Rolls Royce Holdings (RYCEY, Financial) made its bold move into a new sector by planning to build an all-terrain SUV. After years of speculation, the luxury car brand confirmed that it will build an off-road SUV.
Rolls-Royce Holding has a current market cap of 17.14 billion. The original company, Rolls-Royce Limited was established in 1904. Henry Royce entered into a deal with Charles Rolls. Combing their great engineering and craftsmanship qualities, one of the world's best luxury car brands was created. 1907 saw the launch of The Silver Ghost, the car which created the legend of 'the best car in the world'. This was attributed due to the smoothness of a continuous 14.371 mile virtual run. In 1973, the company split into Rolls-Royce Motors and Rolls-Royce PLC. Currently, the Rolls-Royce has its headquarters and assembly plant at Sussex downs, Goodwood, UK. World-known architect Sir Nicholas Grimshaw plays a very important role in the smooth functioning of the company.
Rolls-Royce estimated annual 2014 earnings of 0.64 GBP per share. The estimate for 2015 is 0.70 GBP per share. According to latest forecast, analysts covering the company advices the investors to continue holding their position in the company. Previous consensus speculation said that the company would out-perform the market.
The ATV
The decision was made public in a joint letter from CEO Torsten Müller-Ötvös and Chairman Peter Schwarzenbauer. The letter stated that the decision to build any terrain SUV was due to the high customer demand. The letter stated that the company was focused on customer's desires. Hence Rolls-Royce decided to develop such a car due to the urges of discerning customers. The company is driven by a constant thirst to innovate, and this factor was also instrumental in the decision-making process. The engineers and the design team of the company is now challenged to create a unique and an exceptional car. There were many questions raised before as to whether an SUV would work for Rolls-Royce.
An announcement was made in January that the Goodwood-based car brand had broken records by making an annual sale of over 4000 cars. CEO Torsten Müller-Ötvös revealed that moment was a crucial moment to decide whether to go ahead with the plan or not. He said that asking the question 'Is the segment the right one?' is not appropriate since the segment is a very lucrative one. The segment will surely grow in the years to come. The main question that has to be asked is whether the segment is right for the company, will Rolls-Royce fit in that segment and how will the company look in that segment.
Data has revealed that around 12% of the UK market in 2015 is accounted by SUV's alone. 2009 showed that SUV's accounted for a mere 6.5%. Thus, the SUV sector seems to be profitable for Rolls-Royce. It is surely a fast-growing sector. SUV's could actually make for half of the total car sales in the long term, according to a global study.
The final look of the car has not yet been decided. Though they have revealed that the body will have a new all aluminum architecture and will be a “high-bodied” vehicle, surely building this kind of a vehicle will take time and it may be years before such a vehicle is made. According to the letter, the SUV will meet the highly mobile and contemporary lifestyle expectations of customers. The car will also carry the Spirit of Ecstasy to the next generation. Last but not the least, the company has made promises to offer the luxury of a Rolls-Royce in a vehicle that can cross any given terrain. Rolls-Royce will involve their customers in the development and looks of the car. Valuable opinions of customers will be considered in molding the final design of the car. The car will also embody the values of the founders and will surely secure the reputation of the company, the letter stated. Besides, Rolls-Royce cars did a fantastic job by carrying their owners through Australia, India and other challenging terrain with comfort and ease.
Outlook
This news comes after Jaguar (TTM, Financial) announced its plans to enter into the SUV sector in January. They would launch the F-Pace 4x4, creating around 1300 jobs. Rival BENTLEY SPORTS Inc. (BESR, Financial), the luxury car marque also announced its plans to enter into the SUV sector a few years ago. The car, to be named Bentayga is said to go on floors in 2016 and will be "the most powerful SUV in the market".
