Aston Martin investment talks with Stroll, Geely
Discussion
There is simply not enough confidence in the brand. The AM Management made the mistake of proposing AM as a luxury brand generally, and failed to focus on what makes cars within this bracket, sell; engineering integrity.
Many may disagree; if Aston had focused on making its own engine/drivetrain for the V8 Vantage, not to mention tidy up the mess that is its rear end and interior, it would have sold. The marque under Ulrich Bez reinstated itself as a genuine contender for good reasons; the cars looked great, had good quality and especially, bespoke qualities to them.
As another posted says, correctly in my opinion, the vehicles were sat on for too long; the profits were not reinvested properly...
...I hope the SUV cuts it, however I think it is too expensive for what it actually is and what it offers, and therefore it will not be enough on its own to save this brand.
The press releases repeatedly issued highlighting how overpriced and in debted the company is, is not exactly encouraging those to go out and buy their goods either.
I really hope I am wrong though and I hope the company finds a way out of the mess they are in.
Many may disagree; if Aston had focused on making its own engine/drivetrain for the V8 Vantage, not to mention tidy up the mess that is its rear end and interior, it would have sold. The marque under Ulrich Bez reinstated itself as a genuine contender for good reasons; the cars looked great, had good quality and especially, bespoke qualities to them.
As another posted says, correctly in my opinion, the vehicles were sat on for too long; the profits were not reinvested properly...
...I hope the SUV cuts it, however I think it is too expensive for what it actually is and what it offers, and therefore it will not be enough on its own to save this brand.
The press releases repeatedly issued highlighting how overpriced and in debted the company is, is not exactly encouraging those to go out and buy their goods either.
I really hope I am wrong though and I hope the company finds a way out of the mess they are in.
Edited by chelme on Monday 13th January 19:16
Fire99 said:
However, in relatively simplistic terms, they seem to have sat on their hands pretty much stretching the DB9 design way beyond its sell-by date, and then joined the SUV market way after it had already been saturated by every other premium brand.
I am pretty sure they 'sat on their hands' because they didn't have enough money to do anything else.I saw people saying the same thing about Lotus but it's not selling old models that are rehashed for any other reason than they didn't have money to design and build new ones, until now.
Aston Martin, to me, was an exclusive brand with very small, compared to other manufacturers, production runs. This coupled with some bespoke cars kept them going until the next crisis. It was very exclusive and had charismatic leaders like Victor Gauntlett. Now they are making thousands of cars and have a high probability of serious trouble in the near future.
It may be too late to salvage the brand at all, but with modern production techniques allowing very low volume production and one-offs to be viable, I would do it by canning all the volume stuff, going for a bespoke range and resurrecting the old stuff for limited runs as they have been doing.
The main production sites could be sold to a company more adept at selling products by the thousand. In other words the employees would not be thrown on the scrap heap.
It may be too late to salvage the brand at all, but with modern production techniques allowing very low volume production and one-offs to be viable, I would do it by canning all the volume stuff, going for a bespoke range and resurrecting the old stuff for limited runs as they have been doing.
The main production sites could be sold to a company more adept at selling products by the thousand. In other words the employees would not be thrown on the scrap heap.
The IPO was/is a huge embarrassment. Think the company was way, way bigger than it actually was and just a way of paying off other shareholders. It's simply not in the same league as Ferrari as a company. Note, not actually comparing model ranges, just brands and businesses and how they differ.
I am actually a fan of the new Vantage. It's not as pretty as the original '05 model, but it is a nice modern interpretation. They could have easily rested on their laurels and made a retro-twee looking one, but they really went beyond. Even taking account for the little MX-5 lights and wavy rear.
