New partner confirmed
Discussion
BamfordMike said:
If i were a betting man i would say V12 Vanquish II motor would go into Vantage chassis ASAP and then a downsized pressure charged version of the current V12 will replace it in the future for all models.
They might look at a bought in motor for a new 'baby' Aston chassis, but the 80-150£k sector that car would occupy is hellishly competitive from makers who have made great strides in the last few years where aston has been somewhat stagnant. Meaning they need to take two evolutionary paces forward at next model upgrade stage which is a tall order - big development spend. So, I bet they knock the less lucrative 'baby aston' market on the head altogether and concentrate on V12 'halo' cars pitched in the £150k plus sector. I reckon this because taking the simplistic view that 7 years of Vantage production has seemingly not resulted in bulging coffers to develop new product, the spend to create and the reward returned from future car in that sector is of questionable short / medium term worth. Vantage 'S' is a phenomenal Sports car, it just isn't selling in the numbers it needs. We are all Aston nuts on this forum and we are not kidding ourselves saying it is a great sports car, it is and we love it, but it just isn't appealing to the masses....
Who knows what will happen, but based on the fact the competition is so tough, any new aston will have to be fantastic for them to survive - which means what is to come must be a fantastic model range.... happy days.
Interesting. They might look at a bought in motor for a new 'baby' Aston chassis, but the 80-150£k sector that car would occupy is hellishly competitive from makers who have made great strides in the last few years where aston has been somewhat stagnant. Meaning they need to take two evolutionary paces forward at next model upgrade stage which is a tall order - big development spend. So, I bet they knock the less lucrative 'baby aston' market on the head altogether and concentrate on V12 'halo' cars pitched in the £150k plus sector. I reckon this because taking the simplistic view that 7 years of Vantage production has seemingly not resulted in bulging coffers to develop new product, the spend to create and the reward returned from future car in that sector is of questionable short / medium term worth. Vantage 'S' is a phenomenal Sports car, it just isn't selling in the numbers it needs. We are all Aston nuts on this forum and we are not kidding ourselves saying it is a great sports car, it is and we love it, but it just isn't appealing to the masses....
Who knows what will happen, but based on the fact the competition is so tough, any new aston will have to be fantastic for them to survive - which means what is to come must be a fantastic model range.... happy days.
I thought that you would say the opposite, that the V12 DB9/ Vanquish would be phased out for the V8V and V12V, on the basis that the Vantage way outsold the V12's, but what you're saying is that its the otherway around. You're saying they will look to less smaller cheaper vehicles for the, "mainstream", market (if there is a mainstream AM market), and specialize in the bigger more exotic market.
That is great in theory, and I can understand the method for doing it. But what about the, "rest of us"? If the £80,000.00 car disappears and the only cars available are £180,000.00 plus, who has that sort of money? I know that £80,000.00 is a lot of money, but with lease-plans and finance, it's attainable. But £180k on finance? Who has that? What this means is that it will enter the world of Rolls Royce where only the really rich can buy the car and the rest of us have to wait until they are a few years old. Maybe that's what they want ....!
They get very exclusive cliental.
If they were to develop a V6 Vantage, it would bring costs down alot, or would it? If we look at BMW, they used to be a more elite car maker (after almost going bankrupt), they were the premium brand. Over the last years and with a lot of development and very clever management, they remained a premium brand and then started to OUTSALE Ford. I understand they sell more 3 Series than Mondeo's.
You think they will go the route of elite Rolls Royce, or the more premium branded mainstream BMW? Or neither and just jog along the way they have been (which I think would be sad).
MaverickV12 said:
That is great in theory, and I can understand the method for doing it. But what about the, "rest of us"? If the £80,000.00 car disappears and the only cars available are £180,000.00 plus, who has that sort of money? I know that £80,000.00 is a lot of money, but with lease-plans and finance, it's attainable. But £180k on finance? Who has that? What this means is that it will enter the world of Rolls Royce where only the really rich can buy the car and the rest of us have to wait until they are a few years old. Maybe that's what they want ....!
