The head of Rolls-Royce Motor Cars has complained that the current crisis facing its aircraft engine namesake is damaging the image of his company’s luxury cars.
Rolls-Royce Plc, which manufactures jet engines, has been a separate company from the carmaker since the mid-70s, but has released a string of profit warnings in the past year and a half.
According to Torsten Muller-Otvos, chief executive of the BMW-owned Rolls-Royce Motor Cars, public confusion over the relationship between the two companies is causing “contagion”.
He raised fears that given the Rolls-Royce brand’s reliance on projecting wealth and success, that car owners would seek to distance themselves from a brand which they perceived to be failing.
“We know how famous the brand is, and as much as we have done to make clear that they are separate, for many people it is hard to see the difference. When people read about turmoil at Rolls-Royce in a newspaper it causes concern,” he said.
Rolls-Royce Plc, which is listed as a separate company and is a separate member of the FTSE 100, shocked shareholders 18 months ago with its first profit warning in a decade.
Swiftly followed by a further four warnings, shares in the aircraft engine manufacturer have plunged more than 60 per cent as a result, wiping more than £10 billion off its market value.
In stark contrast, Rolls-Royce Motor Cars has enjoyed a renaissance in recent years, and sold more than 4,000 cars in its last full year, setting a new record for the automaker.
Muller-Otvos expressed sympathy for the jet engine company, but warned that he was “determined to protect” the carmaker after having spent “a great deal of time and money” building it up.
The two companies are in regular contact, with Sir Ralph Robins, the former chairman of Rolls-Royce Plc now a member of the board of Rolls-Royce Motor Cars.
According to Robert Haigh, director of brand valuation company Brand Finance, the risk to the automaker is high, despite its attempts to distance itself from the troubles of the aircraft company.
He said: “Knowing that your car bears the same name as the company that manufactured Spitfire engines is undoubtedly appealing.
“The flipside is that now that company is facing tumbling profits, a plunging price fall and thousands of job losses, the association is not so positive. For Rolls-Royce cars’ status-conscious owners, this matters.”
