British Motor Cars, which has been selling Rolls-Royces in Monte Carlo, Monaco since 1930, has sold its last car from the legendary factory in Crewe, England.
Although it was the top-selling Rolls-Royce and Bentley dealership on mainland Europe in 1998, British Motor Cars had its franchise terminated suddenly in November, and is now suing the manufacturer.
British Motor Cars is not alone. It is one of eight mainland European Rolls-Royce and Bentley dealerships to have their franchises terminated last year. The company has dropped dealers in cities such as Brussels, Milan and Zurich, and three UK dealers are also losing the franchise.
Rolls-Royce and Bentley Motor Cars, now owned by Volkswagen, is restructuring its entire European dealer network, not including the UK. Fourteen new dealers have been appointed, which brings the total number of European dealerships for the two marques to 35. Nine of those new franchises have been given to VW Group dealers. Several of the terminated dealerships are now suing Rolls-Royce and Bentley.
'I don't understand exactly what is their final objective,' said Francis Griffin, managing director of British Motor Cars. Griffin's wife's grandfather started the business in 1924. The company drew wealthy customers not only from Monaco and Monte Carlo, but from all over Europe. Loss of the franchise is wrenching, and does not seem logical to him.
'It was a total surprise. We never had problems before. In the past we knew everybody at the factory. We were friends. We were part of the family.'
Not so any more. Adrian Hallmark, worldwide marketing chief for Rolls-Royce and Bentley, said the franchise terminations were painful and difficult - but necessary.
'Fallout over any dealer situation like this is always bad news,' he said. '(Terminating a franchise) is always the last thing we want to do. But it's a business. High performance, market share and high customer satisfaction with specialist products are the determinants for keeping the franchise.'
Most of the franchises were terminated for 'performance-related issues.' Others were terminated because the company is eliminating its independent importers and moving to direct factory-dealer relationships, Hallmark said.
'We're taking on the role of importers in the European, US and Asia-Pacific offices,' he said. Sales and marketing operations are split into six regions worldwide: UK, mainland Europe, USA, Middle East, Japan and southeast Asia.
The company is preparing itself for the split of the marques in 2003 and the eventual growth of Bentley from selling about 1,500 cars to 9,000 cars a year. As a matter of course, all franchises will be terminated and contracts renewed with Bentley alone.
BMW will make its own arrangements later (see story below), but VW Group officials say Rolls-Royces cannot be sold out of Bentley showrooms after December 31, 2002.
'It's reasonably high scale, but not a total wipeout,' said Hallmark.
Although franchises are being dropped in other regions, Europe is the scene of the biggest change. Three further contracts will be ended in the UK and one in southeast Asia. The networks will remain intact in the USA and Japan.
'The purpose of the reorganization is to add some outlets to strengthen our coverage in preparation for future product programs,' said Hallmark.
To be precise, Bentley will be introducing a smaller 'entry level' model in three or four years. The car will be priced just above the Mercedes-Benz S-class and BMW 7 series. The expected growth in volume means each Bentley dealer will have to sell a lot more cars. Many Rolls-Royce and Bentley dealers are lucky to sell one car per month now. Hallmark says that number should be closer to 90 per year.
'Our challenge is to make sure we expand the scope of our network and the number of people we have serving and supporting our customers,' he said. 'We have to deliver the most personalized experience, and deliver it to more customers than ever.'
To prepare for the changes, Rolls-Royce and Bentley is building a new organization in Europe. At the beginning of January, Rolls-Royce and Bentley relocated its mainland European headquarters from St. Prex, Switzerland to Berlin after an extensive search for new premises.
Stefan Brungs, a former VW marketer who also spent time at Boston Consulting, has been named managing director for Europe. Staff size has increased from 12 to 20 people. Hallmark said Rolls-Royce and Bentley was able to lure most of the staffers from Switzerland to Berlin.
'We chose Germany because it has to be the driving force of our volume,' said Hallmark. 'The market is 50 percent bigger than the next biggest European market. In terms of the segments we are interested in, it is more than 100 percent bigger than the next biggest.'
Berlin has the added benefit of being close to VW headquarters in Wolfsburg, Hallmark said.
Some European dealers won't be around to enjoy the benefits of the company's labor. Belgian dealer Jacques Beherman said he has had many customers ask about the new Rolls-Royce Corniche convertible, but the company will not give him any cars now that the Brussels franchise is being transferred.
Beherman, who surrenders his franchise March 1, is not giving up without a battle. He is suing Rolls-Royce and Bentley for $4 million, and has already won the first round in the Belgian courts.
'They did not respect Belgian laws concerning distribution,' he said. 'You must give 3-4 years' written notice. They gave us only 12 months. You must pay for the goodwill of the business.
'It is a loss when you lose Bentley and Rolls-Royce,' Beherman said. 'You cannot replace them with anything else.'
Monte Carlo dealer Griffin is also bitter. 'Because of good relations they gave us two months' notice,' he said.
British Motor Cars, which prided itself in its full range of British luxury cars, will now sell only Jaguars and Aston Martins.
The Rolls-Royce and Bentley franchise in Monte Carlo is going to a Mercedes-Benz dealer, unlike in some other markets where the franchises will go to VW dealerships.
Carlo Talamo owns Gialloquaranta, a Rolls-Royce and Bentley dealership in Milan. He was more philosophical about the loss of his franchise. He is concerned about what will happen to his customers but he wants a friendly divorce.
'Because I am a Bentley enthusiast, I cannot be happy with the situation, but I understand the long term vision of VW does include distribution via VW dealers. Good luck to both Bentley and Rolls-Royce.'