BENTLEY TO REVAMP U.S. DEALERSHIPS ALONG WITH INTRODUCTION OF ARNAGE

Rolls-Royce and Bentley Motor Cars Inc. is counting on the debut of a new Bentley sedan, plus launch of a pumped-up adver-tising campaign and a program to revamp its dealer showrooms, to increase future sales for the ultra-luxury marque.

To pave the way for Bentley growth in the U.S., the carmaker expects to spend $3 million-$4 million on advertising this year. And it is undertaking a program with its 37 U.S. dealers - 17 operating exclusive stores - to revamp showrooms.

RR&B says it will give higher margins to dealers who make the $200,000 investment in the new setup in order to help them recover the cost. So far, five have done so (one each in Toronto, Chicago, Boston, North Carolina and the Maryland/Washington D.C. area), and another 12 are expected to follow suit by year's end.

"Every dealer that has put in the investment has increased his sales this year," says Alasdair M. Stewart, president and chief executive of RR&B's U.S. arm.

Mr. Stewart says he doesn't expect any big change in the dealer count in the U.S., but there could be a few tweaks here or there. The top 16 dealers - the biggest is in Manhattan (with a volume of 45 cars so far in 1999) - account for 80% of the company's U.S. sales, he points out.

The U.S., which is RR&B's largest market, is considered the critical growth arena for the automaker. Mr. Stewart says about 70,000 high-luxury cars (priced above $95,000) are sold annually worldwide, with the U.S. accounting for 37%, Germany 23%, Japan 12% and the U.K. - RR&B's other key market - just 8%.

The new Arnage Red Label features Bentley's own high-powered 6.75L V-8, which comes to the 4-door lineup after a two-year absence. The 6.75L, which continued to be offered in some lower-volume 2-door Bentleys, was replaced in the 4-doors by a BMW AG 350-hp twin-turbo V-8.

The Red Label, due in the U.S. in late November or early December, is expected to be priced about $10,000 above the Green Label's $203,000 sticker.

With RR&B's new owner Volkswagen AG set to turn over the Rolls-Royce marque to BMW AG in 2003, the company is putting more emphasis on the Bentley brand.

The hope is that the new Red Label Arnage will set the stage for a new line of smaller, lower-priced, performance-oriented "Baby Bentleys" expected on the market in about four years. With the new line, RR&B is looking to push worldwide sales from fewer than 2,000 units today to 9,000-10,000 by 2003 or 2004.

Mercedes-Benz all but owns the segment, with 60% of U.S. sales to Porsche AG's 30%, BMW's 5% and RR&B's less than 1%. But there is a silver lining for RR&B. U.S. sales so far this year - at 462 units - are up 52.5%.

"If we're going to grow, the U.S. is where it has to be," Mr. Stewart says. "(And) we have to target Mercedes."

Rolls and Bentley U.S. sales are expected to total about 1,000 units in 1999.

Meanwhile, the company also has launched Bentley Financial Services as a way to help ensure future growth. Currently, about 80% of Bentley buyers pay cash, but the reverse is true for segment leader Mercedes, Mr. Stewart says, and he believes that's the direction the market will go.