If I Ran Aston Martin

In early April I posted an article on the challenges Aston Martin, Ferrari, and McLaren were facing in light of the Coronavirus (Aston Ferrari McLaren Challenges).  I then then put together an update in May once each company’s full Q1 results had been released. (Aston, Ferrari & McLaren Challenges Update).  In both these articles I included a few top line suggestions on what each of the three companies needed to do to get there business back on track.  While it’s easy to toss out a few pretty obvious recommendations from a distance, actually being in charge, dealing with the reality of the situation and assets or liabilities you are inheriting, plus owning the impact of all your decisions, is a completely different situation.  Having sat in the hot seat a few times and lived to tell about it, I asked myself what I would do if I was the new Aston Martin CEO.

As a starting point, with an eye of making this as realistic an exercise as possible, I’ve taken into account the reality that Lawrence Stroll is the controlling shareholder.  This makes him effectively the ultimate decision maker and taking into account his goals is critical to making a success of it.  I have also used Lawrence Stroll’s June 26, 2020 Trading & Funding Update Letter as a starting point on the state of the business.  In summary the situation Stroll lays out is:

  • – restructuring plans in place to bring cost base in line with reduced production levels
  • – financing looks to be in place to get through the next year
  • – production of the DBX SUV has started
  • – the dealership network is now 90% open
  • – deliveries of the Valkyrie have been pushed back (again), this time until 2021,
  • – Capital expenditure and R&D investment year-to-go will be focused on core sports car mid-cycle refreshes, DBX variant and mid-engine development
  • – DB5 Goldfinger Continuation production has started at Aston Martin Works

And then he adds two interesting points:

  • – For the full year total wholesales are currently expected to be broadly evenly balanced between sports cars and DBX
  • – From next year Aston Martin will also have the great benefit of their own highly competitive Works Formula One team

But in terms of how Stroll really sees the future of the business, it is laid out in the first paragraph of the Update Letter:

“I am as enthusiastic and confident in our multi-year plan to build on the inherent strengths of Aston Martin, its unique Brand defined by beautiful design”

The Aston Martin that Stroll envisions going forward is first and foremost a luxury brand.  It needs to become the British “Ferrari”.

What also is very enlightening is two topics that Stroll does not mention:

  • – The two other limited edition cars in the pipeline: the Valhalla & V12 Speedster
  • – What I call the package of Andy’s follies: Aston Martin Miami Apartments, Project Neptune, the Aston Martin submarine, and the AMB 001 motorcycle

In the first article I wrote that “Aston Martin feels like it was built on the side of an active volcano that sits on top of an earthquake fault line”, while my long-term view hasn’t changed much, at least the volcano seems to have entered a dormant phase as Aston’s overall the situation certainly looks more stable than it did several months ago.  Where the owner of the company wants to take the business is now very clear and what pieces you have to work with have been laid out.  Stroll talks repeatedly about Aston Martin as a unique, luxury brand defined by beautiful design which gives a clear starting point.

So, what would I do if I was in charge? With the DBX now out the door with the expectation that it will deliver 50% of unit sales going forward, job one has to be getting the rest of the range back on track.  If beautiful design is a critical Aston value, then all the current sports cars need a serious facelift.  Aston Martin’s current head of design, Marek Reichman, needs to find something else to do.   As a replacement, I would go find Ian Callum and pay him whatever he wants to come in a lead the redesign work.  Not only do all the car exterior need to be redesigned, the interiors also need serious work to bring them up to what I would expect from an Aston Martin.  A return to “beautiful design” and “elegance” is critical for Aston’s success as this is the niche it can carve out for itself in-between Ferrari which own’s passion and engagement & McLaren representing best in class performance.  This expression of “beautiful design” needs to consistently be applied across the Aston Martin experience starting with when you first step foot in a dealership, to all the support materials, to the impression you get both looking at and sitting in the cars.  As part of this model lineup overhaul, the current front engine Vantage needs to be replaced finally by a mid-engine V8 built off a carbon fiber tub.  The Rapide AMR can also go to an early grave as it is fairly pointless sitting in-between the DBX & DBS. The Rapide is the poster child in terms of being an answer to a question no one asked. I would immediately kill the current internal V6 engine program.  Engine development is not something that thin scarce resources should be focused on in the near to mid-term.  For engines, I would sign a long-term supply agreement with Mercedes for AMG V8s & V12s for the full range.  In the supercar market segments Aston needs to be competitive in, a V8 is the minimum expectation. Post relaunch the core portfolio would be the DBX SUV, mid-engine CF tub V8 Vantage, front engine V12 DBS, and a front engine V8 DB11.  This line up should provide good balance while appealing to a much wider range of potential customers.  Depending on how sales development for the new mid-engine V8, dropping the front engine DB11 might make sense in a year or two.  All production would now be made to order only.  The days of overstocked dealership discounting cars heavily to get them off the lot needs to be put and kept firmly in the past.  It destroys residual values and negatively impacts the brand.