That's exactly what Aston were until the DB7, ultra-exclusive for a very select and wealthy clientele. That business model ceased to work after the oil crisis (I guess) but I never dreamed I would be able to buy an Aston until the made the 'cheaper' Bloxham/Gaydon cars so it has been a marvellous way for me to get into a good car. Of coure you can buy an old Virage etc but they fact is they actually aren't that good, you had to really want one back in the day, and back then I would rather have had a Ferrari It has been mentioned more than once that Aston never made a good car until the DB9... (no offense to pre-Gaydon onwers).The 'rest of us' do not concern Aston Martin, it is a business that needs to survive and if only appealing to wealthy clientele is the way to do it, good luck to them. I'm so happy with my DB9, its manual box, its switchable suspension and mahoosive brakes. Once it has its 6.5 litre engine, Vanquish lights and some pimping quited leather inside, I don't ever intend to change
MaverickV12 said:
Interesting. I thought that you would say the opposite, that the V12 DB9/ Vanquish would be phased out for the V8V and V12V, on the basis that the Vantage way outsold the V12's, but what you're saying is that its the otherway around.
You're saying they will look to less smaller cheaper vehicles for the, "mainstream", market (if there is a mainstream AM market), and specialize in the bigger more exotic market.
That is great in theory, and I can understand the method for doing it. But what about the, "rest of us"? If the £80,000.00 car disappears and the only cars available are £180,000.00 plus, who has that sort of money? I know that £80,000.00 is a lot of money, but with lease-plans and finance, it's attainable. But £180k on finance? Who has that? What this means is that it will enter the world of Rolls Royce where only the really rich can buy the car and the rest of us have to wait until they are a few years old. Maybe that's what they want ....!
They get very exclusive cliental.
If they were to develop a V6 Vantage, it would bring costs down alot, or would it? If we look at BMW, they used to be a more elite car maker (after almost going bankrupt), they were the premium brand. Over the last years and with a lot of development and very clever management, they remained a premium brand and then started to OUTSALE Ford. I understand they sell more 3 Series than Mondeo's.
You think they will go the route of elite Rolls Royce, or the more premium branded mainstream BMW? Or neither and just jog along the way they have been (which I think would be sad).
I would not worry too much about that Maverick. They have been down the ultra exclusive road in the past and they certainly didnt fair any better than they are with a mass market car. In fact they did far worse! I thought that you would say the opposite, that the V12 DB9/ Vanquish would be phased out for the V8V and V12V, on the basis that the Vantage way outsold the V12's, but what you're saying is that its the otherway around. You're saying they will look to less smaller cheaper vehicles for the, "mainstream", market (if there is a mainstream AM market), and specialize in the bigger more exotic market.
That is great in theory, and I can understand the method for doing it. But what about the, "rest of us"? If the £80,000.00 car disappears and the only cars available are £180,000.00 plus, who has that sort of money? I know that £80,000.00 is a lot of money, but with lease-plans and finance, it's attainable. But £180k on finance? Who has that? What this means is that it will enter the world of Rolls Royce where only the really rich can buy the car and the rest of us have to wait until they are a few years old. Maybe that's what they want ....!
They get very exclusive cliental.
If they were to develop a V6 Vantage, it would bring costs down alot, or would it? If we look at BMW, they used to be a more elite car maker (after almost going bankrupt), they were the premium brand. Over the last years and with a lot of development and very clever management, they remained a premium brand and then started to OUTSALE Ford. I understand they sell more 3 Series than Mondeo's.
You think they will go the route of elite Rolls Royce, or the more premium branded mainstream BMW? Or neither and just jog along the way they have been (which I think would be sad).
yeti said:
MaverickV12 said:
That is great in theory, and I can understand the method for doing it. But what about the, "rest of us"? If the £80,000.00 car disappears and the only cars available are £180,000.00 plus, who has that sort of money? I know that £80,000.00 is a lot of money, but with lease-plans and finance, it's attainable. But £180k on finance? Who has that? What this means is that it will enter the world of Rolls Royce where only the really rich can buy the car and the rest of us have to wait until they are a few years old. Maybe that's what they want ....!
