The New AMG Engine Apparently The New Aston V8??
Discussion
I think this is a very strange twist to the original purpose of the thread. The view that Aston could build/sell 100k vehicles a year would not only change the cars completely - effectively just reinventing Porsche - which would completely change the brand forever, and In my view for the worse. When I eventually managed to afford my first Aston and fulfilled a lifetime dream of getting one it was because they were pretty exclusive and very special. I have had a few Porsches in the past and whilst they were great they never made me feel like the Astons have.
One other thought. Where is Aston going to get the financial backing to build a factory and infrastructure to build 100k cars a year even if they could find buyers for them. IIRC the Gaydon facility was pretty much up to capacity in 2007 at around 7,500 vehicles and that was why the Rapide was built abroad in Austra. As it happened the bottom fell out of the market and they could have built it at Gaydon. So, you would need a completely new factory with 12/13 times the capacity of the existing one, a completely new dealer network. It would be a very different car being produced and I have little doubt that whilst it would have far more bells and whistles on it it would no longer be an Aston. Not sure if anyone would ever buy into that. Probably better trying it with Jaguar.
My view is take Aston upmarket and keep capacity around 7k cars a year. Probably would mean that I would never be able to afford another one but think it is the best way for the car/brand to go. Also, manage the second hand market to keep depreciation acceptable. They will have to use a big manufacturers technology and engines but make sure the engines retain their Aston-ness. Not asking for much am I? We will have to see what the AMG engines are like but little point fretting about it now untIl we see what is produced - unless of course you think this thread will influence anything
Just my view - and very happy to keep my very special Aston that I hope will be in my garage for many years to come.
One other thought. Where is Aston going to get the financial backing to build a factory and infrastructure to build 100k cars a year even if they could find buyers for them. IIRC the Gaydon facility was pretty much up to capacity in 2007 at around 7,500 vehicles and that was why the Rapide was built abroad in Austra. As it happened the bottom fell out of the market and they could have built it at Gaydon. So, you would need a completely new factory with 12/13 times the capacity of the existing one, a completely new dealer network. It would be a very different car being produced and I have little doubt that whilst it would have far more bells and whistles on it it would no longer be an Aston. Not sure if anyone would ever buy into that. Probably better trying it with Jaguar.
My view is take Aston upmarket and keep capacity around 7k cars a year. Probably would mean that I would never be able to afford another one but think it is the best way for the car/brand to go. Also, manage the second hand market to keep depreciation acceptable. They will have to use a big manufacturers technology and engines but make sure the engines retain their Aston-ness. Not asking for much am I? We will have to see what the AMG engines are like but little point fretting about it now untIl we see what is produced - unless of course you think this thread will influence anything
Just my view - and very happy to keep my very special Aston that I hope will be in my garage for many years to come.
Well put Ian
When capacity couldn't keep up, as you say they outsourced to Austria for Rapide, then demand fell and AML were stuffed with a commitment to Austria that cost them a lot of money. They won't make that mistake again in a hurry
But if demand reaches 7.5k which is total capacity and they cap sales there, discounting will happen less on new cars, depreciation slows, demand goes up even more as a result, depreciation slows even more, etc
The byproduct of that is prices continue to rise and profit per car goes up hugely.
It's the Ferrari model and it works very very well albeit it can lead to arrogance by the manufacturer
When capacity couldn't keep up, as you say they outsourced to Austria for Rapide, then demand fell and AML were stuffed with a commitment to Austria that cost them a lot of money. They won't make that mistake again in a hurry
But if demand reaches 7.5k which is total capacity and they cap sales there, discounting will happen less on new cars, depreciation slows, demand goes up even more as a result, depreciation slows even more, etc
The byproduct of that is prices continue to rise and profit per car goes up hugely.
It's the Ferrari model and it works very very well albeit it can lead to arrogance by the manufacturer
It is funny the twist the topic has taken and how everything said is taken so literally.
