Aston’s annus mirabilis: where did it all go right?
Andy Palmer’s audacious management is paying o , and then some. By Gavin Green
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.