What Next For Aston Martin?

Sacking your CEO is a great way to boost investor confidence. Just ask Aston Martin. After their CEO, Andy Palmer, was 'arrghed' of the 'ship' a-la Boss Baby style, the British brand's share price went up over 30 %. To any business shareholder reading this, this may seem like a quick way to make money. That is if you conveniently ignore the fact that under Mr Palmer's tenure Aston's share fell by 98%. 

Source: Livemint

But sure, any improvement is a good improvement, right?

Improvement is a key part of the Aston Martin story. The Gaydon based manufacturer has gone bankrupt almost 8 times in its 107-year history ( Someone should give them the 'Trump: Art of the Deal' book). Thus, in 2014, Andy Palmer was brought in to do some ' improvements'. This Andy here wasn't going to spend his time writing his name on Woody and Buzz Lightyear.  He was tasked to do the good old 'switcheroo' on the company's fortunes. The English man had years of experience working at Nissan, climbing through the ranks and working directly under it's then CEO Carlos Ghosn. Palmer was called 'engineer-turned-marketing-guru [with a] raw instinct'. He was 'improvement' personified.

Source: Financial Times

Andy wasted no time in his attempt to turn Aston Martin around. He began implementing the many policies he learnt whilst working in Japan including frugalism, reduced internal politics and perhaps some intense bowing. He actually had a plan, aptly called the 'Second Century Plan'. Maybe he was planning to preside over the brand for the next 100 years. After all, he worked in Japan long enough to feel that even he, as a gaijin, would get blessed with a long life.

Nevertheless, the plan worked. The marque, most famous for supplying 007 a set of 4 wheels (and a car too), released several new models like the DB11, Vantage all whilst developing a specific factory for the upcoming DBX SUV. He also oversaw the evolution of Aston's Nordic-themed halo cars, namely the Valkyrie and the Valhalla.

Source: Google Images

Within a year, non-Toy-Story Andy had produced an impressive 11% growth in car sales, and between 2014 and 2017 had increased the car manufacturer's EBITDA ( Earnings Before Taxes, Depreciation, and Amortization) by 400%. The company had finally returned to profitability. 

But that didn't mean the company's years of debt had been wiped off. Profitability was good but like any car company, Aston needed more capital to continue making cars. The launch of the DBX was meant to attract more people to the brand and get more capital for developing those big bucks garage collector wheels but the development stalled. The purpose-built plant for the DBX too had emptied a significant portion's of Aston's cash. It needed money, pronto!

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So an IPO (Initial Public Offering) was announced. The company decided that it had made significant enough changes under Palmer's tutelage and now was the time to go under the hammer and put itself on the line. So on October 2018, Aston Martin stock floated on the LSE (the London Stock Exchange, not the London School of Economics) and over the next few days, the share price reached a sweet sweet 19 pounds making the automobile producer worth a bank-busting 4 billion pounds. That's bigger than the economies of some countries. Aston was floating flying.

But sadly like Buzz Lightyear or Newton's apple, it couldn't stay up for too long and came crashing down. Oh no, the horror!

Source: Google Images

So...What went wrong?

Simple answer: the brand became boring. Aston cars were ridiculed for looking and being much too alike in the pre-Palmer era. So when the all-new DB11 came out with Palmer's blessing, with a delightful body and Mercedes-innards, it was a breath of fresh air on the European stables. 

Source: caranddriver

However, the stable air grew stale yet again. The redesigned, renewed Vantage had a shoddy interior and was worse than its competition. And remember those Mercedes innards? Yeah, the Germans gave them older tech. Heccin bamboozled.

The DBS Superleggera? While being the prettiest modern Aston, it failed to differentiate itself yet again from its cheaper and older sibling, the DB11. It was like paying 40% more for a Snicker's bar only to find that the difference between the cheaper and expensive version is the packaging. Sure the bar was great, but when you paid that much more, you'd expect to get that much more. So the next time you were 'hungry', would you 'grab a Snickers'? Probably not.

