After years of static motion, British car maker is ready to enter the luxury automotive race
“You only live twice: Once when you are born. And once when you look death in the face.” The famous line from Ian Fleming’s legendary James Bond series reflects well on the history of Aston Martin Lagonda — whose name, for many, is tied to the iconic fictional character of a British secret service agent.
Since Bond used a DB5 Aston Martin as his accomplice in the 1964 film Goldfinger, the two trademarks have almost always gone hand in hand. Throughout the luxury car maker’s history, it has died and been revived, time and time again. As many times, dare we say, as James Bond himself.
Its first downfall came in the form of ever-changing owners, who ranged from serial entrepreneur David Brown in the 1940s to Ford Motor Company in the 1990s, before being sold to investors led by Prodrive motorsport mogul David Richards for $925m in 2007. Five years later, Italian private equity fund Investindustrial acquired almost 38 percent of the company, investing $187m in capital increase. Today’s investors include Prestige Motor Holdings (39 percent), Asmar (19 percent), Primewagon (19 percent) and Daimler (5 percent). Kuwait’s Investment Dar sold its majority share in 2013.
In between the motion waves, it suffered extreme financial troubles that went as far as bankruptcy. While it continues to struggle in the tough market, one factor has changed — chief executive Andy Palmer has reported for duty.
Though the eponymous brand experienced widening losses from $90m to $160m in 2015, its fifth straight year in the red, it also witnessed an 8.5 percent rise in revenue to $634m under Palmer, selling 3,615 cars in 2015 compared to 3,500 in 2014.
The company is also expecting a return to profitability in 2018 thanks to its “century plan” set by Palmer to resurrect the brand’s value. It includes a series of changes such as raising volume and launching new models or variations every nine months through to 2020.
“We’re going through our second ‘century plan’ and that by nature grows the volume of the business. So if we were around 3,500 units a year two years ago, then you will see that expand to 7,000 units by 2019. You’re going to see at least a doubling of volume. It will be quite a small volume compared to other big car companies but an important volume for us,” Palmer says.
He expects car sales to double in almost every market; maybe more in places such as the UAE, and maybe less in places such as China, where sports cars are less popular in general.
“Obviously, that means that we would expect to see more cars sold in the UAE. Normally, 60 or 70 percent of the sales are done in Abu Dhabi and the rest are done in Dubai,” Palmer says.
In order to keep up with demand, the brand is set to launch a showroom in Abu Dhabi in 2017. To boost sales, it has invested heavily in its first-ever SUV scheduled to come out in 2019. Following years of silence in terms of new car models, the brand is going all out on its creation, according to Palmer. It will be produced in high volumes of 4,000 to 5,000 a year and is expected to compete against Bentley’s Bentyaga SUV.
“We’ve unfortunately gone through a period where we didn’t have new cars coming. Now we’re launching a new car derivative every eight or nine months. So we put this tsunami of new products [on the market] and obviously when you’re dealing with that, you’ve got to make sure that the supply is good, the quality is good and the launch activity is good,” he says.
Aston Martin’s biggest venture, however, is its most expensive car ever made: the electric, Formula 1-inspired AM-RB001 hypercar priced at $2.5m. The automobile, which is being developed by Red Bull Advanced Technologies, is set to launch in 2018.
In line with its new car models, Aston Martin is expected to raise its production of sports cars from 3,500 to 6,500-7,000. Its second factory in Wales, which will open in 2019, will have a capacity of 7,000 units by 2020.
But for a brand that relies largely on exclusivity, you would expect greater production would reduce the value of the car. Palmer insists that will not happen.
“Exclusivity is about not being able to supply the complete demand. Every year, we do two runs of special cars. Last year, it was GT12 and Vulcan, this year it’s GT8 and it’s the Zagato coupe. Next year, it’s the Zagato Volante. Those are expensive cars. In every case, they are sold out before we announce them. The Zagato is $623,650. There are only 99 units and they’re all sold,” Palmer says, adding that monitoring the supply and demand ratio will be important.
“Our ability to be able to under-supply the market is probably the crucial part of what luxury means because you’re not trying to push. Everything is a pull.”
While new models are in the bag for Aston Martin, there is one area the carmaker is so far refusing to plunge into — driverless cars.
“Autonomous cars are less applicable to us, because we’re selling a luxury product and we’re selling something that is driver-oriented. So we will not lead in autonomous technology, however, in something like zero-emission electric cars, we will lead in that space. We will be the first car company to launch a fully electric luxury vehicle,” says Palmer.
But the 53-year-old chief executive, who is also a certified engineer, says there is much more to reviving the brand than launching new models. A large part of his turnaround plan is to make the company’s portfolio less volatile.
“In the past, we used to make a few thousand cars and sell almost every one of them in the United Kingdom. Then when the UK’s economy went on a downturn, it obviously affected our sales,” Palmer says.
“So… we try to widen our portfolio to not just sports cars or super sports cars but also including sedans and crossovers. And then we tried to take the geography and change it from being UK-centric and give it a global perspective.”
Despite attempts to broaden the brand’s portfolio, Palmer is facing major bumps in the road, particularly in the Middle East. Low prices, weakened consumer spending and a slowing economy have not made things easy for the shift. But Palmer seems to be up for the challenge.
“Is it a bit more difficult in the Middle East right now? The answer is, ‘yes, it is’. And it’s linked to the oil price and that affects consumer behaviour a little bit. It’s automatic; you can see it. If you go to China, for example, they’ve just increased the luxury tax by 10 percent. On the other hand, we are able to balance that with a resurgence in the US and the UK, and particularly quite significant growth in Asia Pacific. So by having a wider portfolio, we can compensate for, for example, risks in the Middle East,” he says.
Though Aston Martin is not at its best yet, Palmer’s attitude might just be enough to take the brand to grander days.
“We’ve seen good quarter-on-quarter growth in the operational profitability. Most importantly, in the past seven quarters, we’ve met or exceeded our business plan. So from the financial perspective, the promises we’re making to the market, we’re meeting quarter after quarter after quarter because that leads to confidence in the market,” he says.
Part of the growth is also due to new markets, including Mexico, Turkey and Russia.
“Over the last three years, we’ve doubled our number of dealers, so we’ve gone into new markets like Mexico and many new markets in Southeast Asia. We’ve added markets such as Turkey. Russia is also a new market; we’ve recently opened a dealer in Moscow. It’s a small market at the moment and you know that the economy there is quite volatile so we haven’t sold a lot of units there yet, but it’s an important market for the future,” he says.
But it is not only geographically that the brand is expanding. Following in the footsteps of competitors such as Bentley and Ferrari, Aston Martin has announced it is launching more brand extensions. Currently, it sells Aston Martin-branded fashion items and accessories in stores such as Hackett, and promotes holiday packages that include tours of Italy in an Aston Martin or experience driving one of its cars on ice.
The carmaker also is creating residence apartments in Miami and has recently released its newest powerboat, the AM37 concept.
Given the UAE’s love of high-end brands and headline-grabbing promotions, could there be an Aston Martin-themed product in the country in the near future? Palmer says, “I’m sure you will”.
The chief executive, who started his professional career aged 16 at Automotive Products in the UK, is racing against the clock to resurrect the weakening brand. But looking at his downforce, he just might make it on time.