I am actually a fan of the new Vantage. It's not as pretty as the original '05 model, but it is a nice modern interpretation. They could have easily rested on their laurels and made a retro-twee looking one, but they really went beyond. Even taking account for the little MX-5 lights and wavy rear.
gazzathehutt said:
AM's problem is that in 2018 its management team created an ambitious vision for the future in order to support a high price at the IPO in October of that year but the IPO didn't bring in any cash at all to the business - it all went to the existing shareholders (with some going in fees and management bonuses). AM's management were then in a very exposed position - they had committed to an ambitious growth strategy but had very limited funds available to deliver it. They might have succeeded if everything had gone well for them but they appear to have been caught out by a slow-down in certain markets (and probably by other less-visible things like cost-overuns, poor sales mix and other normal business factors. AM has survived (so far) by securing some very expensive debt but it appears that it is not enough and banks probably won't lend them any more, hence the the need for a dialogue with potential new investors such as Stroll and Geely. To bring in the cash they need to fund the tuned-down-but-still-ambitious growth plans they will have to issue and sell more shares which will dilute the value of the existing shares owned by current shareholders. It will be interesting to see how much new equity they can attract and what the equity value will be when the dust settles.
Their problem started when they were bought out from Ford. They have been treated as a cash cow by a select number of gents who have continually sourced ‘dumb’ investment for the brand and then sucked all that money out for themselves. They’ve stripped the company of required growth capital Year after year after year. The IPO was the last fleecing of dumb money. And not a penny of that dumb money found it’s way into the company, just pockets. It was a magnificent fleecing.
Philip Green couldn’t have done a better job.
As for having to resort to emergency bonds at junk rates just to keep the lights on, it’s farcical.
The DBX however successful can only pull in enough revenue to keep the lights on. The company is in a death spiral of debt financing.
So well done Dave and the gang. Out Philip Greening, the big man himself is quite an achievement.
£200m from Stroll won’t end the debt issue, won’t allow the future models to be built.
Let it collapse. Let the equity holders be wiped out, default on the junk debt and restart but with professionals in charge, not bandits. The company and the staff are far more important than the equity and junk bond holders.
Oh and have we heard about the pension shortfall yet? Because the bandits have totally screwed the ex workers over who were reliant on their company being run for the benefit of all not a few.
Frimley111R said:
I am pretty sure they 'sat on their hands' because they didn't have enough money to do anything else.
That may well be true.. I'm sure there are mitigating circumstances but the market won't let them off due to lack of available funds.. If the right product and right marketing strategy aren't there, it won't work. Their 7 new cars in 7 years doesn't appear to have hit the mark and thought I don't want to keep beating the same drum, the new Vantage is an underwhelming sports car in a declining sales category.. The SUV should have been a priority (though I hate the idea of them building one) much much earlier, so they could cash in on that market and then be ready for the electrification phase which is already upon us... (in my humble opinion of course)
Not easy but I do find their strategy a somewhat odd one... (From a casual observers perspective)
Wills2 said:
A different scale in terms of sales/profit but BMW has huge debts, I doubt there is a car maker out there (of any scale) that doesn't have a massive amount of debt, one figure I saw for BMW was around £80 billion.
The trick is I guess servicing it and producing a return.
There is often a bit of confusion with automotive debt. You have to take the figure quoted by the press in articles and remove the leasing business to be left with the operational debt. The trick is I guess servicing it and producing a return.
In the case of the likes of BMW or Ford etc the bulk of their gross debt figure is actually just the lease operations which are hugely profitable (borrowing at a few % and lending to individual customers at 5-10%). You want that debt to be massive. It’s the operational debt that you have to look at and see how that cost of servicing compares to net revenue, ie the ability to service. In that regard Aston are dead in the water. They are a zombie company where all net revenue is required to service their debt pile. One slip in revenue and its lights out.
They need to find a fool with hundreds of millions to throw into a hole to try and fix that. But most aren’t fools and are waiting to pay just a few million via the receivers for a cracking business.
Edited by DonkeyApple on Monday 13th January 23:37
AM signed up almost every major bank for the IPO - so very little ‘independent’ sell-side research was produced and they had to pay over £130m in fees.
I bought in at £5 thinking it couldn’t fall much further...
Going for high yield debt financing was a big warning flag and really is ‘last resort’ financing.
I presume they wanted to keep going long enough to get the DBX out and hope that would rescue the situation, but that may now be doubtful.
Very sad if so, and for everyone connected with Aston Martin I hope the company can prove us wrong.
