RE: Aston sells stake.
Discussion
the_g_ster said:
I guess to some extent this makes sad reading when you remember the heritage of what Aston has been over the years, and what an iconic brand it has been. Much the same as now all (maybe not Atom in Somerset) Uk car makers, fortunes have changed. I would have thought that whatever the value of Aston's shares, the company clearly needs to stand back and think about the direction it's going in.
When you think about where the brand sits in the market now, then given that you can spend £180k on one to £35k on a second hand car that in many ways to many people is not that different in looks to new model. Ferrari has been bold yet it has covered it's bases on all levels, with the entry level California to breaking with tradition and building a Z3M Coupe, oooops, I mean FF. The 458 sits in the less price sensitive super rich segment, and the new F12 will do the same. Whatever you say, there are still plenty of people globally who have money to spend, and Aston needs to tap into this.
Many may have hated what BMW first did with the Mini, yet they have taken that icon, and turned it into something enduring again. Aston need to think hard about their product, maybe some kind of modern heritage BMW'esq style throwback to what have been some of the most beautiful cars in the world. £150m of invest/shares, isn't going to do this, and so more change will be needed. It's interesting to see that viewpoints on overseas investment into the UK, and I would remind people there are a handful of UK football clubs that are a going concern in their own right, yet are seen as play things of many dubious and not so dubious overseas investors. Aston's future lays with a group of people with a passion for what the brand could be, and that will be huge risk to kick off in light of the vast costs to take a new model to market.
Aston doesn't stand up next to Ferrari and even Porsche now, and what else is there? Low volume premium Merc's? This won't be the last posting on here about changes at Aston that's for sure, I just hope someone is bold enough and take the company back to what it should be.
Not sure that the looks of the car are the main problem, after all Porsche seem to manage okay. When you think about where the brand sits in the market now, then given that you can spend £180k on one to £35k on a second hand car that in many ways to many people is not that different in looks to new model. Ferrari has been bold yet it has covered it's bases on all levels, with the entry level California to breaking with tradition and building a Z3M Coupe, oooops, I mean FF. The 458 sits in the less price sensitive super rich segment, and the new F12 will do the same. Whatever you say, there are still plenty of people globally who have money to spend, and Aston needs to tap into this.
Many may have hated what BMW first did with the Mini, yet they have taken that icon, and turned it into something enduring again. Aston need to think hard about their product, maybe some kind of modern heritage BMW'esq style throwback to what have been some of the most beautiful cars in the world. £150m of invest/shares, isn't going to do this, and so more change will be needed. It's interesting to see that viewpoints on overseas investment into the UK, and I would remind people there are a handful of UK football clubs that are a going concern in their own right, yet are seen as play things of many dubious and not so dubious overseas investors. Aston's future lays with a group of people with a passion for what the brand could be, and that will be huge risk to kick off in light of the vast costs to take a new model to market.
Aston doesn't stand up next to Ferrari and even Porsche now, and what else is there? Low volume premium Merc's? This won't be the last posting on here about changes at Aston that's for sure, I just hope someone is bold enough and take the company back to what it should be.
I think the cars simply aren't good enough next to the opposition and they need investment to move things on.
Aston is too strong a brand to go under, but I would rather have seen a car company take a large share rather than another investment company.
Whatever I wish them well.
mph said:
DonkeyApple said:
In very crude terms, overseas investors are buying heritage and class whereas our companies invest abroad purely for returns.
Why buy into a struggling firm which will need more money when you can buy a factory abroad which needs nothing but will give good solid returns.
We own more assets overseas than others own UK assets.
Didn't you put Aston Martin forward as a shining example in a Morgan thread not too long ago ?Why buy into a struggling firm which will need more money when you can buy a factory abroad which needs nothing but will give good solid returns.
We own more assets overseas than others own UK assets.
andyps said:
DonkeyApple said:
The real issue is that you are only targeting the people who want a top GT.
What all other main manufacturers do is diversify into other sectors so as to obtain better economies of scale and so better margins and profit per unit.
If you look at JLR they even diversify within the SUV sector but also the Jag brand covers saloons and GTs.
Aston have only managed the expand with the Rapide and as lively as it is it doesn't really break into a different client pool. By building a saloon or an SUV they will tap separate client pools and so increase unit sales, efficiencies and margins.
Porsche is a really good example of how a single product company expanded in such a way and gained financial security for the first time ever.
