The Strategist

Rolls-Royce Engines Harm Rolls-Royce Cars: the Company's Industrial Part Has Negative Impact on the Image of Luxury Cars

11/16/2015 - 14:52

Head of the car company Rolls-Royce believes that the crisis in the industrial Rolls-Royce adversely affects the image of luxury cars. The top manager notes that the general public associates problems of the company Rolls-Royce Plc, which produces engines for aviation and maritime transport, with the manufacturer of cars that do not correspond to reality.

In an interview with The Daily Telegraph, Torsten Muller-Otvos, Head of Rolls-Royce Motors, said: "We all know how famous our brand is. However, despite all of our efforts to show that there are two different Rolls-Royce companies, people still do not see the difference. And when people read about the problems of Rolls-Royce, it causes a concern."

As is well-known, in 1973, Rolls-Royce Ltd, produced both cars and aircraft engines, was divided into two parts. These were Rolls-Royce Motors, produces only vehicles (now owned by BMW), and aviation Rolls-Royce, which is now called Rolls -Royce Plc, included in the FTSE 100 and produces engines not only for aircraft, but also for marine and power equipment. In the past two years, industrial Rolls-Royce has been experiencing hard times due to lower orders. Since the beginning of 2014, the company five times warned investors about profit adjustment in the forecast. Because of this, Rolls-Royce Plc shares have fallen in price by 40% from the beginning of the year.

At the same time, Rolls-Royce Motors is going through one of the best stages in its history. The luxury car maker sold 4,000 vehicles, a record for the company, over the last financial year. In this regard, Mr. Muller-Otvos said that his colleagues and he continue to make every effort to explain the difference between the two companies to the public. When Rolls-Royce Plc profits began to fall last year, Rolls-Royce Motors even released a special statement in which noted that the drop in shares is not relevant to Rolls-Royce Motors. "The flip side of falling profits is the loss of jobs, so that such associations are not very positive. All this is of great importance for owners of Rolls-Royce cars, which are concerned with their own status", - added Head of the company.
In May, the British engineering group Rolls-Royce announced a reduction of 10% of jobs in the division, which produces engines and other equipment for ships. The company was forced to go for this due to low oil prices, which have a negative impact on the financial position of Rolls-Royce customers.