Aston Martin's chief executive on why today's deal puts the firm in a "great position"
Jim Holder
31 January 2020

Aston Martin chief executive Andy Palmer talks exclusively to Autocar following the announcement that billionaire Lawrence Stroll is investing in the firm this morning.

When did you conclude negotiations?

“I’m getting too old for all-nighters, but let’s just say it was a late night! It has been time-consuming, but as I sit here now the company is better funded than it has ever been in the past, with a good product cadence in plan as per the second century plan and with a commitment to build our own V6 hybrid in the UK. That is compelling.”

We understand you had rival bidders to consider, so why choose Lawrence Stroll?

“Lawrence and his consortium are a group of pretty big names and it is a great sign of confidence in Aston Martin and our plan that they have invested in us. They have huge experience in luxury brands, and as much as anything that gives the company - and me personally - a group of mentors to work with.

“On a more personal level, Lawrence shares a lot of my beliefs and passions. He was clear that the mid-engined plans had to progress, he has a passion for F1, and F1’s ability to sell cars for you, he can see the value of the hybrid V6 and more. And he loves cars; he’s an investor who wants to engage. There would be nothing worse than a disengaged investor.”

Is his investment enough to do what you want?

“To this plan, yes. It allows us to once and for all start doing the right things, chief among them controlling supply and demand in a way that Ferrari has demonstrated can be so effective. In the past we have had a balance sheet that has required us to push wholesales to pay our bills. Now we can reset, reduce our stock and start operating properly.”

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Shouldn’t you have done that before?

“We had to pay our bills, most notably the one to build a new factory. We made that decision in 2016 when the going was good and were committed to it. You can’t build a new factory and a new SUV that’s true to your values by cutting corners. The costs were fixed in a bullish market that turned to crap.”

How bad was last year?

“Very. Our retail sales were up 12%, our marketshare was up in a lot of markets, but the slice of the pie was less and the profitability of what we sold not good enough. The list goes on. It was a bad year.”

Don’t you have to take the responsibility for that?

“Yes. I’m chief executive. I’m responsible for that and for where we are. Clearly there were factors I couldn’t control, which affected almost every luxury car maker, but it is absolutely my responsibility to get us through this.”

What would have happened without this investment?

“We would have had to take on more debt at nosebleed levels. $100m at 15% interest is pretty alarming and inevitably would have created problems down the road. It’s not where anyone wants to go, because it is toxic debt, but I’m not going to say that we would have faced doomsday - just issues to overcome down the road. Thankfully we have a solution that I sit here now and reflect on as being enormously positive for now and the long term.”

Why push on with the mid-engine programme?

“Well, I’m a car guy, so that helps, but in business terms the profit margins on those cars are attractive, the market is still growing and open, and there is very little cross-shopping among buyers that would harm our other vehicle sales. Tie those facts into our involvement and belief in F1, plus the arrival as Valkyrie as our halo car, and it makes sense.”

You’ve stated Valkyrie will arrive this year. How hard has that project been?

“We are building and running cars and it will be delivered to customers this year. That’s the facts, but if you’re asking if it has been easy then the answer is no. I’m not blaming anybody for that, because we are trying to make a car of the decade, if you will, a last naturally-aspirated, F1-derived car for the road. That’s difficult, and if you want to know how difficult then look at how Mercedes are getting on with its own Project One. We are a bit late with the project but no more than a bit late, and it will be phenomenal. What a halo to have for our mid-engined programme.”

Will the split with Red Bull Technologies affect Valhalla?

“Valhalla was always in-house and will continue to be, as will development of our V6 hybrid engine.”

Could Racing Point, or Aston Martin Racing personnel, work on road car projects?

“Today, who knows? But it is possible.”

Could you work with Red Bull Advanced Technologies again in the future?

“I’m not discounting anything.”

How disappointing is it to delay your electric car plans, including the relaunch of Lagonda?

“You know I’m a great advocate of electric cars, going back to Leaf and the Nissan NV range, my favourite project of all. So I am wedded to the idea of electrification going forward. But we have had to cut our cloth accordingly - for me the V6 hybrid is the priority, and to be making that engine in the UK is something to be proud of.

“You also have to remember that none of our competitors, bar Porsche, will have an electric car on sale before 2025. So we are on a pretty similar timeline to them, and at the vanguard of the luxury market still. The money we have is going on making the mid-engined programme as good as it can be. The rest will follow.”

Are you concerned at switching from links with a winning F1 team to a mid-grid team?

“It gives us a challenge and, if you talk to Mr Stroll, then you’ll quickly learn he isn’t in the paddock to just turn up. He is investing in the team to win, and we wouldn’t want to be involved with a team that didn’t have a chance of at least podiums.”

