Forget Bond, or bonds, anyway. What Aston Martin is looking at now is stock. The British automaker, best known as the car of choice for super-spy 007, is acting on long-standing rumors and planning to go public.
The company, which has gone bankrupt as many as eight times since it was founded 105 years ago, has staged a major turnaround during the last several years, and it now plans to float as much as a quarter of its existing shares, a move that would raise an estimated £5 billion, or nearly $9 billion for current shareholders. The IPO will be a test of the “Second Century Plan” put in place by CEO Andy Palmer, who joined Aston in mid-2014.
“Today’s announcement represents a key milestone in the history of the company, which is reporting strong financial results and increased global demand for its award-winning sports cars,” Palmer said in the statement.
Aston is unquestionably best known for its ongoing role as the supplier of cars for Bond films, a relationship that goes back more than 50 years and was only briefly interrupted when BMW outbid Aston and supplied its own vehicles for a few of those adventures. Despite having relatively little cash for paid film placements, Aston returned, in large part due to the demand from 007 fans.
Those cars have enough of a following, in fact, that Aston earlier this month said it would recreate the classic DB5 that originally appeared in “Goldfinger,” and it plans to offer 25 full-size reproductions that, the British marque claims, will include an assortment of “working gadgets.” It did not say whether that would include the legendary ejection seat or machine guns. But even though the reproduction won’t be street legal, Aston expects to quickly sell out the series at £2,750,000 pounds apiece, or about $3,510,000 at today’s exchange rate.
(Aston Martin rolls out limited line of “Goldfinger” DB5s. Click Here for the story.)
Specialty models are one part of Palmer’s far-reaching Second Century Plan which, when originally announced shortly after his arrival, was expected to cost $845 million. While small by the standards of mainstream automakers, that was billed as the biggest program in the history of the company, which is based in Gaydon, England. And, all told, it will allow Aston to launch seven distinct new product lines.
That rollout began with the debut of the new DB11, the successor to the real DB5, two years ago. The third model, the DBS Superleggera, is just now reaching showrooms.
Next up is the DBX, Aston’s first-ever SUV. It was, in fact, the first vehicle project Palmer initiated, just days after he came to work in Gaydon.
“I knew the mass of the market had clearly moved over to SUVs. I also knew 72% of Aston owners had an SUV, so why wouldn’t we transition those brand advocates out of something like a Range Rover and into an Aston SUV?” Palmer asked during an interview with TheDetroitBureau.com.
Aston was by no means the first luxury maker to target the SUV segment, Mercedes-Benz, BMW, Audi and Porsche already well established there, and Bentley and Lamborghini were, by 2014, readying the launch of its own Bentayga, the first SUV in the ultra-premium segment. If anything, however, demand has skyrocketed since the concept DBX was shown and even Rolls-Royce and Ferrari are entering the fray.
Aston actually plans to add a second ute, this one an all-electric model that also will mark the revival of the Lagonda badge. It will operate as an essentially standalone brand and will offer only all-electric models, starting with the debut of the SUV in 2021, with a battery-sedan to follow in 2021.
The DBX is expected to become the brand’s best-seller, but added together, the Second Century Plan envisions boosting sales to 7,000 to 8,000 annually, and again doubling that figure to 14,000 by the time all seven of Astons new models are in production. Looking further out, Palmer sees still more opportunity for growth, though he quickly adds that he prefers to err on the “conservative side.”
Not everyone is so upbeat. Some critics contend the latest crop of Astons don’t quite match the best of the competition, notably Ferrari, though Aston’s sales have been growing. For his part, Palmer said he’s not worried about threatened U.S. import tariffs, or even Brexit. But there are some things that make him sweat, including the threat of another major economic shock, like the one triggered by the collapse of Lehman Brothers nearly a decade ago. As a result, he is looking for ways to broaden the company’s appeal, and revenue base.
(First Drive: Click Here for our review of the 2019 Aston Martin DBS Superleggera.)
Palmer’s Second Century Plan may put a premium on exclusive automobiles, but he sees Aston as a broader luxury brand, along the lines of the exclusive, French-based LVMH Moët Hennessy Louis Vuitton SE, also known as LVMH. Don’t expect to see it selling caps and scarves, the CEO says, but it will stray into new territory in the coming years.
It has launched the Project Neptune partnership with Triton Submarines to build the sort of personal sub James Bond might appreciate is one example. Another effort will see a new, 66-story condo complex in Miami named the Aston Martin Residences. And earlier this summer, at England’s biennial Farnborough Air Show, the company rolled out a three-seat personal aircraft that Palmer sees as part of a rapidly changing world of transportation.
Developed in cooperation with Cranfield University and Rolls-Royce Aerospace, Palmer insisted the aerocar isn’t a fantasy, but something that could become a real project, with a functioning prototype due as early as 2020.
“We’re not putting our own money at risk,” noted Simon Sproule, Aston’s global marketing chief, emphasizing that such deals have lots of upside potential and relatively little downside risk – at least as long as Aston picks the right partners.
Whether the planned IPO will connect with the market is far from certain. The company’s history is a cautionary note, according to several observers. And Sproule acknowledged Aston’s ledger sheet has almost routinely been in the red. It went bankrupt at least six times, though the figure might actually be eight, he said, adding that, “The records get hazy when you go back over the last 105 years.”
Nonetheless, things have begun looking significantly better. In the regulatory filing for the IPO, the automaker revealed its adjusted pretax earnings for the first half of the year increased 14% year-over-year, £106 million, or $137 million. Sales during the period jumped 8%, to £445 million.
(Aston Martin wants to take to the air with Volante Vision Concept. Click Here to check it out.)
Aston is clearly hoping to replicate the success of rival Ferrari, which has seen its market capitalization surge since going public. It’s now valued at around $24 billion, or 35 times earnings. But while Aston has generated only the rare profit during the past century, Ferrari has been on solid financial footing since it was founded in post-War Italy, and it remains to be seen if the British maker’s latest plan will generate the same level of enthusiasm among investors.
“…Ferrari has been on solid financial footing since it was founded in post-War Italy…”. But perhaps only because Fiat bought them in the 1960’s. There are far more exotic car companies in the “Repeatedly Bankrupt” and “Repeatedly Nearly Bankrupt” categories than those that have never seen red ink.