Exorcising the ghosts of the past

Sean O'Grady investigates how the iconic Rolls-Royce marque is being cleverly rebranded for today's market

Once upon a time, the Rolls-Royce was described as "The best car in the world" even when it could no longer lay reasonable claim to that exalted title. The brand spoke for itself, but with an increasingly "showbiz" accent. Slowly, but surely, it was losing its "brand equity", ironically because of its customers, or at least their image. The cars themselves retained wonderful presence and the thickest shag-pile in the business. There was, and will always be, something special about following the flying lady on the prow of your carriage. But probably by the 1970s, and certainly by the 1980s, Rolls-Royce's best years were behind it. The Silver Shadow of 1965 was the last all-new vehicle before the latest Phantom, launched in 2003. By the late 1990s, Rolls-Royce models were being outsold 10-to-one by their Bentley-badged siblings. Though few realised it at the time, the car business, by then owned by the engineering group Vickers, was being kept alive by increasingly lavish and eccentric orders from Prince Jefri of Brunei, whose ideal car was a Bentley crossed with a Range Rover.

Then the Germans arrived. The saga was told with great zeal by the veteran motoring writer Richard Feast in Kidnap of the Flying Lady. What happened was that in 1998, after a slightly messy scrap, the old Rolls-Royce/Bentley combine was split between Volkswagen and BMW. VW kept the Bentley name and the historic Crewe works; BMW picked up the rights to the Rolls-Royce logo, the flying lady, that famous grille and various other bits of copyright. They set about creating an all-new model and taking the brand back upmarket. They decided to build new premises on aristocratic petrolhead Lord March's Goodwood estate, of Festival of Speed fame.

By 2003, the stately Phantom appeared – the size of a Transit van, near supercar performance and superb craftsmanship made it a worthy contender for the title of "Best car in the world". A drophead coupé Phantom followed. Last year saw the launch of the smaller Ghost model, and Rolls-Royce sold 1,002 cars, of which 150 were Ghosts. The result was 17 per cent down on 2008, but it might have been worse. Thus, even in the depths of the global recession, Rolls-Royce met its self-declared target of 1,000 sales a year. It may not sound much, but given that a price tag on a Rolls-Royce can top £300,000, it means substantial revenues. In July, the firm managed to find people rich enough to buy 251 Rolls-Royce cars, thanks to the new Ghost, an annualised rate of 3,000 cars a year. That will wind down as the novelty of the new model wears off, but it is a superb start. Rolls-Royce insiders say the company has been less affected by the slump than might have been imagined, though there was still damage. The saving grace for Rolls-Royce is its growing presence and sales in the fast emerging economies of east Asia. China and India are the key markets for the future, alongside the traditional US buyer (still taking around half of Goodwood's output), and the Middle East.

At first, BMW has concentrated on re-establishing the brand at the top of the automotive tree – the £250,000 bracket. That, however, left the £100,000 market wide open, and that was filled with the Bentley Continental and its variants. That error helped push BMW into reappraising its strategy for Rolls-Royce, and hence the Ghost, a car with a good deal of the excellent 7-series limo behind it, but sufficiently and successfully distanced from its origins. A more overtly sporty and driver-oriented machine than the Phantom, its grille slopes back, as if by aerodynamics. As a purposeful, pocket Rolls-Royce, it deserves to do well. It launches, though, into an increasingly crowded field; the Aston Martin Vantage, the Porsche Panamera and the more established Bentley Continental Flying Spur all have much to commend them. Not so far down the automotive pecking order is Jaguar's stunning new XJ and the Range Rover. More reassuringly for Rolls-Royce the Maybach, a brand exhumed from the 1930s by Mercedes-Benz for what might otherwise be called an "S+Class", seems to be reaching the end of its road. Rolls-Royce executives will tell you their typical customer has half a dozen or more cars at their disposal, but even the most plutocratic have limits to their interests, if not their budgets.

For now, the savagely devalued pound must be bolstering Rolls-Royce's fortunes in its key overseas markets. At all events, Rolls-Royce, along with the rest of the British motor industry, is doing its bit for the balance of trade, and the much-discussed "rebalancing" of the British economy, back towards making stuff. It's a pity that so much of the modern Rolls-Royce comes in a crate from Germany, but at least its going into a British-built product.

But will Rolls-Royce repeat the errors of the past and fail to innovate? And can it survive as an indisputably ostentatious product in an age of austerity? Displays of conspicuous consumption may be out in the West for a while, but the Chinese seem not even to understand the term. For as long as that market is bullish, then so will be Rolls-Royce's sales. One renegade Chinese maker even displayed a knock-off of the Phantom at the Beijing motor show, a sign that the model's size and singular looks suit Chinese tastes. Compared to the Lexus, for example, most of Europe's premium brands are a little technologically behind. At last, though, firms such as BMW are developing hybrid technology, and a Rolls-Royce would be an obvious home – if customers want it.

Rolls-Royce, more than most manufacturers, is consumer-driven, for obvious reasons. "He who pays the piper calls the tune" the old saying goes, and if a successful Russian, Chinese or Indian businessperson thinks the car isn't a Rolls-Royce without a 12-cylinder petrol engine, as now, then they must be listened to.

Under new chief executive Torsten Müller-Ötvös, the firm is reviewing its power trains and conducting intensive market research into what its owners want. A hybrid – which would be literally silent at low speed – is an option. "It's up to the customer, ultimately. We are looking at it all and soon we will have an announcement."

The new boss is well suited to the role he has been given. A BMW lifer, his last job was running their global product management when the firm seemed compelled to fill every last niche in the premium market, with varying degrees of success: the smaller 1-series was a hit; the odd-looking 5GT less loved. More importantly, he led the revival of the Mini brand in 2000, and understands the importance of "Britishness" in the brand DNA of Mini and Rolls-Royce. Less well advertised is the importance of German-ness in these brands, especially the Rolls-Royce. Subliminally, but still powerfully, it has infused perceptions of the brand with the new qualities of reliability, durability and quality of build that complement its more traditional attributes of craftsmanship and style. In Rolls-Royce BMW has a brand that is close to being the best of all worlds – and making the best cars in the world.