Bentley hikes investment despite plunging into red

SLIDING sales as the major world economises plunged into recession and a massive hike in research and development costs saw luxury car maker Bentley crash into the red last year.

The Crewe-based manufacturer, owned by German auto giant Volkswagen, said the credit crunch in late 2008 had hit sales by 25% after a “good start to the year”.

Newly filed accounts for 2008 show that Bentley made a loss of £127.6m compared with a profit of £93.4m in 2007. Sales fell to £829.4m from £941.4m in the same period.

Research and development costs in the period surged from £102.5m to £255.5m as the company invested in new models and technology.

Since the year-end Bentley has cut more than 200 jobs and introduced a company-wide 10% pay cut for the rest of 2009. It still employs more than 3,000 people in Crewe.

In the directors’ report the company said: “After a very good start to 2008, Bentley was unable to escape the gradual deterioration of the global economy and the negative impact it had on the automotive market.

“The high luxury sector was particularly hard hit as sales declined by around a quarter. However Bentley broadly maintained its market share, sustained by new model introductions.”

Bentley said most of its markets were “invariably down” – including its largest sales area, the US, but its sales in China and the Middle East had grown by 50% and 18% respectively.

Chairman and chief executive Dr Franz-Josef Paefgen said: “The last few months have been incredibly tough for the global automotive industry and premium manufacturers like Bentley are no exception.”

He said this year would be tough, but being part of the VW Group was an advantage.

“We took early action last year to ensure our production and stock levels matched reduced demand and have been single-minded in our determination to retain our highly-skilled workforce. We have had to adjust our business model to a smaller volume and taken some difficult decisions to reduce overheads.”

He said the company had continued to invest in new models, such as the new Continental Supersports, which would hopefully entice customers back into showrooms.

Last month Bentley unveiled the new luxury grand tourer, the Mulsanne, which has been designed and built at Crewe and goes on sale next year.

Mike Hawes, director of corporate and government affairs at Bentley told TheBusinessDesk: “Despite this severe downturn we have continued to invest heavily in research and development, which is obviously good news for the North West.

“Experience shows that high net worth individuals will spend on new luxury items if the product is good, so it is important for Bentley to bring new models to the market.”

Mr Hawes said the Mulsanne  was testament to Bentley’s investment and that response to its launch had had been “overwhelming”.