This time there is a plan. But will time and money hold while it pans out?

Wheels (Australia) - - Contents - BEN OLIVER

SPEC­U­LA­TION HAS been rife about As­ton Martin’s fi­nan­cial health. Like its most fa­mous cus­tomer in Goldfin­ger, the laser is head­ing straight for As­ton’s ’s nether regions and CEO Andy Palmer will need to do some­thing smart – and soon – to switch it off.

When it floated a year ago on the Lon­don Stock Ex­change, As­ton was val­ued at £4.3bn ($A8bn), and re­turned d £1.1bn to its Ital­ian and Kuwaiti pri­va­tee­quity own­ers. That val­u­a­tion was based on the glo­ri­ous fu­ture en­vi­sioned d in Palmer’s ‘Sec­ond Cen­tury’ plan, in which SUVS, sedans and EVS dou­ble As­ton’s vol­umes to 14,000 cars by 2023, , fi­nally giv­ing it the scale and sta­bil­ity it has al­ways lacked. That plan is still on track, just about. The trou­ble is that old d As­ton is get­ting in the way. The share price had been on the slide for a while, but the an­nounce­ment in late July of an £80m loss in the first half, slump­ing sales in the UK and Europe and sharp down­ward re­vi­sion to es­ti­mated full- year sales caused the stock to plum­met, leav­ing As­ton worth just a quar­ter

of what it was a year ago. The share price slump re­flects in­vestors’ con­cern that As­ton might break be­fore it can get to Andy’s promised land, its cash burnt up by the toxic com­bi­na­tion of tur­bu­lent cur­rent trad­ing and the cost of de­vel­op­ing those new mod­els. It sim­ply needs more money. The pro­ceeds of the IPO didn’t go into the busi­ness but straight back to the in­vestors and the ex­ecs, in­clud­ing Palmer. They won’t want to di­lute their hold­ings now by rais­ing the re­quired cash with new eq­uity is­sue at rock-bot­tom prices. As­ton will prob­a­bly have to bor­row the money, but it will be ex­pen­sive to fi­nance and will add to its debt pile.

So As­ton is in a tight, but by no means in­escapable, spot. The lead­ing auto an­a­lyst Max War­bur­ton has ex­am­ined As­ton’s ac­counts and in a pri­vate note to in­vestors says that he be­lieves the com­pany will find the fund­ing to make it through to 2021, by when DBX pro­duc­tion should have ramped up and added around 4000 units to As­ton’s sales. The firm will also need to cut costs sharply, pos­si­bly slow­ing or even paus­ing de­vel­op­ment of the mid-en­gined Van­quish and Val­halla, and, af­ter the DBX launch, re­vis­ing its growth plans down­wards ac­cord­ingly.

The $4.5m Valkyrie is pretty much done, and de­spite its low vol­umes will make a use­ful con­tri­bu­tion to As­ton’s cof­fers once it starts sell­ing at the end of the year. But War­bur­ton warns that there’ll be no wrig­gle room in As­ton’s es­cape plan: Valkyrie and DBX will both need to ar­rive on time.

Even if As­ton can get DBX and Valkyrie on sale on time, its fu­ture is by no means guar­an­teed. The com­pany is busy com­plet­ing its new fac­tory at the former RAF base at St Athan in Wales, where Palmer will at­tempt some­thing few car com­pany bosses would have the stom­ach for: build­ing two en­tirely new types of car, in a new fac­tory with a new work­force. Usu­ally it’s one or the other: new car in an ex­ist­ing fac­tory, or vice versa. But the scale and pace of Palmer’s ex­pan­sion plan forces him to do both, so St Athan will build both the DBX and As­ton’s fu­ture elec­tric ve­hi­cles. The main risk is to qual­ity, and that risk is all the greater when you’re a lux­ury car maker with a rep­u­ta­tion for hand-tooled op­u­lence but oc­ca­sional me­chan­i­cal and elec­tri­cal woes.

There’s also no guar­an­tee that the DBX will reach and main­tain the sales Palmer needs, and the con­cern is that the new SUV might not gen­er­ate the cash on which the lat­ter stages of Palmer’s plan rely. As­ton has been bank­rupt seven times in its long his­tory. Ev­ery­one watch­ing is hop­ing that, like pa­per, it won’t fold eight times.

There’s no wrig­gle room. Even if As­ton can get DBX and Valkyrie on sale on time, its fu­ture is by no means guar­an­teed

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