Of course AM will never sell 100k cars a year, but as a business goal it is appealing to any specialist car maker. At the moment though they have capacity to build around 7K cars but are only selling somewhere south of 4k. The new CEO wants to "double sales" by 2018, that is before they might release an SUV.
All I'm saying is any business' reason for existence is to grow revenue and profits to deliver a greater return to its shareholders. That is how Andy Palmer's success will be measured, as he can't do anything to improve the value of the brand. Aston can either achieve this by continuing to sell small qualities whilst increasing the prices and reducing its operational costs, or like Porsche has done by increasing volumes, building products that appeal to a wider market and joining a bigger group to benefit from economies of scale and IP.
I would argue that AM will remain a small car maker, but that Andy's job is to take AM to a level where Daimler can do something with them, i.e. at least 10k cars a year. Current activities would support this thinking, use of AMG equipment in the next gen cars, the resurrection of the Lagonda brand, the opening of new dealerships when sales are down on last year, the suggestion that an SUV could see the light one day and the drafting in of Andy Palmer, a man with a background in the mass-production car market (Rover and Nissan), rather then specialist car markers.
Of course AM will never sell 100k cars a year, but as a business goal it is appealing to any specialist car maker. At the moment though they have capacity to build around 7K cars but are only selling somewhere south of 4k. The new CEO wants to "double sales" by 2018, that is before they might release an SUV.
All I'm saying is any business' reason for existence is to grow revenue and profits to deliver a greater return to its shareholders. That is how Andy Palmer's success will be measured, as he can't do anything to improve the value of the brand. Aston can either achieve this by continuing to sell small qualities whilst increasing the prices and reducing its operational costs, or like Porsche has done by increasing volumes, building products that appeal to a wider market and joining a bigger group to benefit from economies of scale and IP.
I would argue that AM will remain a small car maker, but that Andy's job is to take AM to a level where Daimler can do something with them, i.e. at least 10k cars a year. Current activities would support this thinking, use of AMG equipment in the next gen cars, the resurrection of the Lagonda brand, the opening of new dealerships when sales are down on last year, the suggestion that an SUV could see the light one day and the drafting in of Andy Palmer, a man with a background in the mass-production car market (Rover and Nissan), rather then specialist car markers.
R8VBV said:
All I'm saying is any business' reason for existence is to grow revenue and profits to deliver a greater return to its shareholders.
Ian and Jonby have outlined the position perfectly.
You might know about the long financial history of B&M and AM, Rob.
I of course agree with your extract above, but it fascinates me that AML might possibly be the only company today, that has survived 101 years without following that conventional business model. To be able to do that is remarkable, and must be due to the extreme passion that has alway been shown to the marque. So much so, that very deep pocketed ladies, gentlemen and corporations, have always stepped forward with cash injections, every time they have been needed.
When a car company achieves that, it is certainly a very special brand.
On the point of whether Daimler would want control. They cannot possibly want it for financial reasons, because even if AML annual sales were to reach 10,000, the revenue and any profit would only be 'rounding' figures for the Daimler accounts. Therefore it could only be, that they may decide a British trophy brand could enhance their own standing. Daimler already have a longer history than AM, and also a top motorsport pedigree, so I am not sure why they would want full ownership.
R8VBV said:
..... and the drafting in of Andy Palmer, a man with a background in the mass-production car market (Rover and Nissan), rather then specialist car markers.
Or you could look at it that he has a background in making cars well rather than just lots of them.Like I said before just because he is bringing in modern processes based around the TPS does not mean he wants to build lots of cars. It just means he wants to build them better than now.
And that should be welcomed by us all!
Jon39 said:
Ian and Jonby have outlined the position perfectly.
You might know about the long financial history of B&M and AM, Rob.
I of course agree with your extract above, but it fascinates me that AML might possibly be the only company today, that has survived 101 years without following that conventional business model. To be able to do that is remarkable, and must be due to the extreme passion that has alway been shown to the marque. So much so, that very deep pocketed ladies, gentlemen and corporations, have always stepped forward with cash injections, every time they have been needed.
When a car company achieves that, it is certainly a very special brand.
