RE: Mercedes to take 20 per cent stake in Aston Martin

RE: Mercedes to take 20 per cent stake in Aston Martin

Author
Discussion

HocusPocus

867 posts

100 months

Tuesday 27th October 2020
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kevinon said:
I looked at their projections - £2 b revenue, 10,000 cars and EBITDA of £500million.

I'm no maths expert - does that mean selling 10,000 cars at an average sales price of £200,000 with a 25% margin? £50,000 margin per car.

Do people in the car trade think this forecast is anyway realistic?
Are there enough rich petrol heads in the world to create such level of demand without suffering brand dilution? Ho hum, best of luck.

Burwood

18,709 posts

245 months

Tuesday 27th October 2020
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cib24 said:
So, is Toto Wolf going to be done for insider trading?

I find it hard to believe he wouldn't have known about the deal all along when he bought shares in the rights issue. No way any Chinese wall would have worked in those circles and where he is connected.

Edited by cib24 on Tuesday 27th October 17:39
Chill out-do you know the terms. No one is getting 10 bags (enriched) out of this deal unlike the ex chairman.and all the Saudis who offloaded to the idiots at £20.

big_rob_sydney

3,394 posts

193 months

Tuesday 27th October 2020
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hyphen said:
Sofa said:
Interesting that VAG have essentially traded Bugatti off a slice of Rimac, and are reportedly considering selling Lamborghini and Ducati, while Mercedes are essentially taking the opposite approach.

Toto's investment also seems fortuitous...
Totally different.

Mercedes aren't paying Aston for a stake, Aston want to guarantee a relationship with Mercedes and are offering a free stake in return for the savings on R&D and getting 'mates rates' on Mercedes parts and jumping onto any 3rd party agreements Mercedes can make using their scale to negotiate better terms than Aston could.

AMG and Aston working together on performance SUV's could also be of benefit to both seeing as Aston have managed to make the DBX.

Edited by hyphen on Tuesday 27th October 18:17
That is not how I read that at all.

It says very clearly in the article that supply will be on commercial terms.

So, does this mean they get to pay like every other schmuck, and for the privilege they have shelled out over and above, to the tune of 20% of the company? That seems like a rubbish deal, unless there is something else going on under the table...

Terminator X

14,922 posts

203 months

Tuesday 27th October 2020
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Looking forward to Astons next 4 pot engine.

TX.

Motormatt

484 posts

217 months

Tuesday 27th October 2020
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HocusPocus said:
kevinon said:
I looked at their projections - £2 b revenue, 10,000 cars and EBITDA of £500million.

I'm no maths expert - does that mean selling 10,000 cars at an average sales price of £200,000 with a 25% margin? £50,000 margin per car.

Do people in the car trade think this forecast is anyway realistic?
Are there enough rich petrol heads in the world to create such level of demand without suffering brand dilution? Ho hum, best of luck.
I’m not in the trade so can’t comment on margins but 10000 units doesn’t sound impossible for Aston to achieve. The DBX is forecast to sell 4000 units and they managed to sell 6500 units in 2019 without the DBX. The big question though is if their sports car sales will hold steady or continue to decline. For context Ferrari sold around 10k units in 2019 without a big volume selling SUV in their range.

geo1905

87 posts

63 months

Tuesday 27th October 2020
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It's a sound business move, Stroll (senior) is a very astute businessman. As long as they can continue to retain that unique "Britishness" and ensure that they always produce one less car than the market will sustain, they've got a great future. On balance, I think Aston Martin are one of the coolest, if not the coolest, brands in existence.

Burwood

18,709 posts

245 months

Tuesday 27th October 2020
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geo1905 said:
It's a sound business move, Stroll (senior) is a very astute businessman. As long as they can continue to retain that unique "Britishness" and ensure that they always produce one less car than the market will sustain, they've got a great future. On balance, I think Aston Martin are one of the coolest, if not the coolest, brands in existence.
They’re very cool but very antiquated and no money to develop new products that are even close to the market leaders.

robsprocket

109 posts

177 months

Tuesday 27th October 2020
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Another step towards MB dropping out of F1 and transferring the technology/powertrains etc over to AM?

TP321

1,475 posts

197 months

Tuesday 27th October 2020
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I don’t get Aston Martin nowadays..nothing like the aristocratic brand image it had back in the 1980s and the cool image it had back in the early 2000s wIth the DB9 and James Bond DBS. It now seems to make cars that no one seems to want hence the appalling residuals (apart from the DBX buts it’s early days).

So the tie up with Mercedes will give them engines and electronics which although make them reliable, does it make them desirable? I don’t think it does. Look at the Vantage centre console and compare it to the one in the AMG GT..it’s the same.

Is this really what we want Aston Martin to be?