The drop in sales led to an obvious drop in working capital for developing their already lagging DBX SUV. Just imagine if the DBX had come out at the same time as the Lamborghini Urus. They would have easily scratched the luxury SUV buyer itch by setting being in a unique spot of as fast as a Urus and as luxurious as an Aston. But with the Rolls Royce Cullinan released soon after the Urus, and the likes of other big-name manufacturers like Bentley and Porsche pushing new SUV's onto customers, the potential buyers for the Aston didn't feel the need to wait on the DBX. The car which was supposed to save them, came too late.

Source: Top Speed

The Valkyrie was an outlier in effect as it was a car at a level never seen before. But with only 150 samples, they weren't enough to keep the brand afloat. Aston's reputation fell so drastically after their IPO that even their bonkers car like the Valhalla, a car pegged to be better than the Holy Trinity of the Ferrari LaFerrari, McLaren P1 and the Porsche 918 (not the Father, Son and the Holy Spirit, although those would make great car names, especially for the Pope-mobile), didn't get snapped up by the numerous rich folks on this Mother Earth.

Source: Motoring Research

Aston was in huge debt and headed for bankruptcy. And well, it's 2020. COVID is screwing over everything and anything. Not wheeeeeeeeeeeee.

In comes Aston's new lord and saviour, Lawrence Stroll. Tada!

But wait, who's Lawrence Stroll?

Oh right! Stroll is a Canadian fashion investor with an estimated net worth of US$2.6. Followed by the word 'Billion'. He owns a Formula 1 team called Racing Point (formerly Sahara Force India), another team he saved from bankruptcy after it's the previous owner, Vijay Mallya was arrested over money laundering. His son, Lance Stroll, is also a driver for the team. Almost definitely because he's a good driver. Definitely. Back to Lawrence.

Source: Zimbio

So simple answer, Lawrence is rich, he has form and loves to um 'Stroll' his money around. He saw an opportunity and thus led a consortium to help Aston recover earlier this year, buying a significant stake and becoming its new chairman. And immediate changes were made.

Bam, there goes Palmer. With his probably large severance package. In comes Tobias Moers.

Now, who the hell is Tobias Moers?

Moers was the CEO of Mercedes-AMG, successfully helping the German brand spin-off  'AMG' as a stand-alone brand. And also developing the Mercedes AMG One, the hypercar rival for the Aston produced Valkyrie. But why would Tobias move from such a successful career at AMG?

Source: Google Images

He's probably getting a fatter paycheck but while Tobias might be shifting homes across the English channel, Aston and AMG are in theory part of the same company. Daimler, the parent company of Mercedes-Benz ( and indirectly AMG) holds a significant stake in the Aston Martin brand. Besides, Mercedes was a key stakeholder in Andy Palmer's Second Century Plan, providing engines and internal technology for those cars. Lawrence Stroll is also on great terms with the German automaker and their F1 team. Which is probably why the Mercedes-AMG F1 Team Boss, Toto Wolff, bought a personal stake into Aston Martin himself. 

Aston needed change and have put their faith on Moers to turn them around. Because what they need right now is some German efficiency.

What does Tobias have to do to turn the brand around?  

Reduce costs, increase sales. 

C'mon, it can't be that simple.

Yup, it definitely isn't. But that is the gist of Moers has to do. The brand needs to be more efficient and faster in producing and developing cars, or else its gap to the big names like Ferrari and Lamborghini is just going to become wider than the Grand Canyon. And by developing I mean developing from the ground up, not selling the same car re-bodied.

 If you want to borrow Mercedes tech, then that's cool, but you need to differentiate the lineup, not only from the cars at Affalterbach (AMG Headquarter's) but the range at Gaydon too. Sales for the SUV need to be pushed. You can't have spent millions of dollars for a factory for only producing one car and not have that car sell. 

Source: YouTube

More customization options should be made available, cheaper if possible, not just to the millionaire's who buy the 7 figure cars, but to the consumer who wants to spend 6 figures on a sports car and make it his/her own. Those will be Aston's ticket to bigger revenue and recurring brand loyalty. They are the ones who will spread the brand via word of mouth and give glowing reviews, especially if their ride looks just the way they want it to. Because then, their mind would gloss over any faults. 

After all, they are supercars. You buy them with your heart, not with your mind.