You are right, but it highlights the real issue Aston have. They have the basic VH platform which they have shrunk to produce the Vantage and stretched to produce the Rapide, but fundamentally it is a GT/sports car platform. Porsche had to work woth VW to make the Cayenne, and the forthcoming smaller SUV. Jaguar have a link to Land Rover to make an SUV. Aston don't have that relationship and can't afford to do it on their own, as Porsche couldn't and still can't. The Lagonda was based on a Mercedes, but unless the new investment gives access to a sharing arrangement Aston will probably struggle to introduce new product classes.What all other main manufacturers do is diversify into other sectors so as to obtain better economies of scale and so better margins and profit per unit.
If you look at JLR they even diversify within the SUV sector but also the Jag brand covers saloons and GTs.
Aston have only managed the expand with the Rapide and as lively as it is it doesn't really break into a different client pool. By building a saloon or an SUV they will tap separate client pools and so increase unit sales, efficiencies and margins.
Porsche is a really good example of how a single product company expanded in such a way and gained financial security for the first time ever.
But, maybe Aston don't have ambition to expand unit numbers and will stick with just GTs and find tech solutions via partners? If be surprised. I would think that the owners would like to grow the business substantially.
mph said:
but I would rather have seen a car company take a large share rather than another investment company.
Whatever I wish them well.
Can't agree more with this. Someone like BMW would / could still be a great fit supplying engines and sat navs leaving the boys and Gaydon to worry about heritage/brand etc. Mini / BMW / Aston Martin / Rolls Royce would make quite a nice line up.Whatever I wish them well.
f328nvl said:
So the equity value of AML has fallen to £400m, but the enterprise value apparently risen to £780m (if these numbers are right). This can only have happened if the group took on more borrowings (probably from UK banks as it happens).
Well, to assess wheter enterprise value went up we should know how much debt was initially raised by Richards & Dar.a key problem remains that the deal as it stands is insufficient: assuming they haven't sold shares but raised new capital for 150m and that they can raise further debt for further 150m (which would be rich), this leaves 300m to finance a new model and some renewal of the existing range, plus plugging current losses.
If they can make it without further capital injections, Bez, Richards and II should take over the EU goverment as of tomorrow...
Btw, for the sake of objectivity, i love AM's range and consider the v8v the most beautiful car of the XXI century.
I suspect the main issue with AML as they currently stand is that they have the overhead and facilities of a company geared up to make and sell 7-10K units PA, but are only now selling ~4k PA.
The "middle ground" has always been difficult to occupy as a car manufacturer. The Pagani's etc, making a handful of cars a year, can resize their company quickly and in direct response to the demand for those cars. The big companies have the cash to ride through the dips whilst they spend £1B on a new platform that once again rejuevinates their sales volumes (Ferrari etc)
In the middle, you have the costs and overheads (workforce etc) of the large company, but the varriable income of the small one.
Cars in the AML bracket seem to occupy three basic corners:
1) Be the best. Ferrari 458 for example. Generally reviewed as technically the best sportscar ever built. Lots of people will buy one just because of that. The Mclaren P11 is trying to get a bit of this action. You absolutely can't do this without massive backing and upfront spend.
2) Ultra-niche. Pagani - super expensive and exclusive. Low volume, but becomes a "must have" item. You make money on it by having low overheads, and selling it for what would be "extravagent" prices. (The Mclaren P12 is trying to get in on this action)
3) Trade on your brand to a large degree. You products are neither the "best" nor particularly unique and the price must reflect that. Use marketing and association to help sell your cars. This works as a long term, low volume solution, but you will loose sales cyclically to the 1)'s & 2)'s above (especially when they have a new product release
To do 1) & 2) properly, having a suitable mother company to supply all the worthy but dull parts that make a modern car "just work" is important. For a company the size of AML, things like a decent SAT NAV could easily consume as much cash as the whole engine program! As Mclaren found out to their cost, a brave descision to go-it-alone with the P11's electronic systems (understandable choice given their partners (MESL) and the fact that as an "F1" based company, doing everything yourself maintains ultimate control over the end result), almost certainly resulted in them diverting development effort from the powertrain and chassis, at a time where Ferrari moved the game on significantly (458).
IMO, either AML must downsize significantly in conjunction with developing new but not entirely so product (facelifts, new powertrain revisions on existing VH cars) OR they take the brave pills, bet everything on increased sales (inc new markets, china etc) and invest heavily in completely new product lines to support that increased sales volume.
I'm glad it's ain't me having to make that call!
The "middle ground" has always been difficult to occupy as a car manufacturer. The Pagani's etc, making a handful of cars a year, can resize their company quickly and in direct response to the demand for those cars. The big companies have the cash to ride through the dips whilst they spend £1B on a new platform that once again rejuevinates their sales volumes (Ferrari etc)
In the middle, you have the costs and overheads (workforce etc) of the large company, but the varriable income of the small one.
