Reasons Volkswagen lost Rolls Royce brand to BMW 4 years after acquiring it

01/17/2019

Posted by: Chris Odogwu

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Volkswagen and BMW contested for rights to the Rolls Royce brand in 1998. Volkswagen won the bid initially, but lost it just four years after. Find out why!

Automakers Volkswagen and BMW were up for a showdown in 1998 over acquisition of Rolls Royce which was put up for sale by Vickers – same person who owns Bentley.

At the time, BMW had higher prospects of purchasing the brand. They had already gone ahead to supply equipment including engines to the owner, for Bentley and Rolls Royce vehicles. The bidding was fiercely contested by both automakers who had high interest in the Roll Royce brand.

Volkswagen-and-BMW-cars-running

Volkswagen and BMW had been in an intense race for buying Rolls-Royce

BMW seemed to have almost won the bid when they made an offer of £340 million. Everyone thought the deal was just about to be closed. But surprisingly, Volkswagen wasn’t willing to throw in the towel just yet. They went for reinforcement, and showed up with a whopping £430 million offer at the last minute. And just like that, BMW was defeated. They watched as Volkswagen emerged victorious.

The bidding wasn’t for the entire Rolls Royce franchise. Volkswagen Group – a leading automaker for passenger cars like Skoda, Bentley, Lamborghini, Porsche Audi, Bugatti, SEAT Porsche, and Volkswagen models, only acquired some aspects of the Rolls Royce including its nameplates, designs, production facilities, administrative headquarters, Roll Royce grille shape trade marks and Spirit of Ecstasy. The deal excluded the rights to make use of both the name and logo of the brand. These elements were still properties of the Rolls Royce Plc.

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Despite selling off part of the brand to Volkswagen, aeroplane engine-maker Rolls Royce still went on to do business with BMW. They proceeded to give the name and logo to BMW for the sum £40 million. And this was a much better deal.

BMW had to pull some strings to get the deal. Part of this was their threat to stop supply of engine to Volkswagen within one year. This was included in the agreement both companies signed earlier.

It was no ordinary threat. Its weight was felt immediately as the company recorded a 30% reduction in orders. If the threat had been carried out, Volkswagen wouldn’t have been able to manufacture engines for their Rolls Royce vehicles in the said year.

Rolls-Royce-logo-on-car

The brand has suffered downfalls after the controversial acquisition

After a battle that seemed like it’d never end, the two automakers had to reach a common ground in order to foster peace. It was agreed that Volkswagen would have the license to make use of the brand name and logo belonging to BMW in producing Roll Royce cars from 1998 to 2002. In addition to this, BMW would continue to make engines and other components needed by Volkswagen to produce branded Rolls Royce cars until 2002. At the end of the stated duration, BMW would possess rights to the brand's grille shape trademarks and Spirit of Ecstasy. The given period would enable BMW to set up a new production facility and headquarters for their Rolls Royce brand.

As of 1st January, 2003, BMW’s Rolls Royce company officially became the sole producer of Rolls Royce cars. Shortly after, the Rolls Royce Phantom became the very first luxury car that was put up for sale.

In line with the agreement, Volkswagen also assumed the role of sole manufacturer of luxury Bentley cars.

The German automakers were able to bury the hatchet and find a solution that was mutually beneficial to both of them. Rather than keep fighting and losing huge business opportunities, they found a way to settle their disputes. Today, both of them are successful in their own rights. They are driving innovations in the auto industry, producing cars that are enjoyed by their many consumers all over the world.

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Chris Odogwu
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Chris Odogwu

Chris Odogwu

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Chris Odogwu is a Content Writer and Journalist. He holds a bachelor's degree in Mass Communication from University of Jos and a master's degree in Mass Communication from University of Lagos. His works have been published in top local and international publications including Forbes, HuffPost, ThriveGlobal, TheNextScoop and Nigeria360 among others. A member of the Nigerian Institute of Public Relations (NIPR), the thrill he gets from writing about exotic cars feels almost the same as riding in them.

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