On the point of whether Daimler would want control. They cannot possibly want it for financial reasons, because even if AML annual sales were to reach 10,000, the revenue and any profit would only be 'rounding' figures for the Daimler accounts. Therefore it could only be, that they may decide a British trophy brand could enhance their own standing. Daimler already have a longer history than AM, and also a top motorsport pedigree, so I am not sure why they would want full ownership.
I suspect the reason money gets pumped in when needed, is that the brand is more valuable then the business, but to maintain the brand the business needs to continue running. Also the fact they have over £500m already sunk in the business might be enough reason.
Daimler could make a lot of money out of the Aston brand. An Aston Merc ML for example. A Lagonda Merc S Class. A Rapide E Class. A DB10 Merc SL. And why not a Vantage Merc GT.... the chassis design couldn't be closer to AM's VH platform if they tried.
With regards to the comment about Andy Palmer making good cars.... he worked at Rover and Nissan. I would hardly say any Rover was ever a good car, nor would I expect someone who's built Micra's and Sunny's for a living, bring better build quality to a luxury car company like Aston. I would however expect him to bring knowledge of how to bring efficiency and consistency to the production process.
R8VBV said:
With regards to the comment about Andy Palmer making good cars.... he worked at Rover and Nissan. I would hardly say any Rover was ever a good car, nor would I expect someone who's built Micra's and Sunny's for a living, bring better build quality to a luxury car company like Aston. I would however expect him to bring knowledge of how to bring efficiency and consistency to the production process.
Ralf Speth came from BOC (Linde Group) and seemingly knew nothing much about cars - but has turned JLR around.The equations are simple - make too many cars and it loses its appeal. Make a clone of another car and its selling out. Make cars that are too expensive and they won't sell in numbers.
The trick to me... a V8 vantage replacement based on the Merc GT (yes its selling out a bit but there are bills to be paid), do the same with a 4x4 or rapide replacement - and then as real Astons are db cars (and I have a vantage) keep them special, a db10 with a highly customised big engines, 600 bhp+, and create the mega performance grand tourer that has all the dna, individuality, style etc thats called for - which the purists will buy and love even if they look down their noses a little at the other owners.
Maserati have diesels in their range - porsche do in the Panamera, its what you need to do with certain cars, if the worst AM did was rip off the Merc GT for the Vantage so be it - just don't bugger up the whole range doing it.
Very emotive subject this.
1. Romantic solution is to limit production numbers, just make sports cars and GTs, keep the exclusivity, maintain the aura of the brand and keep a loyal following. Basically do a Ferrari of recent. Much higher profit per unit etc. etc. Sure, integrate a few outsourced bits here and there which genuinely enhance the driving experience, evolve the designs, and gently return to profitability for your shareholders over the next 5 years. Wouldn't that be great?
2. The other much less desirable solution (in my mind) is to sell out to Daimler AG or similar and have the Aston brand splashed all over an awful SUV or on the back of an SL something or other. Sure, it will have a sat nav with maps of Mars in it, it will tell you when you're about to crash, and will have 14 built in iPads that will inevitably cause you to crash. But do we really want this?
Then ultimately Daimler AG will get bored with it as in the real world a $1billion or whatever it is, is pennies. Then Aston loses much of what it has in 1. above.
I work in the investment business and thankfully there are still many mega wealthy institutions or individual investors who still have a bit of 1. left in them. I'm sure the current shareholders are in that camp to some degree.
So I persionally hope that the new bloke and the shareholders sit down and take their time and really think about what they want do with Aston Martin. It's not all about the bottom line........keep this amazing icon going, have a 5 year plan to return to profitability without selling yourselves out, ensure your vehicles are right up there in their chosen niche, but don't stress too much if Merc start fitting cameras to video your feet.
All good fun
1. Romantic solution is to limit production numbers, just make sports cars and GTs, keep the exclusivity, maintain the aura of the brand and keep a loyal following. Basically do a Ferrari of recent. Much higher profit per unit etc. etc. Sure, integrate a few outsourced bits here and there which genuinely enhance the driving experience, evolve the designs, and gently return to profitability for your shareholders over the next 5 years. Wouldn't that be great?
