important as we have another place to sell. The critical thing is we keep our customers happy. We are developing a good range. We said early that we will complete Phantom family with Phantom Phantom Coupe.

In 2010, we will launch a brand new car. That is internally called Rolls-Royce 4 (RR-4). It is not replacing Phantom. Phantom continues to be the most prestigious brand of Rolls Royce. RR-4 is designed and engineered in a slightly different way. It will be slightly smaller. The price will be below Phantom. And it will be more engaging for customers with more dynamic character.

Are you looking at greater volumes by pricing it lower than your existing models?

It is not just about increasing volume. It is not about price. It is more about giving a car with different character. With the Drophead Coupe we attracted young people worldwide. That is the purpose of the RR4, attracting new people, and potentially the younger ones. It will significantly improve our volumes. In the medium term, in five years, it will help us increase India’s share in our global volume from the present one per cent to three per cent.

What is the price difference between RR4 and Phantom?

In US dollar terms, it is probably $80,000 net less. Probably in real terms the price of RR4 would be $2,70,000-$2,80,000.

What are your initiatives to make your cars greener?

Globally it is a big issue. There is a lot of work in progress for us. We have a car that has aluminium chassis that is very lightweight. We were one of the first manufacturers to do direct injection at our engines. It is very low in terms of CO2 emissions. It is below 400 CO2 emissions (400 g/km). In most cars by our competitors they are 500 and more.

In relative terms we are positioned better. Clearly, it is a continuous work. A lot of work is going on in emission reduction technology and various other technologies and processes. We have certain interesting technologies under development.

Can you share more details?

I can’t share any more details. It is not hybrid. The BMW Group is considering the hydrogen combustion technology. But realistically the infrastructure is 15 years away. As a group, we would benefit from any development in due course. Keep an eye on next four months or so. In the beginning of next year, we will be talking about something interesting.

What is the growth you are expecting for the current year?

Last year we sold 1,010 worldwide. And this year we expect 20 per cent growth.

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