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April 4, 2005

GERMANY: Rolls-Royce needs to sell more cars to be profitable

Rolls-Royce must sell more than 1,000 cars annually to be profitable, says its former head.

Rolls-Royce must sell more than 1,000 cars annually to be profitable, says its former head.

The trouble is, last year the BMW-owned ultra-luxury brand sold 792 units of its only model, the Phantom.

But Stefan Krause, BMW’s board member in charge of finance, told Automotive News Europe he believes Rolls-Royce will become profitable in the long term, helped by two new models, a stretched Phantom and a convertible.

“We calculate the margins over the entire model cycle. If we miss the target in one year, we have to exceed it in the future,” Krause said at the company’s financial results conference.

“[Last year] was still a year for developing the brand and the dealer network. Rolls-Royce is a long-term business,” he said. BMW acquired Rolls-Royce on January 1, 2003.

Krause was interim head of Rolls-Royce from October until February 1 when Ian Robertson, the former head of BMW’s South African operations, became the new CEO.

Krause had filled in after previous Rolls-Royce CEO Karl-Heinz Kalbfell left the company to head Alfa Romeo.

Rolls-Royce expects its new convertible, which probably will be called the Corniche, to account for 30% to 40% of the company’s annual production. Sales are likely to start in the third quarter of 2006.

The stretched Phantom was unveiled at the Geneva motor show last month and goes on sale later this year.

Rolls-Royce’s rival Maybach, which is part of the Mercedes Car Group, reported sales of 500 units last year. Maybach’s target also was 1,000 units.

But Mercedes Car Group CEO Eckhard Cordes says the Maybach brand, launched three years ago, makes money.

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