Interesting that AM’s Chief Marketing Officer just jumped ship to Fiat...
I bought in at £5 thinking it couldn’t fall much further...
Going for high yield debt financing was a big warning flag and really is ‘last resort’ financing.
I presume they wanted to keep going long enough to get the DBX out and hope that would rescue the situation, but that may now be doubtful.
Very sad if so, and for everyone connected with Aston Martin I hope the company can prove us wrong.
Interesting that AM’s Chief Marketing Officer just jumped ship to Fiat...
jon-yprpe said:
AM signed up almost every major bank for the IPO - so very little ‘independent’ sell-side research was produced and they had to pay over £130m in fees.
I bought in at £5 thinking it couldn’t fall much further...
Going for high yield debt financing was a big warning flag and really is ‘last resort’ financing.
I presume they wanted to keep going long enough to get the DBX out and hope that would rescue the situation, but that may now be doubtful.
Very sad if so, and for everyone connected with Aston Martin I hope the company can prove us wrong.
Interesting that AM’s Chief Marketing Officer just jumped ship to Fiat...
Yup. They needed to pull in a lot of brokers for the IPO and pumped a big story. Hence why a lot of people didn’t like the smell of it but when it transpired that the IPO wasn’t anything to do with bolstering the business but another search for ‘dumb’ money for the gang then quite a few people began saying it stank and walked. As IPOs gonot was essentially shat out to discretionary managers like a crappy penny share float of a magical hole in the ground that’s allegedly full of gold, diamonds and a cure for cancer. I bought in at £5 thinking it couldn’t fall much further...
Going for high yield debt financing was a big warning flag and really is ‘last resort’ financing.
I presume they wanted to keep going long enough to get the DBX out and hope that would rescue the situation, but that may now be doubtful.
Very sad if so, and for everyone connected with Aston Martin I hope the company can prove us wrong.
Interesting that AM’s Chief Marketing Officer just jumped ship to Fiat...
The junk bond issue and let’s not forget that the marketing fees (commission) paid to gatekeepers and discretionary managers will have been big ticket, was simply to help pay for electricity and water.
And you can also go back to the Merc engine deal and having to give big equity away for another German engine deal.
All the DBX can do is stop the company from defaulting. However well it sells it can’t fix the the problem of a decade of Dave Richards.
Great company, brilliant brand, good business. But a decade of rape pillage and plunder has left the corporate structure shattered, the employees at significant risk and the ex employees facing a pension hole.
The only saving grace is that if a significant corporate event does take place then we are currently in a climate that will go looking for just what went wrong and publish their simple findings.
YKnot said:
So many experts on here ???? you do know that for most non PH people. IE the world out there away from your keyboards.
People, love AM, Ferrari, Porsche etc and they are still aspirational and feel good toys that we unnecessarily lust after.
Why, because we can and do enjoy the simple pleasure of having one. Strange to most of you experts I know. You really are a sad bunch
You're right. Lets just bury our heads in the sand, and not have an opinion. Everything is right in the world.People, love AM, Ferrari, Porsche etc and they are still aspirational and feel good toys that we unnecessarily lust after.
Why, because we can and do enjoy the simple pleasure of having one. Strange to most of you experts I know. You really are a sad bunch
Maybe switch off the Forum, so we can only read the article and not comment.
DonkeyApple said:
Wills2 said:
A different scale in terms of sales/profit but BMW has huge debts, I doubt there is a car maker out there (of any scale) that doesn't have a massive amount of debt, one figure I saw for BMW was around £80 billion.
The trick is I guess servicing it and producing a return.
There is often a bit of confusion with automotive debt. You have to take the figure quoted by the press in articles and remove the leasing business to be left with the operational debt. The trick is I guess servicing it and producing a return.
In the case of the likes of BMW or Ford etc the bulk of their gross debt figure is actually just the lease operations which are hugely profitable (borrowing at a few % and lending to individual customers at 5-10%). You want that debt to be massive. It’s the operational debt that you have to look at and see how that cost of servicing compares to net revenue, ie the ability to service. In that regard Aston are dead in the water. They are a zombie company where all net revenue is required to service their debt pile. One slip in revenue and its lights out.
