GENEVA MOTOR SHOW: Rolls plans sports car with BMW

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in Geneva

Rolls-Royce and BMW look certain to jointly produce a luxury sports car in a £300m investment that could double production at the UK company.

Sir Colin Chandler, chief executive of Rolls-Royce's owner Vickers, also said yesterday that its Cosworth engine division was on the verge of an important order with Opel and Audi.

Studies into the new "Java" sports car have been completed and both sides were "extremely optimistic" the project would get under way, Sir Colin said.

In the clearest indication yet that the car will be produced, he said: "I hope that something can be announced soon. BMW is very excited about the idea."

The new Coupe, which would sell at around £100,000, would herald much closer links between Rolls-Royce and BMW. Last year the UK company announced that it had agreed a £250m deal for BMW to supply engines for the next generation of Rolls and Bentley models.

Rolls-Royce needs to update and expand its range, but Vickers did not have the money.

A prototype of the Java won rave reviews at last year's Geneva Motor Show. Studies by both companies say that the sports car, which would be based on a BMW platform with Rolls-Royce styling, could have a market of about 1,500 cars a year. Sir Colin said that the investment in the project could be as much as £300m, split equally between the two companies.

Development of the car is a long way off and Sir Colin believed that Vickers could finance its share out of Rolls-Royce profits, something analysts have doubted.

Last week Vickers announced that Rolls-Royce profits doubled in 1994 to £21m, despite only a 4 per cent rise in sales to 1,414 vehicles.

Sir Colin said the car would be built in the UK, and there was no question of BMW diluting the Rolls-Royce name.

He reiterated that BMW had no plans to take a shareholding in Rolls-Royce. However, BMW does have pre-emption rights should Vickers decide to sell Rolls-Royce in whole or part.

Sir Colin also said that Cosworth was close to announcing an important contract to supply Opel's and Audi's top models. He would not disclose the size of the deals, but Rolls-Royce is already increasing investment in its Cosworth factory in anticipation of the orders.

Sir Colin said Cosworth's£20m-a-year turnover would more than double next year and reach £150m within five years if the deals were approved.