Update: Aston Martin: Time for a New CEO ?

On Feb 6th, Bloomberg published the following: Aston Martin is Hunting for its Fourth CEO in Four Years .  The Bloomberg article confirms what I was hearing in early January, which is captured in the article below.  For Bloomberg to have published the article, they would have confirmed it with multiple different sources.  Since I posted the original piece, I have heard that several candidates have been approached.  Given the history, the job is a tough sell to say the least, about on par with being named Chief Minister by Henry VIII.   While the title might be CEO, any qualified candidate has to realize that there is zero chance Stroll will actually let them operate as a CEO.  Given that the current CEO, Amadeo Felisa, has only been in the role of a bit over a year and a half, he has hardly been given the time (and very likely not the autonomy) to turnaround the business.  The last time Aston Martin (AML) had any stability in the C-Suite, Andy Palmer was the CEO. 

The timing on this development is also quite interesting as Aston Martin will be reporting their full year 2023 results in 3 weeks.  The delays on the DB12 and the management turmoil in Aston Martin’s largest region, the Americas, where AML is also on their 4th leader in 4 years, does not bode well for 2023’s final numbers.  At a minimum I expect there will have been another rather large “temporary suspension of the demand-led operating model” in Q4 2023. One of the largest Aston Martin dealers in the US has a notice on their website stating: “we have a much larger inventory on site and in transit” vs. the 18 new Astons they have listed on the website.  The fact that what was a confidential CEO search has become quite public now would seem to indicate that Stroll is planning to toss the current CEO under the bus for what are likely to be disappointing results.  How this impacts the latest “fulsome refinancing exercise” AML is about to kick off will also be interesting.

Things are certainly never dull in Gaydon.

I wasn’t planning on writing another article on Aston Martin Lagonda (AML) until they released their full 2023 results in February.  However, according to a couple of well informed contacts, it is rumored that Lawrence Stroll might just be looking for a new CEO for Aston Martin Lagonda…….again.  As Stroll’s index finger only points outwards, I guess this should not be a major surprise after all the issues with the DB12 start up and having to call down the 2023 Guidance back in November of last year.

 

Last time we went around on this merry go round was in early 2022.  It started out in early January with an Autocar article on the then Aston Martin CEO, Tobias Moers’ future at Aston Martin being in doubt.  At the time Stroll denied he was looking to replace Moers in a statement to the Financial Times Aston Martin chair denies he is looking for a new chief executive.  Stroll’s denial back then rang pretty hallow when shortly after the FT article came out,  Bloomberg Aston Martin Approaches Ford Executive identified the individual Stroll had approached about replacing Moers and indicated several discussions had already taken place.  Certainly, in this case, where there was smoke, there was fire, and by early May 2022, Moers was out and former Ferrari CEO, Amedeo Felisa, had replaced him. 

Looking back, the current rumored situation certainly is par for the course for Stroll since he took over as Executive Chairman at AML.  Poor Tobias Moers was left twisting in the wind for months and his first CEO, Andy Palmer, found out he had been fired when a reporter from the Financial Times called him up and ask for a comment. 

 

AML is really in no better shape today than it was when Felisa took over 2 years ago.  Looking at a few key numbers through the last available reporting period vs. same period 2 years ago:

 

 

 

Q1-Q3 2021

Q1-Q3 2023

Cars Wholesale

4,250

4,398

Revenue

£ 736 mil.

£1,040 mil.

EBITDA

£72 mil.

£131 mil.

Loss before Tax

-£198 mil.

-£260 mil.

Free Cash Flow

-£39 mil.

-£297 mil.

Net Debt

£808 mil.

£750 mil.

Cash on Hand

£495 mil.

£544 mil.

 

AML is selling a few more cars at a higher ASP (average selling price) than they were a couple of years back and losing a lot more money doing so.  The rise in revenue & ASP has more to do with the Valkyrie than anything else, and for this AML should thank the long-departed Andy Palmer.  Net debt is down slightly and cash on hand is up a bit which does look good on paper.  However, this doesn’t take into account the £964 mil. of capital that been raised in the last 2 years that’s almost all gone. However, to be fair to Felisa, blaming him for AMLs current issues is akin to blaming Lieutenant-General Arthur Percival for the fall of Singapore. While Felisa might be the CEO, he does report to an Executive Chairman, making him more of a COO than a CEO.