The tie up of Audi/VW with Lamborghini on the other hand works because the traits of Lamborghini (amazing styling, noise, V12 engine) have not been compromised or held back by the German engineering - electronics, quality of manufacturing etc. It works.

smilo996

2,755 posts

169 months

Wednesday 28th October 2020
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Well they tried it once with Ulrich Bez (who planned to move production out of the UK) and then Richards and Palmer got in the way. Now there is a free path to take over. Yes this, is good news apparently.
Another one bites the dust.

florian

290 posts

273 months

Wednesday 28th October 2020
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HocusPocus said:
Are there enough rich petrol heads in the world to create such level of demand without suffering brand dilution? Ho hum, best of luck.
The projected figures would be very similar to what Ferrari achieved in 2019: 10.000 vehicles sold, 25% EBIT margin. And soon AM will have access to MB powertrains, electronics etc. who should improve their cost structure significantly.

A1VDY

3,575 posts

126 months

Wednesday 28th October 2020
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Terminator X said:
Looking forward to Astons next 4 pot engine.

TX.
Through that write up BS it's clear AM is skint. AMG badges are sure to appear on any new models, just adding the 'G' will complete the bail out.
Anything cool with AM has long gone (James Bond ect) and is now on a par with Brooke Bond.
A four pot is likely, however, I'm going with a three pot with dubious balance shaft..





Edited by A1VDY on Wednesday 28th October 05:54

Piginapoke

4,737 posts

184 months

Wednesday 28th October 2020
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I interpret this as AM lacking the cash to pay for MB tech, so is offering equity instead; it's not as transformational as Stroll makes out. As others have said, cash burn remains the big issue for AM and it could be terminal with a global recession, Covid-19 etc.

Share price didn't move much yesterday, which is no surprise as this looks to further dilute existing shareholders' holdings.


anonymous-user

53 months

Wednesday 28th October 2020
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Piginapoke said:
I interpret this as AM lacking the cash to pay for MB tech,
In a nutshell, yes. The cost of development is massive and the number of units they sell is comparatively tiny. Any small scale manufacturer is going to struggle to go it alone.

I'd think of it more like a strategic partnership than an equity for engines deal, though.

I wonder what Stroll's out is? Mercedes buyout?

Piginapoke

4,737 posts

184 months

Wednesday 28th October 2020
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RonaldMcDonaldAteMyCat said:
Piginapoke said:
I interpret this as AM lacking the cash to pay for MB tech,
In a nutshell, yes. The cost of development is massive and the number of units they sell is comparatively tiny. Any small scale manufacturer is going to struggle to go it alone.

I'd think of it more like a strategic partnership than an equity for engines deal, though.

I wonder what Stroll's out is? Mercedes buyout?
It seems clear that AM can't survive on its own without OEM support (electrification) so MB seems the best bet for him, if it can see through the next few years.

oilit

2,618 posts

177 months

Wednesday 28th October 2020
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Wasn't the option either Stroll or Geely ? I have to believe the Geely acquisition would have put paid to all this noise and shenanigans, what they have achieved for Volvo, and potentially Lotus is far better than this amateur stage production. I am sure this was the best deal for the stakeholders, but I fear it may not have been the best deal for AM.

chelme

1,353 posts

169 months

Wednesday 28th October 2020
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RIP AM. Long live AM(G).

Unless of course, Mercedes has the sense to take approach BMW has with RR.. .

Notwitstanding either approach, what with Brexit too, the UK only has.... McLaren and Gordon Murray Auto. .. for now.

Usget

5,426 posts

210 months

Wednesday 28th October 2020
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01WE01 said:
You are forgetting one profit driver - finance APR. Merc have gone mad for pushing volume through finance in the past five years.
AM don't have an in house bank, so this isn't a profit centre for them. I assumed they'd use whitelabel products from Santander or Blackhorse, but giving it a quick google, actually they whitelabel... BMW finance! (I wonder if that arrangement will survive the Daimler investment...)

They will, however, make extremely good margin on parts and accessories sales, and like the rest of the industry they will be looking to see which parts of the lifetime customer value chain they can access rather than leaving it to the trade. So an appreciable chunk (not the majority, but some) of that revenue would be expected to come from non-metal sales.

Piginapoke

4,737 posts

184 months

Wednesday 28th October 2020
quotequote all
Usget said:
AM don't have an in house bank, so this isn't a profit centre for them. I assumed they'd use whitelabel products from Santander or Blackhorse, but giving it a quick google, actually they whitelabel... BMW finance! (I wonder if that arrangement will survive the Daimler investment...)
Half true- AM will receive commission from its finance house.

BigR

335 posts

161 months

Wednesday 28th October 2020
quotequote all
Piginapoke said:
I interpret this as AM lacking the cash to pay for MB tech, so is offering equity instead; it's not as transformational as Stroll makes out. As others have said, cash burn remains the big issue for AM and it could be terminal with a global recession, Covid-19 etc.

Share price didn't move much yesterday, which is no surprise as this looks to further dilute existing shareholders' holdings.
Probably because it was announced right at the end of the day. But has shifted higher today - not far off 20% higher at one point.