That's exactly what Aston were until the DB7, ultra-exclusive for a very select and wealthy clientele. That business model ceased to work after the oil crisis (I guess) but I never dreamed I would be able to buy an Aston until the made the 'cheaper' Bloxham/Gaydon cars so it has been a marvellous way for me to get into a good car. Of coure you can buy an old Virage etc but they fact is they actually aren't that good, you had to really want one back in the day, and back then I would rather have had a Ferrari It has been mentioned more than once that Aston never made a good car until the DB9... (no offense to pre-Gaydon onwers).The 'rest of us' do not concern Aston Martin, it is a business that needs to survive and if only appealing to wealthy clientele is the way to do it, good luck to them. I'm so happy with my DB9, its manual box, its switchable suspension and mahoosive brakes. Once it has its 6.5 litre engine, Vanquish lights and some pimping quited leather inside, I don't ever intend to change
bananarob said:
yeti said:
MaverickV12 said:
That is great in theory, and I can understand the method for doing it. But what about the, "rest of us"? If the £80,000.00 car disappears and the only cars available are £180,000.00 plus, who has that sort of money? I know that £80,000.00 is a lot of money, but with lease-plans and finance, it's attainable. But £180k on finance? Who has that? What this means is that it will enter the world of Rolls Royce where only the really rich can buy the car and the rest of us have to wait until they are a few years old. Maybe that's what they want ....!
That's exactly what Aston were until the DB7, ultra-exclusive for a very select and wealthy clientele. That business model ceased to work after the oil crisis (I guess) but I never dreamed I would be able to buy an Aston until the made the 'cheaper' Bloxham/Gaydon cars so it has been a marvellous way for me to get into a good car. Of coure you can buy an old Virage etc but they fact is they actually aren't that good, you had to really want one back in the day, and back then I would rather have had a Ferrari It has been mentioned more than once that Aston never made a good car until the DB9... (no offense to pre-Gaydon onwers).The 'rest of us' do not concern Aston Martin, it is a business that needs to survive and if only appealing to wealthy clientele is the way to do it, good luck to them. I'm so happy with my DB9, its manual box, its switchable suspension and mahoosive brakes. Once it has its 6.5 litre engine, Vanquish lights and some pimping quited leather inside, I don't ever intend to change
MaverickV12 said:
If they were to develop a V6 Vantage, it would bring costs down alot, or would it? If we look at BMW, they used to be a more elite car maker (after almost going bankrupt), they were the premium brand. Over the last years and with a lot of development and very clever management, they remained a premium brand and then started to OUTSALE Ford. I understand they sell more 3 Series than Mondeo's.
Take what i say with a pinch of salt, like the rest of us I / we are playing fantasy car maker strategy.The +£80k car will always be held to very critical appraisal by the press and customers against its peers and it really is a case of sink or swim in that sector. The bigger the development budget the better chance of swim but with a limited sales volume based on small maker volume caps (not more than 10k cars PA) means that the development spend to ensure a car swims in that sector spread over, say 7 years production run, is a risky battle indeed. Now we are 7 years into Vantage, the question is, has it really paid off for them commercially? Yes, it has allowed more folk to enjoy in ownership of the brand and the Vantage is a fantastic car, but will a new model which has to be created outside of Fords help (which was massive and without Ford the Vantage would not have existed) really pay off in the medium term when short term finances look 'wobbly' is what I question....
The >150k car does not have to survive critical appraisal, it has too look and sound awesome, be very exclusive and create the desire in somebody to buy it over a boat or a horse for example and not against another car (DB7 Zagato, DB7 AR1, Vanquish I, one-77, V12 Zagato). The development spend for this type of brute is less, the profit margin is greater and at a time where a few things have not gone quite to plan (Cygnet, Rapide and Motorsport) I would say go back to supercar basics to reaffirm the business.
George29 said:
Mike, do you know what CAD software do Aston Martin use?
I know Mercedes/Daimler Group have recently changed from Catia to NX. I know a couple of people who were offered contract jobs at Aston Martin mid last year, so I can only presume they use NX/Unigraphics?
NX7.5 and TCE8.3. I would say this resource would be in demand right now to conjure up many different scenarios to temp the board into releasing development spend. I know Mercedes/Daimler Group have recently changed from Catia to NX. I know a couple of people who were offered contract jobs at Aston Martin mid last year, so I can only presume they use NX/Unigraphics?
interesting, my two specialist softwares. BamfordMike said:
The >150k car does not have to survive critical appraisal, it has too look and sound awesome, be very exclusive and create the desire in somebody to buy it over a boat or a horse .......