Potential Successors

Last time Stroll went down this path, he had a ready-made solution sitting right in his Boardroom in Amedeo Felisa.  Felisa had been the CEO of Ferrari from 2008-2016 so he was a highly credible option who already was involved with Aston Martin.  Today no such option exists on AML’s Board of Directors.  The last person who could have been considered, Antony Sheriff (former Managing Director of McLaren Automotive), left the Aston Martin BoD last April to become Chairman of the Supervisory Board at Rimac Group and at Bugatti-Rimac.  Stroll therefore has been forced to look outside the AML organization.  At this point, it’s a very tough role to fill, given both the history and what the future may hold (see: The Grinch). 

 

Stroll’s pool of CEO candidates fall into what I believe are three groups.  The first group is former Automotive CEOs/MDs looking for a new job (example: recent SSO Award Winner Thierry Bollore). The first group is less appealing to Stroll as all would come with baggage but would certainly be less expensive to hire than either of the other two groups.  The second group is recently retired Senior Executives who might just be interested in one last payday (example: recently retired Rolls Royce CEO Torsten Müller-Ötvös). This second group, from which Felisa came from, is an easier sell as one last big payday and a nice severance after a couple of years could be appealing.  The third and final group is current top talent at major automotive companies just below the CEO level.  That last group, of which Moers could be considered to have been a member of when he was hired, is going to be a very hard sell for Stroll given both AML’s history of revolving CEOs and its current financial situation.  These types of executives tend to plan a long game and are looking for both stability and a high chance of success.  To put it in F1 driver terms, Romain Grosjean would be in the first group, Fernando Alonso in the second, and Lando Norris in the third.

Implications

While I don’t think anyone at Aston Martin shed a tear as the door was closing behind Moers, if Felisa is out after about two years, it has potentially serious leadership implications for key areas of Aston Martin’s operations. While not many senior executives followed Moers from Mercedes AMG to Aston Martin, Felisa has surrounded himself with former Ferrari colleagues.  In fact, Aston Martin now has former Ferrari executives controlling all the key operating positions including sales, marketing, technology, procurement, and manufacturing.   At a glance, the Aston Martin executive organization chart today (AML Leadership Team) looks like it is more likely to belong to a Modena area organization than one based in Gaydon.  If all these former Ferrari executives followed Felisa out the door, it could have serious implications on Aston Martin’s operations.  At a very minimum, it’s going to cost Stroll quite a bit to get them to stay as a large amount of management turmoil is the last thing Stroll needs as AML embarks on the 1st half 2024 “fulsome refinancing exercise”.

Summary

When I first heard that Stroll might be back in the market for a CEO again, I wasn’t the least bit surprised.  However, sacking Felisa now does seem like a high risk move given the impending “fulsome refinancing exercise” they are about to kick off.  My guess is it gets pushed to the 2nd half of the year after the fresh cash is in the bank.  However, this doesn’t prevent Stroll from having a successor already lined up and available to start as soon as it’s convenient.  I doubt Felisa will be sad to go, the last two years can not have been much fun.  The only question is does his team then follow him out the door.

Note: I do not, and have never, owned any AML shares.

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January 2024

 

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11 Thoughts on Update: Aston Martin: Time for a New CEO ?
    rmd
    7 Feb 2024
     5:30pm

    but doesn’t Felisa have some kinda Premier Footballer deal? so what does he care if he is toast

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    John
    8 Feb 2024
     1:38pm

    I seen Felisa more as a caretaker CEO until they found someone who wanted the job, if any competent person does?

    When you think about it, their future hasn’t deviated much from the Palmer plans laid down, just that they’re taking longer to come to fruition and especially with the Valhalla. Biggest difference was with Tobias Moers, who being an AMG man got Aston to lean more heavily on AMG for parts and drivetrains.

    Stroll wanted Aston Martin to be the British Ferrari, but how can a thoroughbred use someone else’s engine? Part of the appeal of Ferrari is their own engines, giving them their own character. Aston may have used the i6 block from Jaguar, but it wasn’t ever anything but an Aston engine. The V12 was derived from design and reliability data of the Ford V6, but it wasn’t ever anything but an Aston engine.