2. The other much less desirable solution (in my mind) is to sell out to Daimler AG or similar and have the Aston brand splashed all over an awful SUV or on the back of an SL something or other. Sure, it will have a sat nav with maps of Mars in it, it will tell you when you're about to crash, and will have 14 built in iPads that will inevitably cause you to crash. But do we really want this?
Then ultimately Daimler AG will get bored with it as in the real world a $1billion or whatever it is, is pennies. Then Aston loses much of what it has in 1. above.
I work in the investment business and thankfully there are still many mega wealthy institutions or individual investors who still have a bit of 1. left in them. I'm sure the current shareholders are in that camp to some degree.
So I persionally hope that the new bloke and the shareholders sit down and take their time and really think about what they want do with Aston Martin. It's not all about the bottom line........keep this amazing icon going, have a 5 year plan to return to profitability without selling yourselves out, ensure your vehicles are right up there in their chosen niche, but don't stress too much if Merc start fitting cameras to video your feet.
All good fun
R8VBV said:
The times of David Brown financing the business with a few million and lots of passion are gone and the reality is Aston Martin today is majority owned by Investindustrial, Investment Dar, Adeem Investment, Ford and Daimler. I for one don't know any private equity firms or global conglomerates that invest in businesses to lose money because they like their products.
I suspect the reason money gets pumped in when needed, is that the brand is more valuable then the business, but to maintain the brand the business needs to continue running. Also the fact they have over £500m already sunk in the business might be enough reason.
I suspect the reason money gets pumped in when needed, is that the brand is more valuable then the business, but to maintain the brand the business needs to continue running. Also the fact they have over £500m already sunk in the business might be enough reason.
Rob,
The pattern that I was thinking of was more than just including the DB era. If all the company failures (or near failures) are totted up, it is probably about ten times. Four of those were after Sir David, but still the wonderful cars are being built and also raced, which is exactly what the founders wanted.
You mention Ford, and global conglomorates investing for profit. Ford initially made their purchase in 1987, and they did sell in 2007 for significant price. However, if you subtract the purchase value from the sale value, then deduct an estimate of the unknowns (brand new factory, model development costs, engine development costs and a myriad of other bills), Ford were probably not celebrating how much money they made from that investment.
You refer to the present investment position. Add the 2007 purchase cost to the further subsequent investments, and it is more than the figure you mention. In addition to equity (which does not have to be repaid) there is debt. Without profits, how is all that going to be coped with?
Anyway, as it has been all the way from 1913, we just love the cars and the racing. All that 'other stuff' seems to take care of itself somehow.
Edited by Jon39 on Tuesday 2nd December 18:29
I think Mercedes is not interested in control or ownership of Aston .. as already stated, volumes would not make a material difference to Mercedes revenues and profitability.
Mercedes does not need the glamour or shine of the Aston Martin name; it is not in that space. However, Mercedes is still premium.
Mercedes did not buy RR or Bentley or any other high end brand that has been sold in recent decades. They tried to resuscitate Maybach and failed.
Mercedes is in it for the kudos of being an engine and electronics supplier to Aston Martin, much like it is to Zonda.
Remember that Mercedes also has a naturally aspirated 5.5 liter V8 that is used only in the current SLK55 .. this engine is essentially the 5.5 liter bi turbo engines of recent years without the turbos.
Mercedes does not need the glamour or shine of the Aston Martin name; it is not in that space. However, Mercedes is still premium.
Mercedes did not buy RR or Bentley or any other high end brand that has been sold in recent decades. They tried to resuscitate Maybach and failed.
Mercedes is in it for the kudos of being an engine and electronics supplier to Aston Martin, much like it is to Zonda.
Remember that Mercedes also has a naturally aspirated 5.5 liter V8 that is used only in the current SLK55 .. this engine is essentially the 5.5 liter bi turbo engines of recent years without the turbos.