How do you see your own future at Aston Martin now?

“I hope that people remember I’ve had four good years at Aston Martin and one bad one. I know people have short memories and that I am responsible for the lot, but I believe I have the support of Lawrence Stroll, his investors and all of our shareholders.

“This is a tough industry, but I’ve been in it 40 years and I hope people recognise that I’m good at innovating new vehicles, bringing those innovations to market and then marketing them with success. 2019 was a shite year for the industry. My job now is to navigate that, and with this investment I believe we have what we need to do that.”

READ MORE

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Comments
17

31 January 2020

Sorry to say this yet again, but what else?   His designs have been failing.   Palmer says he's had four good years at Aston and one bad one.   Really?   To me continuing with designs that haven't hit the mark is unexcusable.

 

If Palmer won't sack Reichman and get a new designer to refresh the DB11, DBS and all of the Vantage he has to go.

 

As for F1, their involvement with Red Bull is irrelevant.   Nobody is fooled by this.   Nobody is convinced Aston is anything other than a name.   Nobody comes through the dealships doors because of Red Bull.   And a works team is too rich for Aston.

 

Put it this way, they've just had to be rescued with an investment that's about half the budget of the Mercedes F1 team yet believe they can be a works team.   Fantasy stuff.

 

31 January 2020
I agree with Symanski. If Palmer wants to step up to the plate he’s got to get rid of Reichmann. The latter’s style isn’t working. It may have worked at TVR but Reichmann’s output lacks density, taste, restraint. It’s all a bit too puerile, blingtastic and superficial. It just lacks that discernment and purity you got in Touring’s and Bill Towns’ day.

What a shame when the product itself seems way more resolved in terms of overall customer experience than McLaren - let down by childish styling gewgaws. Goodbye Mr Reichmann.

31 January 2020
Saw a DB11 yesterday and it looked fan-freaking-tastic. And the Vantage is pure p0rn. If they can make big money off the DBX and get the very cool looking mid-engine range to work, Aston's not finished yet. Not by a long shot.

31 January 2020

Seeking mentors and belief in existing plans is lovely - but Mr Stroll's consortium doesn't actually offer anything of substance? Or is there hidden detail not described here?

£500 million? - Peanuts in terms of launching a product such as the DBX.

Geeley were the alternate suitor - who have VERY deep pockets and a good track record of taking struggling car companies and helping them flourish.

Exactly how much money are each of the AM board members taking home from this poorly considered deal?

31 January 2020

The big win in this is clearly that it eliminates the need for continued financing at incredible levels. They had already borrowed £120m at 12%, to add $100m at 15% would have been huge and means the cashflows are very difficult when the market is not booming. To be spending $33.72m per year on debt interest, and I've probably missed some other bond issues, would be very difficult for a company selling 6500 cars to absorb.

31 January 2020

Firstly congrats to Autocar for breaking this story. And note how Andy Palmer was so ready to talk to the magazine today, it would seem that Aston was far from annoyed by their coverage. 

One has to wonder a few things. Palmer's marketing/PR henchman Simon Sproule was pushed or jumped ship to FCA and I wonder what will happen now. Stroll has up to two board seats and Exec Chairman status which means he controls the board. He will want to get a big return and so we can expect more change to personnel and ownership.  He is, after all, a deal maker cut from the same mindset as Prodrive's Dave Richards or Tom Walkinshaw - the difference being Stroll plays in a bigger league than auto. 

My bet is that within two years is that another investor like Mercedes or Geely will be in play. 

31 January 2020
My money is on Mercedes ownership in fairly short order. Also on Palmers days being numbered: the product strategy has been unforgivable over the last few years, particularly the Vantage which has gone from being a beautiful sports car with an acceptable interior (for 2005) at the price of a 911 Carrera whose buyers mostly chose manual gearboxes to looking like a fish, crappy interior (especially next to latest gen Porsche and Bentley) priced like a McLaren Sports series and unavailable with a manual unless you spend a £150k and can can live with a dog leg shift. Utter, utter lunacy.

31 January 2020

The worry for me is that Aston get into a situation where they don't have the cash they need to pour into long term development ultimately it comes back and bites you, the automotive world is full of examples like that.

It why Tata have been so good for JLR and Geely for Volvo. They've never starved them of investment.

31 January 2020
TStag wrote:

The worry for me is that Aston get into a situation where they don't have the cash they need to pour into long term development ultimately it comes back and bites you, the automotive world is full of examples like that.

It why Tata have been so good for JLR and Geely for Volvo. They've never starved them of investment.

Tata good for JLR, you are joking.
JLR and has been kept afloat by government grants.

31 January 2020
Can you describe the government grants that have been keeping JLR afloat with the billions needed each year?

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