Cars in the AML bracket seem to occupy three basic corners:
1) Be the best. Ferrari 458 for example. Generally reviewed as technically the best sportscar ever built. Lots of people will buy one just because of that. The Mclaren P11 is trying to get a bit of this action. You absolutely can't do this without massive backing and upfront spend.
2) Ultra-niche. Pagani - super expensive and exclusive. Low volume, but becomes a "must have" item. You make money on it by having low overheads, and selling it for what would be "extravagent" prices. (The Mclaren P12 is trying to get in on this action)
3) Trade on your brand to a large degree. You products are neither the "best" nor particularly unique and the price must reflect that. Use marketing and association to help sell your cars. This works as a long term, low volume solution, but you will loose sales cyclically to the 1)'s & 2)'s above (especially when they have a new product release
To do 1) & 2) properly, having a suitable mother company to supply all the worthy but dull parts that make a modern car "just work" is important. For a company the size of AML, things like a decent SAT NAV could easily consume as much cash as the whole engine program! As Mclaren found out to their cost, a brave descision to go-it-alone with the P11's electronic systems (understandable choice given their partners (MESL) and the fact that as an "F1" based company, doing everything yourself maintains ultimate control over the end result), almost certainly resulted in them diverting development effort from the powertrain and chassis, at a time where Ferrari moved the game on significantly (458).
IMO, either AML must downsize significantly in conjunction with developing new but not entirely so product (facelifts, new powertrain revisions on existing VH cars) OR they take the brave pills, bet everything on increased sales (inc new markets, china etc) and invest heavily in completely new product lines to support that increased sales volume.
I'm glad it's ain't me having to make that call!
Edited by anonymous-user on Saturday 8th December 20:01
Agree wight above poster. I think it says a lot about Aston Martin's health when it takes a private equity company to come to its rescue rather than a strategic investor. Hopefully InvestIndustrial can spread their magic and attract a strategic buyer in a not too distant future because I think AML needs that pronto!
Pr1964 said:
Agreed the v8v looks great just a pity it ended up £50k more than a 911 and slower and less delicate to drive too.
If they'd been the same price as a 911 they would have sold like hot cakes.
The difference between the base price of a V8V and a 911 is actually £25k, but the real issue is that Aston do not have the capacity to sell cars like hot cakes, they are not geared up to produce anything like the numbers Porsche do and almost certainly couldn't afford to. The numbers they can make mean they have to sell at a higher price than Porsche, simple economies of scale. Added to which, Porsche share large numbers of components between the 911 and Boxster meaning the scale differences are even larger.If they'd been the same price as a 911 they would have sold like hot cakes.
Pr1964 said:
I'm not sure about the satnav comment AM could have linked up with Garmin and made a suitable system for a few hundred thousand and not have lost AM credibility having a system which would actually have worked unlike the Volvo system.
I can't understand why AML don't just stick to building the body and running gear and then buy all the best bits like gearboxes engines dampers diffs satnav systems from people who make the best.
I also can't understand why they were unable to adapt the existing shell by changing the wings doors bonnet and lights.
Why does it need to be a completely new car?
Hone the running gear and then tweak the stuff that's stuck to it for at least one generation more then build a complete new shell for the next that way they'd get twice the bang for the buck!
I wish it was me having to make that call.
As I understand it, Aston effectively buy engines and gearboxes from Ford, along with many other components. I don't think the factories which make them are Aston owned. The Volve satnav has its origins in the Ford ownership too, of course.I can't understand why AML don't just stick to building the body and running gear and then buy all the best bits like gearboxes engines dampers diffs satnav systems from people who make the best.
I also can't understand why they were unable to adapt the existing shell by changing the wings doors bonnet and lights.
Why does it need to be a completely new car?
Hone the running gear and then tweak the stuff that's stuck to it for at least one generation more then build a complete new shell for the next that way they'd get twice the bang for the buck!
I wish it was me having to make that call.
Edited by Pr1964 on Saturday 8th December 20:23
And the latest update to the DB9 has probably retained the existing shell with new wings, doors, lights etc but people criticise it for being too similar to the old. It is a facelift and updated chassis, but seems to be getting very good reviews from what I have read.
I do agree with the poster above, however, who says that if a customer bought a DB9 5 years ago there isn't a lot of change to tempt them to buy a new one, and that is part of the issue Aston have resulting in low sales volumes I suspect.