Considering Ford probably paid close to the $3.5m Victor Gauntlett bought the company for 6 years earlier, let's say $30m for arguments sake, and then sold 92% of their stake for over $900m 20 years later, whilst experiencing AM's most profitable era ever, and selling just before the financial crisis, it wasn't bad business really. Plus Ford had to sell as they needed cash, hence LandRover, Volvo and Jag went shortly after. Ford still retain 8% in AM.
The majority share holder is now an Italian private equity firm http://www.investindustrial.com/en/index who became involved as Aston needed refinancing and they saw profit, not because they like their cars. I can't see why they would hold on to their share if they could see a return for their funds. If they sold their 37.5% and Ford their 8% to Daimler then Daimler would own 50.5%, which I think is called the controlling stake. Ohh, what a coincidence!
You have to wonder what a car companies intentions are, if they stop developing engines. Even Porsche still make theirs under VW ownership. Maybe a Daimler ownership where AM develop their own engines, could be the best thing to happen to them. I'd rather that then an AMG unit any day.
The majority share holder is now an Italian private equity firm http://www.investindustrial.com/en/index who became involved as Aston needed refinancing and they saw profit, not because they like their cars. I can't see why they would hold on to their share if they could see a return for their funds. If they sold their 37.5% and Ford their 8% to Daimler then Daimler would own 50.5%, which I think is called the controlling stake. Ohh, what a coincidence!
You have to wonder what a car companies intentions are, if they stop developing engines. Even Porsche still make theirs under VW ownership. Maybe a Daimler ownership where AM develop their own engines, could be the best thing to happen to them. I'd rather that then an AMG unit any day.
R8VBV said:
The majority share holder is now an Italian private equity firm http://www.investindustrial.com/en/index who became involved as Aston needed refinancing and they saw profit, not because they like their cars. I can't see why they would hold on to their share if they could see a return for their funds. If they sold their 37.5% and Ford their 8% to Daimler then Daimler would own 50.5%, which I think is called the controlling stake. Ohh, what a coincidence!
If one is generous, and applies a p/e ratio of 15 (more than Ford or Daimler) to Aston Martin's present (or even one-year forward) profits, the resulting company valuation might not tempt investors to sell.
Obviously we can only speculate about p/e ratios and profitability of the business, as they are a private company. Who really knows how things will pan-out, as all we know is what AM PR want us to. What we can be certain about, is AM's of the future will be powered by Mercedes and JB has swapped his for a Fiat 500. 
Jon1967x said:
The trick to me... a V8 vantage replacement based on the Merc GT (yes its selling out a bit but there are bills to be paid), do the same with a 4x4 or rapide replacement - and then as real Astons are db cars (and I have a vantage) keep them special, a db10 with a highly customised big engines, 600 bhp+, and create the mega performance grand tourer that has all the dna, individuality, style etc thats called for - which the purists will buy and love even if they look down their noses a little at the other owners.
Maserati have diesels in their range - porsche do in the Panamera, its what you need to do with certain cars, if the worst AM did was rip off the Merc GT for the Vantage so be it - just don't bugger up the whole range doing it.
Maserati have diesels in their range - porsche do in the Panamera, its what you need to do with certain cars, if the worst AM did was rip off the Merc GT for the Vantage so be it - just don't bugger up the whole range doing it.
NO NO NO NO NO!!!!
ALL Astons should be special, not just some of them. Do you really think your Vantage isn't a real Aston? Why on Earth not?
What you're proposing certainly wouldn't be a real Aston. There is no reason that the next generation Aston structure shouldn't be used for the Vantage replacement as well as the next DB, just as VH underpins all the current cars.
Maserati's standing as a truly special marque is rapidly deteriorating as the production numbers increase, and that's only going to worsen if we see 50K new Masers each year, most of which will be SUVs. Why isn't that Ferrari's plan? Because Ferrari is clearly seen as more special.
Are Porsches now considered nearly as special as they were before they became primarily a SUV/sedan manufacturer? I don't think so, not at all. Is Porsche considered anywhere near as desirable as Aston Martin? No.
Don't bugger up ANY of the range.
