Aston’s an­nus mirabilis: where did it all go right?

Andy Palmer’s au­da­cious man­age­ment is pay­ing o , and then some. By Gavin Green

CAR (UK) - - Contents -

IHAD DIN­NER WITH ANDY Palmer in Paris a few days af­ter he was ap­pointed boss of Aston Mar­tin. It was Septem­ber 2014. The ex-Nis­san chief op­er­at­ing of­fi­cer spoke of his de­sire (‘since I was 20’) to be a car com­pany CEO, and of his pas­sion for Aston Mar­tin.

‘Am I ever go­ing to be re­mem­bered for be­ing num­ber two or three at Nis­san? No. But I would be re­mem­bered for turn­ing around Aston Mar­tin? Ab­so­lutely!’

There was an­other in­cen­tive for this for­mer Rover en­gi­neer. Namely, a juicy bonus, agreed with Aston’s pri­vate eq­uity own­ers. ‘My job is to make the com­pany as valu­able as pos­si­ble as quickly as pos­si­ble,’ he later told me.

With Aston Mar­tin about to float on the Lon­don stock mar­ket, val­ued at around £5bn, Palmer should col­lect about £22 mil­lion in shares over the next four years. (But it could top £30 mil­lion, if shares trade at higher than ex­pected prices.) Add a £1.2 mil­lion salary and about £5 mil­lion in per­for­mance pay­ments, and he may well grad­u­ate from the Sun­day Times Busi­ness sec­tion to the Sun­day Times Rich List. The Kuwaiti and Ital­ian own­ers are likely to see a ten-fold re­turn on their in­vest­ment. Ini­tially 25 per cent of shares will be sold in the flota­tion.

It’s way too soon to say that Andy Palmer has ‘turned around’ Aston Mar­tin. But he’s made a good start. The com­pany is newly prof­itable, for prob­a­bly only the third time in its 105-year his­tory. It has been bank­rupt more times (seven) than it’s made money.

There is a busi­ness plan – seven new cars re­placed in seven-year cy­cles – that seems sim­ple and sen­si­ble, and has been fully costed. The £200 mil­lion needed for the ini­tial in­vest­ment was raised, mostly from ex­ist­ing in­vestors, in 2015. There’s a new Welsh fac­tory to build the DBX SUV and elec­tric Lagondas. Sig­nif­i­cant growth seems likely: Palmer talks of boost­ing an­nual sales to 14,000, once the St Athan fac­tory is at ca­pac­ity. Last year, it sold just over 5000 cars. Th­ese num­bers seem am­bi­tious but achiev­able, as long as the long-for­got­ten Lagonda brand res­onates and the DBX ap­peals.

Plus, Aston Mar­tin is try­ing to el­e­vate it­self into a ‘lux­ury life­style brand’. Th­ese are val­ued higher by herd-like stock mar­ket in­vestors than car brands, ap­par­ently. Wit­ness fluffy non-auto Aston projects such as power­boats, Florida apart­ments and sub­marines (see panel, right).

More per­ti­nently, there’s an­other hy­per­car on the way, due in 2021. ‘Project 003’ is the ‘de­scen­dent’ of the Adrian Newey-en­gi­neered Valkyrie. It’s more road-bi­ased, more prac­ti­cal. There’s even space for lug­gage. Only 500 will be built. As McLaren, Porsche and Fer­rari know well, th­ese lim­ited-edi­tion hy­per-priced hy­per­cars can de­liver huge prof­its, as­sum­ing a sell-out.

Mean­while, Palmer is locked into an­other four years as CEO, which should re­as­sure in­vestors. That co­in­cides nicely with his 60th birth­day. Af­ter that he may de­cide to spend more time driv­ing his im­mac­u­late ’70s V8 Van­tage. By then, he’ll prob­a­bly be able to af­ford Aston’s next hy­per­car, too.

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