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Rolls-Royce Considers Rolling Out SUV

Luxury brand’s potential expansion is sign of the times for automakers


When the LA Dodgers’ 22-year-old rookie sensation Yasiel Puig signed a seven-year, $42 million contract, the first thing he did was go out and get himself a new Rolls-Royce.

Puig has been spotted repeatedly around the LA nightclub scene, getting into his white Rolls Royce Phantom after a stint at the hippest spots in town. The $400k Phantom is one of the most elite of luxury vehicles, and the embrace of the brand by big-time athletes, actors, musicians and the super rich have vaulted the iconic vehicle into the pinnacle of high-end transportation.

Yet Rolls Royce doesn’t just want to be the luxury sedan supplier to the super rich. Now it’s thinking about going after the super-rich sport-utility vehicle buyer, as well.

“The (SUV) segment is highly interesting,” Rolls Royce chief executive Torsten Mueller-Oetvoes told Reuters at the Frankfurt motor show last week. “We’re now looking at it but there are no plans as yet.”

Interestingly, Rolls-Royce’s main competitor in the luxury brand arena, Bentley, a division of Volkswagen AG (VLKAY), does have plans to build an SUV. The four-wheel-drive EXP 9 F is in the concept stage right now, and according to the company, it won’t be out until the 2016 model year. Volkswagen also has plans for a Lamborghini sport-utility vehicle, called the Urus SUV, although there isn’t a production date yet.

Rolls-Royce is owned by upscale German automaker BMW, and the thinking among auto sector analysts is that a Rolls SUV could boost the total volume of sales for the brand. Last year, Rolls-Royce sold just 3,575 cars.

For the auto industry, the mere idea of a super-high-end luxury SUV is a huge turnaround from just a few years ago. As gasoline prices were on the march higher, and as the Great Recession gripped the nation and the global economy, SUVs were seen as possibly going the way of the dodo bird. Horrible gas mileage ratings were seen as a big money waster, and though SUVs were popular for transport capacity and safety reasons, they also were seen as drains on a cash-strapped public.

Now, however, nearly every major auto maker has come out with new SUVs, hybrid SUVs, and vehicles with improved fuel efficiency and the cargo space and safety characteristics of traditional SUVs. Ford (F), General Motors (GM), Fiat’s (FIATY) Chrysler all have their sights set on capturing even more of the growing SUV market, as do Japanese auto giants Honda (HMC), Toyota (TM) and Nissan (NSANY).

For automakers, now seems like a great time to ride the buying wave, as car buyers have largely ignored increases in fuel prices and are opting for big trucks and heavier SUVs. In fact, now is perhaps the best time in history to own a vehicle for a host of reasons, including durability, fuel efficiency, safety, low financing costs and overall affordability.

So, who will be the biggest winners from the current favorable conditions for cars in general and for SUVs in particular?

Well, a quick look at the top-selling SUVs in August should give us a very good sense of where the buying public is right now. Interestingly, all of the major automakers have a lead dog in the fight. Honda and its CR-V is the top seller in the SUV category among US buyers, according to statistics from auto industry website GoodCarBadCar. Ford comes in second with its Escape, followed by Chevrolet’s Equinox, Toyota’s RAV4 and Jeep’s Grand Cherokee.

The biggest takeaway here is that SUVs are hot, so it’s no surprise to me that Rolls-Royce is considering a shot at the über-rich SUV buyer. So, if a few years from now you see the latest Major League Baseball sensation cruising up to an LA hotspot in a Rolls-Royce SUV, remember you heard about it here first.

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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