A couple of weeks ago, I had the privilege of watching a number of the sessions at the Financial Times, Future of the Car, Event in London. The overall theme of the event was: “What new skills, strategies, and strategic alliances does the car industry need to develop to future-proof businesses and ensure long-term success?” Overall, it was an outstanding and highly informative event and the list of participants was a who’s who of the automotive industry. Out of the numerous interviews and fireside chats, it was the three sessions with Aston Martin’s Lawrence Stroll, Ferrari’s Benedetto Vigna, and McLaren’s Michael Leiters that really captured my interest. Leiter’s discussed McLaren’s challenges and where they are headed, Vigna focused mostly on emerging technology and its implications for Ferrari, and Stroll talked about his accomplishments. All three sessions were moderated expertly by the FT’s Peter Campbell. The following are my key takeaways from each of the three sessions, in reverse order of the egos involved.
McLaren – Michael Leiters
Leiters came across as quite open, honest, thoughtful, and a little bit nervous. He was transparent about McLaren’s recent challenges, where he wants to take the business, and how he sees the portfolio and powertrain technology evolving. Leiters was clearly well prepared, well rehearsed, and remained very much on script during the 30 minute discussion. It’s clear that he’s got a massive challenge, possible more than he originally bargained for, when he took the job. He did make a point of saying that he has confidence in the business plan and it has strong shareholder support. Leiters indicated that he is hoping to have the new capital structure in place in a month. I hope he is right as it is a bit overdue at this point as the discussions have dragged on for at least 6 months now. A couple of other interesting points:
Ferrari – Benedetto Vigna
Vigna is clearly a captain of industry and quite comfortable in the Ferrari CEO seat now. While Ferrari might be his first CEO job, Vigna ran a massive highly complex semiconductor operating group prior to joining Ferrari so is used to managing complexity and large organizations. He started the discussion by establishing that he is used to working in a much faster paced industry than the automotive world which was a rather interesting approach given the audience. While he did say Ferrari was fast for a auto manufacturer, it was clearly implied that he would be step changing the rate at which Ferrari evolves and embraces change. He did reference Tesla as a company that has come out of nowhere to completely disrupt the industry. Vigna is a clear champion of using technology to create disruptions that can be leveraged. He does believe that innovation is core to the Ferrari DNA and he will use emerging technologies to drive that forward. A few quite interesting points:
Aston Martin – Lawrence Stroll
If Leiters and Vigna were the poster kids for staying on script and disciplined in their response, Stroll was free flowing word salad. The first two discussed their companies’ accomplishments. Stroll attributed everything to himself in a performance that would even make Trump blush. If someone in the Aston Martin PR department spent time preparing a script for Stroll, it was not time well spent. This was a completely different Stroll vs. the on-script discipled version from the FY 2022 Earnings Call.
A few things Stroll would like you to know:
And my favorite Q&A:
In answer to Peter Campbell’s question on inventory, “you said you’ve never made a card that you haven’t already pre sold. And yet there were some of the books last year, about 900 more cars, in inventory than were planned, what happened”
Stroll replied “with that no we didn’t 100 more if you’re referring to the DBX we had tremendous well two very big supply chain shortages which we mentioned during the course of the year one was one was leather one was bumpers and we had to deliver cars later in the year because we got the components later in the year those were sold orders or to dealers or the customers that we delivered later they were not there. The car should have been delivered earlier but were sold before they were delivered so there’s no, categorically there’s no car made today that aren’t pre sold at all. There’s no cars made today that were not ordered by a customer or by a dealer there’s no cars in our inventory there are cars in dealers inventory. Its just the two or three cars they have in the showroom. These are the cars that they have for test drives and but unless they’ve ordered the car, or the customer ordered the car, that’s correct we have not made a car. Other than some press cars or things like that”
Word salad has never had a finer moment.
As a final note, Aston Martin’s shares are down 83% since Lawrence Stroll took over as Executive Chairman and its Gross Debt is up by over £200 million. Regarding all the Aston Martin boutiques Stroll is planning on opening around the world, only one word comes to mind, Asprey (see: A Royal Mess – Asprey). In terms of only building to order, in Aston Martin’s 2022 Full Year Financial Report, it was noted that in the timing of deliveries towards the end of Q4, total wholesale volumes were temporarily ahead of retail volumes at the end of 2022. A check of inventory at a few US Aston Martin dealerships indicated that there are plenty of new Aston Martins for sale on dealer forecourts today. For more details on Aston Martin’s performance: AML 2022 FY Results & AML Q1 2023 Results.
Watching the three interviews back to back was fascinating. Leiters clearly has his hands full, knows it, and isn’t trying to hide it. Vigna and Ferrari are flying high but are concerned that the emergence of EV could destabilize the cash machine they have created. As for Stroll, there really isn’t anything to add that he hasn’t said himself. Stroll couldn’t be more different from the other two if he tried.
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