If becoming the British “Ferrari” is the goal and Stroll does mention that he sees a great benefit of having their own highly competitive Works Formula One team, I would push hard to make it a true “works team” and have the current Racing Point F1 Team fully merged into Aston Martin vs. the current agreement which is basically a 5 year sponsorship agreement at $20 mil. per year.  Racing Point as a stand-alone brand has little to no value and certainly isn’t worth investing behind.  Fully integrating the team into Aston Martin, which would then allow you to maximize the Aston Martin branding, is critical to unlocking the full benefits of the Formula 1 halo.  I don’t believe you can become the British “Ferrari” without taking this step.  There is a very good reason why Ferrari, McLaren, and Mercedes all fully own their F1 teams.  The F1 halo will be a key element in the success of the new mid-engine V8 Vantage.

 

Two of the major management blunders of Aston in the last few years were a lack of focus and setting objectives that were neither realistic nor achievable.  I would immediately ditch the submarine, Miami apartments, and motorcycle.  They are nothing more than an unnecessary distraction and add zero to the goal of building a unique luxury brand.  There is a good reason why you have never seen a Ferrari motorcycle or a Ferrari submarine.  Probably the poster child for overreaching on objectives is the Valkyrie.  When the Valkyrie (designated the AM-RB 001 at launch) was first launched in 2016, first deliveries were targeted for 2018.  Currently Aston is hoping to finally deliver the first Valkyries in early 2021.  In terms of missing timelines, the Valkyrie has been consistently spectacular, and this just highlights how in over their heads Aston got itself on this project.  In roughly the same time period, McLaren has developed and will have delivered the Senna, Speedtail, and Elva.  Given just how difficult the Valkyrie project has been, ditching both the Valhalla and the V12 Speedster is only prudent.  Resources that these projects would have consumed are much better spent on the base range relaunch.  Developing a mid-engine V8 Vantage is far more strategically important long term for Aston than selling 500 Valhallas.  As Stroll didn’t mention either the Valhalla or V12 Speedster in the Update Letter, I would expect him to be supportive of the move.  Being able to make these sorts of tough, potentially unpopular but strategically sound decisions are what separate a great CEO from an average one.

Last on the list of distractions is the DB5 Goldfinger Continuation.  Given that production has started, I would finish the run and then forbid anyone from ever suggesting another project like it.  All these continuation runs do is remind the general public that your glory days are long behind you.  It also demonstrates a lack of creativity and reeks of a desperate cash grab.   I can only imagine what would happen to a young executive in Maranello if he or she suggested producing a few more 250 GTOs.

So where would this all leave Aston Martin going into 2021?  The Aston Martin I would envision:

  • – More stable financial footing
  • – Fully integrated F1 team with both car and racing division owned by Aston Martin Lagonda
  • – An updated road car portfolio that can successfully compete with Ferrari, McLaren, Lamborghini, and Porsche consisting of a mid-engine V8 Vantage sports car, front engine V8 DB11 GT, front engine V12 DBS Super GT, and the DBX SUV
  • – First Valkyries delivered
  • – All the off-strategy distractions eliminated
  • – Valhalla and V12 Speedster projects discontinued

Net net, this will be a much more focused company built around both a competitive F1 race team and a car manufacturer that produces the most elegant, beautiful sports cars & SUV on the market.  With a balanced and competitive car portfolio, Aston should return to growth.  Once back on sound footing, remaining focused on the core business, and not chasing high profile vanity projects that consume enormous resources, will be critical.

Thoughts and comments? Please see the comments section below.

Also please share, buttons are below.  

Follow us on

May 2020

Share Now

Share on facebook
Share on twitter
Share on linkedin

Recent Posts

18 Thoughts on If I Ran Aston Martin
    Desf
    4 Aug 2020
    7:41pm

    As for the engines – I’ve read somewhere that AMG isn’t viable partner long term, since they’re going strongly in the way of electrification, so V8 will be killed off earlier than Aston would wish and replaced by 2.0 hybrids and then fully electric drivetrain. Can’t remember where I read it though. There is a lot of rumours about next C63 using such powertrain, and I can imagine bigger models to follow the suit soon. Maybe with EQ S on the way we won’t even get S63 with combustion engine at all.

