BMW takes lead in race for Rolls

BMW has moved into pole position as prospective buyer of Vickers' Rolls-Royce luxury car unit despite talking tough about price, writes David Brierley.

At last week's Belgian motor show in Brussels, Bernd Pischetsrieder, BMW chairman, declared: "I know precisely what I am prepared to pay for Rolls-Royce."

Mr Pischetsrieder's confidence stems from the fact that BMW has a joint venture with Rolls-Royce, the aircraft engine maker that also owns the rights to the Rolls-Royce name.Vickers cannot dispose of its car unit without getting approval from the aircraft engine maker.

Relations between BMW and the Rolls aircraft company strengthened last week, following the signing by their joint venture of a crucial deal with Boeing, under which they will supply engines for the new Boeing 717-200 regional jet.

Described as a "breakthrough" by Klaus Nittinger, chairman of the joint venture, the agreement will double sales and ensure that BMW/Rolls-Royce venture meets its target of breaking even by 2000. "Our opportunities for growth have improved markedly," Mr Nittinger said.

BMW further underlined its conviction that it is closest to snapping up Rolls-Royce by dismissing comments made by Volkswagen chairman Ferdinand Piech.

Mr Piech suggested that the Rolls-Royce and Bentley brands could be split and proposed a deal with BMW. He said, partly in jest: "I would like the less refined brand [Bentley] at half the asking price. The more sporty manufacturer [BMW] needs a more conservative brand. Unfortunately, it could be that everybody wants the same thing."

But a BMW spokesman said: "From our point view, splitting the brands is unthinkable."

Vickers has insisted that Rolls-Royce and Bentley will be sold off together. Despite his joking tone, Mr Piech remains seriously interested. He admitted that Volkswagen's DM1.2bn (pounds 400m) rights issue had been delayed because of the Rolls-Royce auction. He said: "We had to react when Vickers put Rolls-Royce up for sale. Now we want to see the prospectus and see what the show is worth."

Meanwhile,Mr Pischetsrieder's main concern is to ensure that BMW does not pay over the odds. He said: "It is possible that I already have an alternative to Rolls-Royce. Because it is obvious that we have to be in this market segment, with or without Rolls-Royce."