Phil74891 said:
Very emotive subject this.
1. Romantic solution is to limit production numbers, just make sports cars and GTs, keep the exclusivity, maintain the aura of the brand and keep a loyal following. Basically do a Ferrari of recent. Much higher profit per unit etc. etc. Sure, integrate a few outsourced bits here and there which genuinely enhance the driving experience, evolve the designs, and gently return to profitability for your shareholders over the next 5 years. Wouldn't that be great?
2. The other much less desirable solution (in my mind) is to sell out to Daimler AG or similar and have the Aston brand splashed all over an awful SUV or on the back of an SL something or other. Sure, it will have a sat nav with maps of Mars in it, it will tell you when you're about to crash, and will have 14 built in iPads that will inevitably cause you to crash. But do we really want this?
Then ultimately Daimler AG will get bored with it as in the real world a $1billion or whatever it is, is pennies. Then Aston loses much of what it has in 1. above.
I work in the investment business and thankfully there are still many mega wealthy institutions or individual investors who still have a bit of 1. left in them. I'm sure the current shareholders are in that camp to some degree.
So I persionally hope that the new bloke and the shareholders sit down and take their time and really think about what they want do with Aston Martin. It's not all about the bottom line........keep this amazing icon going, have a 5 year plan to return to profitability without selling yourselves out, ensure your vehicles are right up there in their chosen niche, but don't stress too much if Merc start fitting cameras to video your feet.
All good fun
Superb -- very well said.1. Romantic solution is to limit production numbers, just make sports cars and GTs, keep the exclusivity, maintain the aura of the brand and keep a loyal following. Basically do a Ferrari of recent. Much higher profit per unit etc. etc. Sure, integrate a few outsourced bits here and there which genuinely enhance the driving experience, evolve the designs, and gently return to profitability for your shareholders over the next 5 years. Wouldn't that be great?
2. The other much less desirable solution (in my mind) is to sell out to Daimler AG or similar and have the Aston brand splashed all over an awful SUV or on the back of an SL something or other. Sure, it will have a sat nav with maps of Mars in it, it will tell you when you're about to crash, and will have 14 built in iPads that will inevitably cause you to crash. But do we really want this?
Then ultimately Daimler AG will get bored with it as in the real world a $1billion or whatever it is, is pennies. Then Aston loses much of what it has in 1. above.
I work in the investment business and thankfully there are still many mega wealthy institutions or individual investors who still have a bit of 1. left in them. I'm sure the current shareholders are in that camp to some degree.
So I persionally hope that the new bloke and the shareholders sit down and take their time and really think about what they want do with Aston Martin. It's not all about the bottom line........keep this amazing icon going, have a 5 year plan to return to profitability without selling yourselves out, ensure your vehicles are right up there in their chosen niche, but don't stress too much if Merc start fitting cameras to video your feet.
All good fun
Jonby and Ian, +1 to your posts at the top of this page.
I simply cannot comment on the secondary sub thread going on here, but for those that have any doubt that AMG could supply an engine with sufficient character, whilst incorporating new technology and achieving emission guidelines, this may be of some use. Chris Harris drives the new Mercedes AMG at Laguna Seca. He seems very pleased with the motor, and the gearbox, which let's face it hasn't been AM strongest point. Ever.
http://youtu.be/CRubofSy7jE
http://youtu.be/CRubofSy7jE
IanV12V said:
Probably better trying it with Jaguar.
My view is take Aston upmarket and keep capacity around 7k cars a year.
I actually think Jaguar is Aston Martins biggest rival ATM, the F type R has to be cutting into V8 Vantage sales?My view is take Aston upmarket and keep capacity around 7k cars a year.
As for taking on Porsche, forget it.
Bez tried that and failed, and he had Ford money and resources backing him up.
He was also ex Porsche and knew their operation inside out.
As for taking AM upmarket, I thought they already are , unless you are thinking of them making only totally bespoke limited cars like the One-77 and the new Lagonda, and when they were doing just that in the Old Newport Pagnell days they were not making money either?
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