They need to find a fool with hundreds of millions to throw into a hole to try and fix that. But most aren’t fools and are waiting to pay just a few million via the receivers for a cracking business.
Edited by DonkeyApple on Monday 13th January 23:37
DonkeyApple said:
Yup. They needed to pull in a lot of brokers for the IPO and pumped a big story. Hence why a lot of people didn’t like the smell of it but when it transpired that the IPO wasn’t anything to do with bolstering the business but another search for ‘dumb’ money for the gang then quite a few people began saying it stank and walked. As IPOs gonot was essentially shat out to discretionary managers like a crappy penny share float of a magical hole in the ground that’s allegedly full of gold, diamonds and a cure for cancer.
The junk bond issue and let’s not forget that the marketing fees (commission) paid to gatekeepers and discretionary managers will have been big ticket, was simply to help pay for electricity and water.
And you can also go back to the Merc engine deal and having to give big equity away for another German engine deal.
All the DBX can do is stop the company from defaulting. However well it sells it can’t fix the the problem of a decade of Dave Richards.
Great company, brilliant brand, good business. But a decade of rape pillage and plunder has left the corporate structure shattered, the employees at significant risk and the ex employees facing a pension hole.
The only saving grace is that if a significant corporate event does take place then we are currently in a climate that will go looking for just what went wrong and publish their simple findings.
Any thoughts on the management team 'Doing a Rover'?The junk bond issue and let’s not forget that the marketing fees (commission) paid to gatekeepers and discretionary managers will have been big ticket, was simply to help pay for electricity and water.
And you can also go back to the Merc engine deal and having to give big equity away for another German engine deal.
All the DBX can do is stop the company from defaulting. However well it sells it can’t fix the the problem of a decade of Dave Richards.
Great company, brilliant brand, good business. But a decade of rape pillage and plunder has left the corporate structure shattered, the employees at significant risk and the ex employees facing a pension hole.
The only saving grace is that if a significant corporate event does take place then we are currently in a climate that will go looking for just what went wrong and publish their simple findings.
Frimley111R said:
I could see a tie up with Lotus working well for both companies.
I'm struggling to see this one, to be honest.Maybe it's just me, but I've always seen Aston Martin as a purveyor of big-engined, brawny GTs.
V8s and especially V12's are dying out left right and centre, and it's difficult to see Aston Martin being reinvented as an EV or small-engined hybrid, whereas such an approach would suit Lotus' lightweight, tech-led ethos very well.
AM might be a better partner to Volvo, sharing the platform of that company's saloons and SUVs to offer a luxury/performance brand.
can't remember said:
Any thoughts on the management team 'Doing a Rover'?
I don’t think it would be a bad thing. The management team isn’t really to blame for the current predicament. The current debt holders can be rolled into new debt and equity and if it safeguards workers best and the pension trustees are given a viable route to the plugging of the whole. It would just be the current shareholders being erased. The automotive industry is in a difficult place as a whole with slowing consumer spending meeting the need to transition to electric. That alone is going to clear out some firms, probably in the guise of more mergers etc but the AM business is pretty good and they carry the premium value needed to transition to hybrid and EV. It’s really the debt mountain that needs removing and the only prudent way to do that is to wipe out the current equity holders and replace the debt holders with new equity.
An eventual merger with a larger firm would remain on the cards though if it doesn’t happen now.
Equus said:
Frimley111R said:
I could see a tie up with Lotus working well for both companies.
I'm struggling to see this one, to be honest.Maybe it's just me, but I've always seen Aston Martin as a purveyor of big-engined, brawny GTs.
V8s and especially V12's are dying out left right and centre, and it's difficult to see Aston Martin being reinvented as an EV or small-engined hybrid, whereas such an approach would suit Lotus' lightweight, tech-led ethos very well.
AM might be a better partner to Volvo, sharing the platform of that company's saloons and SUVs to offer a luxury/performance brand.
Gassing Station | General Gassing | Top of Page | What's New | My Stuff