    Also, reading the news I got the impression that development of this engine is almost done – in that case building own engine may help them lower costs compared to buying V8s from AMG

    As for what people require in this segment – Yes, V6 seems to be a bit on poor side right now, but with rumoured V6 powertrains for 570S replacement, and some rumours from Ferrari, V6 may soon become standard in this segment.

    1
    0
    Andy F
    26 Jul 2020
    9:00pm

    Really sensible approach. But the financial investment required to achieve this makes it simply fantasy to think the above would happen

    0
    0
    James
    26 Jul 2020
    9:14pm

    Great overview and hopefully someone from Aston will read it. My own wish is for them to make their cars far lighter with far greater visibility (poor visibility for the driver deterred me and a number of others) and space in the cabin. I have just been on a tour and there was not a single Aston, but plenty of McLarens, Porsche etc. Aston need to make cars people want to drive and drive all the time, rather than just a design statement.

    1
    0
    Nick Gardner, NL, Canada
    27 Jul 2020
    3:03pm

    Having read your assessment, I would agree with you that AM needs some rethinking as to how needs to position itself to ensure it survives into the future.

    I agree hardheartedly that to fully activate the global benefits of F1 it demands full immersion into a works team. I agree that while the value proposition of partnership sounds tempting on the balance sheet as a cost, it doesn’t hold a candle to the ability to leverage the power of the F1 fan-base as it turns AM into more than just the company that produced James Bond’s car.

    In that vein, I also agree that while the Continuation series of the movie car is something they are uniquely positioned to do, it does take the shine off the brand. Not forward thinking enough and just “cashing in” or looking for a win in a portfolio which has been hemorrhaging value for some time

    The only part I do somewhat disagree with is the notion of exclusively using AMG engines throughout the brand. This to me is the only part that hurts. AM has always been portrayed as the British Muscle car. It is known for being handmade and being snappy as a sports car but refined like a Grand Tourer. One need only to see that values for the older models are holding par and those who love them love them dearly. To turn the heart over to AMG sounds wonderful to most. The snap and the growl of the V8 is beastly but it lacks a soul.
    Ultimately to let the engine development be turned over to AMG when so many others have done or are doing it currently means it is no longer special. It is no longer bespoke.

    You, of all people should see that AM is like buying a Saville Row suit. This is not off the rack. But hand made. Tailored to fit the refined tastes of of the buyer who knows he’s not buying the car that sets Nurburgring lap records. They want the story that their car was made by a craftsman and they buy the story of craftsmanship and quality in a world that is far too often sterile and cold.

    While the nostalgia factor can over time become hokey and not current, to deny its existence by not leaning into the values it has created over time seems cold and not in spirit with the history of the brand. To deny the value of it is a sad state of affairs and should be mourned.

    2
    0
    AB
    26 Jul 2020
    9:31pm

    DBX Coupe will be high up the agenda as well I imagine

    0
    1
    Richard Lacey
    27 Jul 2020
    12:25pm

    Agree re Callum. Sent a message on twitter to this affect when I heard he left Jaguar. Reichmann should already have left the building. Think a carbon tub may be expensive for the vantage. Alloy at that price point does the job. V6 probably be required for DBX models and spin offs plus vantage etc with reduced emissions going forward but they could source them from Merc or buy like McLaren, don’t know the financials, so cannot offer an opinion. Merc interiors need to be dumped from sports cars. Valhalla had a very interesting concept (that was beautiful) with no media screen, just using ones mobile, this is the direction they should take. Thank you for your article

    1
    0
    Np
    26 Jul 2020
    9:59pm

    One project which I think would have done well would have been the electric lagonda. I’m a petrol with a manual type of guy but one doesn’t have to wonder long to see the potential popularity of something in that mold. But realistically, you would need lots of money or dig a really deep debt whole.

    1
    0
    Christian Grebe
    27 Jul 2020
    1:47pm

    I think this is a very good assessment of the situation at Aston Martin, as far as you can see inside the company from the outside.