Personally, the V8V was their road-to-riches, it needed to be spectacular and, if it was, they would have sold vast numbers. It looked so promising but was massively underwhelming to drive - they seemed to be caught by the depth of the 911 offerings too: if you were a bit more of a petrol-head then the GT3 was an option, whereas there was no similar V8V offering.... I don't know, I just feel like I was target market for the V8V and it never got close to snagging my cash. Really hope they get through this but they probably need a general global economic pick up to materialise and that's not looking hugely likely at the moment.
Max_Torque said:
3) Trade on your brand to a large degree. You products are neither the "best" nor particularly unique and the price must reflect that. Use marketing and association to help sell your cars.
Called living on your laurels and never works in the long term.No new engine of their own for 20 odd years doesn't help.
Plainview23 said:
Personally, the V8V was their road-to-riches, it needed to be spectacular and, if it was, they would have sold vast numbers.
Thing is the AM305 and 803 (DB9) did initally sell in "vast" numbers. Vast for AML at the time. The competely new platform cars, although both someway behind their competitors in terms of objective measurements, were new, and good looking, and offered another option to buyers. Unfortunately what happened is that AML spent all the their earnings on a swanky new facility to build these ~8k carsPA, rather than re-investing the cash in PD/R&D (product development). So, when those cars where no longer the new-kids-on-the-block, sales volumes rapidly fell, leaving AML with huge overheads and too few sales to support them.Also, the V8V was a bit of an issue for AML in terms of profitability. It cost almost exactly the same to build as the DB9 (same chassis, just 5inches shorter so only saves about £15 in alluminium!, same interior, suspension, transmission, EFC, etc etc, really just 4 pistons cheaper (about £40!) but was selling for half as much money! No wonder the price of the V8V quickly began it's rise up towards that of the DB9
Add in a poorly timed reccesion, which hit the mid range cars more than the higher priced ones (if you have ~£200k to spend on a car, then even a reccesion isn't enough to stop you, whereas for a car less than £100k, and often brought using large amount of finance is quickly dropped when any belt tightening is required)
The only possible outcome that i can see that supports any production volume over about 3k unitsPA involves a buy out from a suitable parent OEM imo ??
Two thoughts - the first is no industry in the world except perhaps Airlines is more punishing from a marginal cost situation than Autos - it is terrifying how costs go nuts as volume reduces yet it is so hard to reduce total costs without shuttering the factory.
Secondly, at the launch of the V8 I pointed out to someone how annoying the boot lid was - my sister would have struggled to get it up and down easily with hands full of shopping as it was a bit heavy and poorly designed and slammed horribly. Rubbish I was told - it's an enthusiasts car, not for fashionistas like my sister.
Not many real enthusiasts in the world with the wealth to buy new cars as many a car company has found to their cost!
So I welcome the news of more finance, but boy can it disappear fast!
Secondly, at the launch of the V8 I pointed out to someone how annoying the boot lid was - my sister would have struggled to get it up and down easily with hands full of shopping as it was a bit heavy and poorly designed and slammed horribly. Rubbish I was told - it's an enthusiasts car, not for fashionistas like my sister.
Not many real enthusiasts in the world with the wealth to buy new cars as many a car company has found to their cost!
So I welcome the news of more finance, but boy can it disappear fast!
Numeric said:
Two thoughts - the first is no industry in the world except perhaps Airlines is more punishing from a marginal cost situation than Autos - it is terrifying how costs go nuts as volume reduces yet it is so hard to reduce total costs without shuttering the factory.
Very true. I don't think this deal really changes the game for Aston...it's probably a stay of execution. Buys them time and gives them some cash to do some limited R&D.
It will be very interesting to see what happens next, I suspect the major OEM's didn't get involved either because Investment Dar wouldn't sell outright or just wanted too much. Aston as a brand is worth a lot but the business isn't, it's making tiny profits (if any at all).....it needs a huge amount of investment, if it is to exist as a stand alone manufacturer.
The running costs of Gaydon aren't really an issue....that's an odd lot when it comes to developing a new car.
Aston Martin as a brand is too legendary to disappear I believe, however to move forward and continue to be a viable company they will need a large partner with lot of liquid cash on hand. I personally thought Toyota would have been perfect but for whatever reason their assessment team didn't see it fit. I know a lot of people would find it upsetting if a Japanese company purchased legendary British brand but Tata has done wonders for Jaguar and Land Rover. Toyota or Nissan or Hyundai or Honda I think would have been great, not that Nissan was interested or the other brands were in consideration, these companies have cash on hand and don't have an extreme luxury marquee brand. However they do have cash and great R&D departments. Especially Toyota and Nissan, with all they have learned recently from projects such as LFA and FRS and the GTR. Aston Martin needs access to technology and development, and can be left to do what they do best aesthetics and road feel
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