Aston Martin plans a second coming

With a blueprint to create 1000 new jobs, introduce a slew of technology-laden models and create a second manufacturing site, luxury sports car maker Aston Martin claims to be accelerating away from its ill-performing balance sheet.

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It's "pretty ballsy", says its chief executive of 18 months and custodian of the iconic 103-year old marque, Andy Palmer, referring to the company's "Second Century Plan".

Aston Martin unleashes the Vulcan

The Aston Martin Vulcan is a monster of a machine, seen here taking to Highlands Motorsport Park in spectacular style. Video: Aston Martin/Highlands Motorsport Park

Aston Martin produces a product that is internationally recognised as James Bond's ride of choice. It is a small company with a big following. But Palmer has to please his multinational shareholders, as well as countless brand enthusiasts.

Just months ago Aston Martin announced 300 redundancies, mainly management roles lost in the pursuit of a flatter executive structure. Aston Martin had just posted losses of £35.9 million ($68.7 million) on turnover of around £454 million.

Is the boldness displayed by the new management team hubristic, or the necessary impetus to roll up sleeves and fix long-standing problems? Palmer has already set a number of changes in motion but remains coy about the latest set of accounts, which are not yet due for publication.

He says: "What I would say is, 'look at the results of the past 18 months'." Palmer says that he inherited a company that didn't hit any of its budgets and was in continual decline over the last few years. He says: "Last year's sales were up 11 per cent with a portfolio that, essentially, hadn't changed and was one year older. For the first three [financial] quarters, we've hit the declared budget."

Turning Japanese?

The 52-year-old is an auto industry veteran and was formerly second in command at Nissan's Japanese headquarters. He wants Aston Martin to adopt a Japanese-style culture of longer-term planning in order to ensure product credibility and profitability.

Under his guidance, Aston Martin will broaden its portfolio to include a third design, an SUV-type vehicle codenamed DBX to complement its V8 and V12-engined sports car ranges.

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Output from its existing Gaydon base in Warwickshire is expected to increase from around 4000 sports cars a year to 7000 units, in line with arch rival Ferrari's current production. The Italian maker says it intends to increase its overall output to more than 9000 units in coming years.

Palmer also wants to revive Aston's often-forgotten sibling brand, Lagonda. A new factory at St Athan in Glamorgan has also been announced. The fresh recruitment drive will result in 750 jobs being created at that facility and 250 at Gaydon.

Refresh and renew

The company is in what the chief executive calls the "stabilisation phase" of restructuring, getting itself in shape in time for new products.

"The next period, which starts from this September with the replacement of the DB9 with the DB11, represents the renewal of the sports cars range," he says. "Then we get into the third phase, which is one of portfolio expansion with the DBX.

"This company needs a tempo of new products. That tempo is at least one new car every year in each of the segments. So if you start in 2016, we've got DB11, then Vantage (smaller sports car), then Vanquish (top of the range). The sports car roll-out is more or less complete by 2018. Then you've got DBX (SUV, due by 2020) and so on.

"We need a minimum of seven cars (including derivatives) with a lifecycle of seven years and then copy, repeat, copy, repeat. That brings stability and it brings natural growth."

Around £500 million has been injected into the company to kick-start this process. A further £200 million has since been added. Headcount sits at 1850 but will rise to nearly 3000 once both facilities are running at capacity.

A star technical partner

With this level of investment, a strong technical partnership is fundamental. Daimler, owner of Mercedes-Benz and its AMG sports division, has taken a 5 per cent stake in the Warwickshire business. Mercedes is giving Aston Martin access to its industry-acclaimed electronic and electrical technologies.

The AMG division will supply modern V8 engines which the British manufacturer will tune to its own driving characteristics for the replacement of the smaller Vantage sports models.

"It allowed us to concentrate our own internal resources on developing a V12 engine," says Palmer.

Aston Martin will also have to expand its number of dealers to achieve higher sales. There are currently 160 dealers worldwide. Almost all of the recent expansion has been from China, Korea, Japan, other parts of the Asia and Australasia.

Independence play

The question is whether this quintessentially British luxury brand can remain independent in a sector where the future is founded on ever-spiralling development budgets.

Palmer says this is his "preferred" option. However, he acknowledges that this is only going to happen "as long as we have a robust partnership with Daimler".

Appearing over the horizon is AM-RB001, the codename for Aston's new flagship hypercar. It is being built in partnership with the Red Bull Racing team and its technical director Adrian Newey and should help place the Aston Martin brand firmly into the mid-engine sports car market.

Built for the road, the AM-RB001 will be loaded with F1 technology. However, it is likely to be even faster than an F1 car around Silverstone Circuit. "We're creating dreams for a new generation," says Palmer.

Of course, the marque's own future will need to be grounded in more down-to-earth realities.

Palmer says: "We have to be the Olympic athletes of the car business because we have to win. We don't have a choice. If we don't win, we don't exist."

The Sunday Telegraph, London

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