    At least Tobias Moers can say he wasn’t the worst CEO as Thierry Bollore took that mantle and made it exceptionally difficult for anybody to challenge him! Look at how Bollore killed off Jaguar.

    Where to go for another CEO? Guenther Steiner is looking for a job…

    Whoever does come in as CEO has to ensure that he can do the one task that has hindered all previous three CEOs: The sacking of Marek Reichman. Reichman has been there for nearly 20 years and yet only with the DB12 have people said “it’s ok”. Engineering never better, but still not good enough design and his choice of colours don’t show off the cars at all. As Aston also faces yet another rescue package, the one big problem they’ve had – Reichman designs not selling – has to be fixed by sacking Reichman.

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      Ghini
      10 Feb 2024
       1:34pm

      I’d like to point on that on the okay looking DB12 there is a big black square on the front grill cutting straight through the body colored part. Now they say it was on purpose but that is definitely not how it looks and IMO it is f*cking ugly and not acceptable on a new car with that price tag.

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    Ghini
    10 Feb 2024
     1:40pm

    I do wonder what deal Felisa made when he took the “CEO” job. He already knew how Stroll operated so he knew he would never be a real CEO. He was on the BoD, never wanted the CEO title in the first place. It would make sense to say okay I’ll take over from Moers until you find a new CEO candidate from outside, or I only want to do it for a certain time and then get back in my BoD seat. That could still be the case..

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    Hywel
    24 Feb 2024
     11:55am

    Fascinating.

    The merry-go-round will, no doubt, settle on someone safe. Someone with a “sound” automotive background and plenty of “bottom”. Marvellous.

    Aston Martin, more than most other businesses, needs inspirational leadership and some strategic acuity. A team player, for sure (how else to get on with a character like Lawrence Stroll) but, nonetheless, someone who can communicate a vision authentically and then deliver on it.

    Of course, a large part of Aston Martin’s difficulties stem from a lack of vision. It’s not good good enough to want AM just to be a brand. That’s crass and vulgar. There has to be some substance behind it – some product with line of sight to the brand’s heritage and values. As a customer, I’m not sure I could tell you what the brand stands for at the moment or what its values are. It’s become blingy and a bit corpulent. The DB12 and (much more so) the new Vantage appear to be better cars than their predecessors but I don’t want to buy either of them. More power, more weight, less tactility and less driver involvement (no manual option of the Vantage…). The grace is being lost.

    I suspect AM is trying to compete with Ferrari but Ferrari buyers are not the same. I’m not going to profile the two constituencies here but, bluntly, there are many, many more Ferrari buyers than Aston buyers. It’s just an anthropological fact of life.

    Running a business like Aston Martin needs more than just an industry hack as its Chief Executive. It needs someone to inspire up as well as down. Someone who understands that, whilst everyone has limits, everyone has a contribution to make. Someone empathetic enough to find the common ground between the different interests of shareholders, customers and staff. Someone modern enough to understand that change is necessary but sympathetic enough to know that brand equity is priceless. And, of course, someone strong who can execute.

    John kindly replied to my last comment on this topic and made the point that “the size of Aston Martin means they need to sell a certain volume of cars. Lamborghini can do it, Bentley can do it, Ferrari could do it twice over. Aston must find a way to do that too.” I’ve reflected of that and, on reflection, I think John’s view is absolutely correct. Although I would like to see Aston as a sort of larger scale Ruf, the business is starting from a different place and, if Aston needs to survive as a volume car maker, then it needs to do what Bentley, Lamborghini, Ferrari have done but, because of its brand heritage and customer base, Aston will need a different approach to those others.

    Aston Martin’s current path (bling, weight, unusable power, no manual gearbox, too little support for owners, crass marketing etc) isn’t going to cut it unless its shareholders want to trash the brand and continue burning money.

    Incidentally, like most Aston owners, writing critically about the brand is a bit painful. I want to see it succeed, to thrive and to bring joy to future generations of owner drivers.

    Thanks for the regular posts, by the way.

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    Stanislav
    25 Feb 2024
     2:45pm

    Recent news about 400 agency jobs opening look like preparation to explain low results in q4 2023. “We were limited by lack of employees, but we are already improving now.”

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