Price cuts boost Rolls-Royce resurgence

PRICE cuts that lopped the equivalent of up to an Aston Martin V8 Vantage off the price of a Rolls-Royce have not upset existing customers, the British luxury marque says.

Despite the risk of a possible backlash from existing Phantom customers, Rolls-Royce Asia Pacific general manager Dan Balmer told GoAuto the response was overwhelmingly positive as most dealers were already selling cars at the new prices prior to the drop.

The British marque stripped $213,000 from the driveaway price of the short-wheelbase Phantom in November last year after introducing the facelifted Series II, priced from $855,000. The price of the range-topping Drophead convertible, meanwhile, fell by $280,000 to sell from $1,075,000.

“They (previous customers) had bought their Phantoms at transaction prices which mirrored the current list price,” he said.

“So it wasn't like they had bought a million-dollar car and suddenly it was $800,000 overnight. The whole price realignment was about realising where we were transacting at and bringing things closer to reality.” Mr Balmer said the exchange rate had shifted so much since the current-generation Phantom launched in 2003 that Rolls-Royce had to adjust pricing to reflect what customers were paying at dealers.

“Parity has backed off slightly since then, so we plotted a price point which was right for us at the time and then again in 2012 with Series II launch.

“We then re-plotted that price point having acknowledged that the past few years of sales had never really reached that price point anyway,” he said.

“It's about realising the reality of the market. You can't go on charging that money if no-one is buying them at that money.” Last month, Volkswagen-owned rival Bentley ruled out reducing prices of its luxury range, with the company’s Asia Pacific head of marketing and communications Robin Peel saying the experience of owning a Bentley would be “cheapened” if buyers had to negotiate a discount.

Mr Balmer said he understood the statement from a brand perspective, but was confident in how Rolls-Royce managed the price reduction with its existing customers.

“What we managed to achieve with Phantom was good traction since the price drop and no negative feedback from current customers.

“They were all written to individually and we explained the whole story with them so they were fully onboard with that, and we followed-up with phone calls and it was a good response.

“There was no adverse reaction at all. I can’t comment on what other brands are doing, to be honest, but I think we are about right to be placed,” he said.

Mr Balmer said interest in the Phantom lifted following the announcement of the price reduction last year, with a boost in enquiries at local dealers.

“We saw more leading and more enquiry off the basis of that. It was very clear to make the statement we are not the million-dollar car that everyone thinks we are.

“Of course you can go that high with bespoke and options but we start at $800,000 for Phantom and that was a bit more realistic in terms of pricing for us.” Meanwhile, Mr Balmer said any further expansion to the Rolls-Royce line-up beyond the Ghost, new Wraith coupe and Phantom to include a sub-Ghost entry model was unlikely, but there was “potential for further developments”.

“Where we are now with the range, the Ghost is about as inexpensive as it gets for us and the Wraith being the similar level as well.

“That's about where it’s at, we don't want to go any lower than that.” A replacement for the current-generation Phantom appears to be some years away, with Mr Bulmer confirming the updated Series II model launched last year will keep the model going for some time yet.

The iconic British car-maker plans to expand its dealer network in Australia beyond its existing locations in Sydney and Melbourne, with customer enquiries open in Perth ahead of an upcoming dealer launch, and Queensland likely to follow.

Mr Balmer said a four-location network was the right size for the brand in Australia for now, but that would be dependant on future sales volumes.

“The volume chasing that other brands do, we are not into opening a Rolls-Royce dealership on every street corner, we are trying to keep it limited to those four locations for now.

“I would never say never in the future but I think in terms of our volumes we see the business case as adequate in those different areas as well,” he said.

Rolls-Royce sold 3575 vehicles globally in 2012, with the booming Chinese market making up roughly a third of total sales. Despite the solid Chinese sales figures, the US was the brand’s largest market for the year.

Mr Balmer said the company was experiencing “strong resilience” in its home market, Britain, while European sales have taken a hit thanks to the economic downturn in the region.

Rolls-Royce has sold six vehicles in Australia in the first half of this year, a 33 per cent drop on the nine units it shifted in the same period last year.

The company does not provide a break-down of models sold, so it is unclear which of the four-model current line-up is the best seller.