Rolls-Royce Unveils a Recession-Ready Limousine

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Rolls Royce Motor Cars Ltd

Rolls-Royce's new recession-beating luxury car, the Ghost

To put a slight spin on the name of a popular folk song from the Great Depression, "How can a rich man stand such times and live?" He could buy a smaller car, for starters, such as the about-to-be-released Rolls-Royce Ghost, the first lower-cost limousine to be produced by the world's luxury automaker in more than a decade.

Rolls-Royces are typically leviathan in size and synonymous with ostentatious wealth. But the company's new Ghost model will be much more modest. A prototype of the four-door sedan that has been making the rounds at auto shows this summer is shorter and sleeker than the company's flagship Phantom limousine, making it "slightly more agile" and better for daily use, says Rolls-Royce CEO Tom Purves. It's more affordable as well, priced at just $245,000, far below the $380,000 baseline price tag for the Phantom.

The Ghost has been in the works for several years, well before the global economic meltdown. But the timing of the car's rollout this fall couldn't be better for the automaker. Although Rolls-Royce had a banner year in 2008, selling a record 1,212 Phantoms worldwide, the company has taken a substantial hit this year. Sales of the Phantom tanked by more than 34% in the first six months of 2009 as the superrich started to put the kibosh on their conspicuous consumption.

"To have a car like the Ghost [coming out] right now is, of course, ideal," Purves says. Buyers may be attracted by not only the tens of thousands of dollars in savings, but also the ability to strike the right tone in a recession. "[The Ghost is] less ostentatious, so owners can give the impression that they're downsizing their Rolls-Royce," says Garel Rhys, president of Cardiff University's Centre for Automotive Industry Research.

Rolls-Royce is also facing greater competition from its old stablemate, Bentley, which has had phenomenal success in recent years with its lower-priced Continental line of luxury cars. Bentley sales, which consist primarily of Continentals, jumped from 6,576 in 2004 to 10,014 in 2007, before falling back to 7,604 last year.

Because the Continental starts at $177,600, the decision by Rolls-Royce to price the Ghost at $245,000 was a "quite deliberate" maneuver to create a niche market just above Bentley's more affordable model, says Paul Newton, an automotive analyst for the consulting firm IHS Global Insight.

Rolls-Royce will start hand-building the cars at its south England plant in September, with the first deliveries scheduled to go out in early January. The company says it expects to sell about 2,000 Ghosts annually, although Purves says that may not happen until after the recession is over. "It's not at all a frothy environment [right now]," he admits. But analysts say the sales figure is a realistic goal. John Wormald, managing partner of the British automotive consultant Autopolis, says sales of the Ghost could eventually reach 5,000 a year.

Although the Ghost is being marketed as a downsized luxury car, a Rolls-Royce is still a Rolls-Royce. The new model is chock-full of exquisite details, from its soft leather seats to the wood-veneer finish of its Art Deco–inspired dashboard. The Ghost also boasts a 6.6-L V12 engine capable of top speeds of 155 m.p.h., but it still promises to provide a silky-smooth, ultra-quiet ride.

How can Rolls-Royce offer this kind of luxury at such a relatively cut-rate price? One place the company saved money is in the electrical and safety systems, which Rolls-Royce borrowed from its parent company, BMW. The Ghost also has a steel frame, unlike the Phantom's aluminum skeleton, making it less expensive to manufacture, although also less adaptable to customization.

That it's not a fully bespoke limo may turn off some customers, Newton says. "There is a risk of losing that exclusivity," he says. Perhaps. But some 1,200 potential buyers have already expressed "strong interest" in the Ghost, according to the company. About 85% of those people would be first-time customers, which indicates that the company is indeed mining new territory, since typically 37% of Rolls-Royce buyers already own one of the cars — or more.

"It's a car for a business suit," Purves says, "not a tuxedo." That makes it a tad more recession-friendly — for some. But it's still a long way from being a car for folks who wear T-shirts and jeans.

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