    I agree with you on the design aspects of the cars. I was quite underwhelmed of the new cars since the ‘old’ Vantage. I bought a V12 Vantage S with a manual myself and still think it is one of the most beautiful cars out there. I did not ‘get’ the new cars, same for the interior. That said, I think the design of all the proposed mid-engine sports cars is extraordinary and I like it. There needs to be a change in design and those concepts look dramatic and desirable.

    I think it was an excellent decision under Ulrich Betz to go for the VH-platform. It saves a lot of money a small company does not have. Not sure about the diverse path Aston Martin went since then. Aston Martin is small compared to Ferrari. It takes very deep pockets to compete in this market.

    Going F1 with Stroll’s money is good for publicity and attracting customers. Not sure about the long term. Maybe this whole F1 thing just burns a lot of cash spent better elsewhere, like developing an own engine. Hopefully Stroll has very deep pockets. Running a F1 team and a sports car manufacturer at the same time is quite ambitious. Just running one of it has ruined people.

    I would ditch F1 and built an engine.

    1
    0
    David B
    29 Jul 2020
    4:25pm

    Totally agree about the lack of focus and chasing ludicrous projects like the Submarine and Motorbike that can only dilute the brand and are probably almost impossible to deliver profitably. I think your case for realigning their product line and also improving the aesthetics are very valid but I would also argue that DBX needs to have some kind of hybrid or electric power train for it to become successful in the longer term. Presumably the rest of the range will in time also need to offer hybrid options ? Short term DBX will sell to fans of the brand but those easy sales won’t last long and then you will be competing more on the product that they are offering.

    I suspect they don’t have enough money for any of the above in the current operating environment. I think Aston need a quick win and the quickest is probably improving the design of the current cars, unfortunately I think that for the longer term health of the company a new model line up with that mid-engined V8 is probably what they should do first followed by the hybrid/electric powertrain for DBX.

    0
    0
    John Sim
    9 Aug 2020
    1:38pm

    I’ve been saying for a long time now to save Aston Marek Reichman must go. I’m glad more and more people are coming to that realisation.

    The Vantage needs a bumper to bumper redesign by a competent designer to make it beautiful again. Under the skin it seems fine. Autocar this week described it as “unsuccessful” and previously even Aston blamed its slow sales for their problems. Yet Aston let Reichman loose on more car designs! Repeating the same mistake time and time again is a sure sign of insanity.

    Too many of Reichman’s designs need fixed, and it’s too late for the DBX. It’s not terrible, but a final going over by a new designer would have it looking superb. There could have been queues out showrooms for this, but they let Reichman work on it…

    F1 is a waste of time for Aston Martin; nobody sees through that it’s a branding exercise. McLaren were an F1 team turned to doing sport cars, Ferrari essentially the same to pay for their racing. McLaren can’t find enough money to go racing, and Ferrari need special payments to stay in the sport. Both have had to turn to blood money with tobacco sponsorship again. This isn’t what Aston needs.

    Valkyrie has an even bigger problem. The T50 from Gordon Murray. I know which I’d buy.

    And then there’s Stroll. He’s got far too much control of the company for a fraction of the shares. His report referenced Aston as a “Brand” with a capital B. He’s only interested in making it appear that Aston is the British Ferrari, not by adding value by getting the products right. His assertions are more about image than building the fabric of the business. If you get the products right, the fabric of the businesses, the brand value will follow and mean something.

    And the new CEO of Tobias Moers isn’t the right guy either. He’s already praised Reichman’s designs, overseen the pig ugly AMG GT and failed in delivering the Mercedes Project One. Not the right person at all.

    1
    0
    Kevin Wu, NY
    14 Sep 2020
    1:29pm

    Another great read. Yes, I do understand and agree with you on many fronts but I also have to agree with what Nick Gardner wrote. He did have quite a few points that if mixed with yours and fed to Stroll, may actually be the recipe to turn AM around. Another update and some food for thought. Given the state of F1 with Seb going to AM F1 next year, how much of a factor do you think keeping his son in one of the seats will play? In our household, we have nicknames for certain drivers. Douchebag 1 (Seb) , Douchebag 2 (Max), Douchebag 3 (Lance). Personally, I not buy an AM if I had heard that Lance was still in an AM seat.

    P.S. I was in Miami, March 2019 and I was driving down the main section where I actually doubled back when I saw the Aston Martin Miami Apartments. But as I drove further down Collins, my brother pointed out the Porsche Design tower which is the equivalent of AM’s Miami apartments. And you know how it is in Miami. You could get sucked into the glitz and the glamour. What a waste of money especially given the state of the world right now.

    1
    0

Leave A Comment