I would say go back to supercar basics to reaffirm the business.
I agree that your suggestion would make better financial business sense.I would say go back to supercar basics to reaffirm the business.
It seems to be the route that McLaren are following, although there have been comments about them introducing a lower cost model to their range.
Perhaps Vantage owners have had a fairly brief opportunity, to be amongst the new / nearly new Aston Martin 'family', at a more reasonable cost.
Can anyone explain more fully, the financial details of the company transaction?
The announcement headline, Italian investment firm buys 37.5 per cent stake in Aston Martin for £150m, would value 100% of the company at £400m, which is not right.
Perhaps it is a capital increase costing £150m, plus the purchase of a stake from InvestmentDar, which then gives the new investor 37.5% of the company.
The other financial puzzle to me, is the comment by the AML Chairman. I think it was, "£500m is to be spent in the next 5 years on developing new models". That must be a huge sum for AML. If the interest payments on the £300m bond were 'tight', and £150m new money is to become available, where is the extra £350m coming from?
MaverickV12 said:
Does any one know how many
V8V are sold every year ?
V12V every year?
DB9 every year ?
DBS every year ?
Projections for Vanquish every year?
Occasionally, total production numbers are referred to in the media, but I have never found a split by model.V8V are sold every year ?
V12V every year?
DB9 every year ?
DBS every year ?
Projections for Vanquish every year?
When each model has ended, the number of cars built do then seem to be quoted.
UK sales by each model can be found though. Using the new registrations by year, part of the website 'How Many Left', gives an idea. The DVLA records seem to be slightly 'wobbly', with regard to precise model titles. Looking at the combined figures of, for example DB9, might be reasonably accurate.
Their figures with the Vantage, show the initial rush of enthusiasm of UK buyers, followed by a steady decline in annual new registrations.
Now you should not be producing a product at a loss or intentional break even, but I wonder how much of the fixed costs and the development cost sharing the Vantage range covered. Without the contribution, the additional costs would have to be absorbed in the higher end models adding maybe 20% or more to their costs and making them potentially no longer cost competitive in their segment.
Then there is the parts sharing. Components in smaller volumes will also cost more.
Next we can look at the viability of the franchise. I know most are not independently (as in it is the only car franchise they have) owned anywhere (are there any in fact), but as a franchise, the Aston dealerships are mostly stand alone premises. Without the volume the Vantage has produced for them in sales, used car sales, trade in sales and parts & service work, I wonder how many of the dealers would be getting a return on the kind of premises we see them presently operate. Next step less market coverage and a concentration only on large conurbations. Not to compare the cars, but has Bentley not followed a similar model strategy?
Surely that has to be a part of the thinking of which way to go if the plan is purely £200k upwards.
Then there is the parts sharing. Components in smaller volumes will also cost more.
Next we can look at the viability of the franchise. I know most are not independently (as in it is the only car franchise they have) owned anywhere (are there any in fact), but as a franchise, the Aston dealerships are mostly stand alone premises. Without the volume the Vantage has produced for them in sales, used car sales, trade in sales and parts & service work, I wonder how many of the dealers would be getting a return on the kind of premises we see them presently operate. Next step less market coverage and a concentration only on large conurbations. Not to compare the cars, but has Bentley not followed a similar model strategy?
Surely that has to be a part of the thinking of which way to go if the plan is purely £200k upwards.
ipd57 said:
Next we can look at the viability of the franchise. I know most are not independently (as in it is the only car franchise they have) owned anywhere (are there any in fact), but as a franchise, the Aston dealerships are mostly stand alone premises. Without the volume the Vantage has produced for them in sales, used car sales, trade in sales and parts & service work, I wonder how many of the dealers would be getting a return on the kind of premises we see them presently operate. Next step less market coverage and a concentration only on large conurbations
I am to understand that AM have a large influence on how franchise dealers set up their premisis, in that they must have 40m2 of floor space per car etc, then if you look at the physical premisis they have a common thread. I have a feeling that AM belief their s
t don't stink and they dictate to franchise dealers how they want their cars sold. Obvioulsy other franchise dealers are all branded with what ever car they are selling, but the premises are basically what ever the garage wants to build or refurbish. Not so AM.Its ok pissing off their franchise dealers with their demands, but you're right, if their income is suddenly hit, and hit hard, that's a different ball game, all bets are off. They still need a network of dealers over the country (and world) and if they don't have any, they are screwed. That would suggest they would have to go cap-in-hand to other dealers to sell their cars. I wonder if AM's s
t didn't stink them. 
