Aston Martin had high hopes when it launched its IPO last year, but things got off to a rough start, the stock tumbling almost immediately and, during the last month, share prices have again fallen by more than half.
The recent sell-off was triggered by Aston’s announcement that full-year 2019 production would be about 10% lower than originally forecast, at around 6,400 vehicles. It didn’t help when Moody’s cut its rating for Aston stock into junk bond territory, warning the ultra-premium carmaker’s cashflow will make it difficult to fund its aggressive product development program.
Despite such dire warnings, Aston CEO Andy Palmer remains confident things will improve, notably with the upcoming launch of the DBX, the brand’s first SUV. TheDetroitBureau.com spoke to Palmer about its products, plans and strategies and whether it can prove the naysayers wrong:
TDB: You’ve had some tough weeks, with your reduced 2019 sales forecast triggering a sharp slump in Aston’s stock price. How can you regain the confidence of investors?
Palmer: It’s perhaps been some of the most difficult weeks of my career. Nobody likes to hear their child being called ugly. There are people out there who don’t believe our story, don’t want to believe our story, want to bet against us, and worse, use the media to drive us down. The only way you can work against that is demonstrate they’re wrong. We’re already three cars in (to Aston’s seven-car plan) and you’re soon going to see the fourth and, I hope, that will begin to change attitudes.
TDB: You’re talking the DBX, your first sport-utility vehicle?
Palmer: Yes, and that will give way to the mid-engine cars. The best racing cars in the world, Formula One cars, are built in the UK, and we’re using that technology to bring those cars to the road. We’re all about exploiting British talent. So, it’s bizarre to see how people are downplaying our ambition. Ambition is good.
TDB: Let’s get back to the DBX. As important as those mid-engine cars will be, and as important as the revival of the Lagonda brand will be, those are niches. Considering the huge demand for SUVs, won’t the DBX have to become the foundation of the brand?
Palmer: We put our heart and soul into making that car the most beautiful SUV in the world and, more importantly, making sure it’s an Aston. It will probably become the most important car in our history, because it will become the car that transforms us as we try to address all parts of the high-luxury market. It will target the U.S. and China, two critical markets and it will change the dynamics of the company.
TDB: Are you confident that the global market for SUVs will continue to grow, especially at a time when vehicle sales in key markets like the U.S. are slowing down?
Palmer: There’s a slowdown, across the world, in demand for cars. But, I think it’s fair to say…the more (high-end SUVs) you put out there the bigger the sales grow. Go back four years, before the Bentley (Bentayga) existed, and sales were nothing, the market was zero. You might have said there was no demand for the Lamborghini or the Rolls-Royce Cullinan, or the model Ferrari is coming with. Clearly, the market grows along with the supply of (high-luxury SUVs).
TDB: One of the reasons investors got nervous was the sharp reduction in your sales forecast for 2019, from 7,250 to just 6,400 cars.
Palmer: But, year-on-year, we have had a 26% increase in sales. So, you hear we’re had a sales slump and are struggling, but how often have you heard about a car company having a 26% growth in sales. We’re confident about what we’re doing. But we rely on selling cars today to fund the development of cars for the future and that’s what (critics) point to and question whether we can do that. I think we can.
TDB: The DBX has been designed to allow you to later fit it with various electric drive options. The upcoming Lagonda models will be all electric. Can you talk more about these plans?
Palmer: A simple strategy, really. Aston Martin goes towards hybridization and Lagonda is our EV play. From a half-empty point of view we need EVs in our range because they help us meet our (fuel economy and emissions) requirements. The half-full point of view is that EVs are great. I led the Nissan Leaf program and fell in love with EVs. We’re set to become the first company that will bring a full EV into the high-luxury space. The market needs innovation. Electrification allows you to get rid of the big 12-cylinder engine and give space back to the passenger. That’s an important part of the innovation of EVs.
TDB: One might quibble. There already are some very high-end electric supercars, like Rimac’s. And, as with that battery supercar, isn’t part of the appeal of going electric the way it can improve the performance of already fast cars like an Aston Martin?
Palmer: You can get supercar performance out of an electric motor because you have such incredible amounts of torque. Outright performance is a great thing to have.
TDB: But what about that other big issue: Range?
Palmer: Range remains an issue. One of the innovations we brought to market with the Rapid-E (Aston’s limited-edition, four-door EV) is an 800-volt battery system that you can charge twice as quickly as existing batteries. It doesn’t eliminate range anxiety but it helps alleviate that if you have access to a fast charger. In reality, we know that in the high-luxury segment the average journey is 11 miles and daily usage is about 25 miles. So, in that sense, an electric car is perfect. But we have to worry about that once-a-year long journey. That’s where the 800-volt system is so valuable.
TDB: Let’s wrap up with James Bond. Aston will be back in the next, 25th 007 adventure?
Palmer: Yes, we have three cars in the next Bond movie. We have the DB5 – where would a Bond movie be without a DB5 – we have the V8 Vantage and then the Valhalla which points to the future of where our brand is moving. Bond and Aston are yin-and-yang. They go hand-in-hand and we’re really privileged and pleased to be part. Our relationship with Eon Productions is stronger than ever.