UPDATE 1-VW's Bentley to build world's most expensive SUV

Tue Jul 23, 2013 9:08am EDT

* First Bentley SUV to go on sale in 2016

* SUV production to create over 1,000 jobs in UK

* Bentley to spend over 800 mln pounds

BERLIN, July 23 (Reuters) - Germany's Volkswagen gave its ultra-luxury Bentley division the nod to build its first sport-utility vehicle, venturing beyond its speciality of sleek, growling road cars in a move that could unsettle automobile purists.

The new model, billed as the world's most expensive SUV, will go on sale in 2016, VW said on Tuesday. The project will create over 1,000 jobs in the UK, Europe's second-largest auto market, and require over 800 million pounds ($1.23 billion) of investment over the next three years.

Crewe, England-based Bentley aims to replicate the success that Porsche has had with the Cayenne SUV, which was launched over a decade ago and now accounts for half the sports-car maker's global sales.

The push towards off-roaders is aimed at boosting profitability at Bentley, which accounted for no more than 1 percent of the VW group's first-quarter earnings of 2.34 billion euros ($3.09 billion).

"SUVs continue to be in high demand and Porsche has shown that plush sport-utility vehicles have great potential," said Frankfurt-based Equinet AG analyst Tim Schuldt.

But the Bentley SUV may face competition from VW stable mate Lamborghini, which recently won the backing of parent Audi to launch the Urus SUV in 2017, Maserati's Jeep-based Kubang and Land Rover's Range Rover Sport, analysts said.

The moves by Bentley and Lamborghini have dismayed some automobile fans, who fear that the push into four-by-fours betrays their history and will dilute the brands' exclusivity.

Bentley is known for sleek models with a racing pedigree. Its redesigned Flying Spur has a 6-litre, 12-cylinder engine generating 616 horsepower and a top speed of 200 miles per hour.

It is targeting annual sales of between 3,000 and 4,000 SUVs priced at above 150,000 euros. The new model would be key to almost doubling Bentley's worldwide deliveries to 15,000 autos by 2018.

The company has had extremely positive feedback on the SUV from customers in the past 16 months, VW said.

"This decision will ensure sustainable growth for the company," said Bentley Chief Executive Wolfgang Schreiber.

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