About the Vantage market and pricing...
It seems that the Vantage market is not new to Aston Martin. Rather, it was that market that they played in for a long period in their history. A while ago I did a bit of research regarding the prices (in the US) of Astons in decades past when I found an original road test of the DB4. In 1962, the price in the US was $10,475. According to the Consumer Price Index, this is equal to $80,300 in 2012. Obviously, that's quite a bit less than the price of a V8V today. In 1964, the DB5 tested by Road&Track had an as-tested price of $13,222, which translates to $98,660. The DB6, in 1966, was $15,495. That's $110,625 now, which is still less expensive than today's V8V. Even after the (NP) V8 came out, the price was more like a V8V's than a DB9, and far below the price of a DBS or Vanquish. In 1977, Road&Track's test V8 Coupe cost $35,250, which is $134,550 in 2012 dollars -- in the range of a new V8V today. Then, things changed. Just 5 years later, in 1982, a V8 Volante listed at $115,000, which equates to $275,660 in 2012. The Lagonda was $150,000, which is $359,600 today. The V8 Coupe, in '84, was $110,000, which is $244,900 in 2012.
What this means for tomorrow I don't know, but the V8 Vantage did not take AM into a "cheaper" market, just a market that they hadn't played in for a while.
It seems that the Vantage market is not new to Aston Martin. Rather, it was that market that they played in for a long period in their history. A while ago I did a bit of research regarding the prices (in the US) of Astons in decades past when I found an original road test of the DB4. In 1962, the price in the US was $10,475. According to the Consumer Price Index, this is equal to $80,300 in 2012. Obviously, that's quite a bit less than the price of a V8V today. In 1964, the DB5 tested by Road&Track had an as-tested price of $13,222, which translates to $98,660. The DB6, in 1966, was $15,495. That's $110,625 now, which is still less expensive than today's V8V. Even after the (NP) V8 came out, the price was more like a V8V's than a DB9, and far below the price of a DBS or Vanquish. In 1977, Road&Track's test V8 Coupe cost $35,250, which is $134,550 in 2012 dollars -- in the range of a new V8V today. Then, things changed. Just 5 years later, in 1982, a V8 Volante listed at $115,000, which equates to $275,660 in 2012. The Lagonda was $150,000, which is $359,600 today. The V8 Coupe, in '84, was $110,000, which is $244,900 in 2012.
What this means for tomorrow I don't know, but the V8 Vantage did not take AM into a "cheaper" market, just a market that they hadn't played in for a while.
I've posted my thoughts on the AMOC Froum but still could not find the courage to say what BamfordMike has said about the segments AML occupies. Full marks to him for having the audacity and guts to do so.
AML's issue is exactly that; the V12 cars are slowly drifting into the V8 territory of other manufacturers. This is the first problem to solve along with re-establishing a proper environment of better retained value for secondhand cars.
AML's issue is exactly that; the V12 cars are slowly drifting into the V8 territory of other manufacturers. This is the first problem to solve along with re-establishing a proper environment of better retained value for secondhand cars.
Good article (excluding the first few paragraphs lecturing on what is or is not corporate strategy). Compares Aston's R+D investment to Bentley, Ferrari etc.
http://skiddmark.com/2012/12/aston-martin-serves-u...
To save everyone, reading the boring bits article says:-
In last Friday’s announcement we learned that Investindustrial will be making a cash payment of £150 million for a 37.5% stake in Aston Martin, then working together with the company’s other shareholders to invest around £500 million over the next five years in developing new models and pursuing growth in the emerging markets of China, India and the Middle East.
Whether this is a competitive level of commitment, only Aston Martin can really say, for it depends on the quality of programmes already underway and the assets currently in place, but it’s worth bearing in mind this investment in product and operational development represents around 20% of annual revenues, which in most industries would signify a major transformation.
Aston Martin Dr Ulrich Bez D2 Aston Martin serves up a lesson in corporate strategyAston Martin CEO Dr Ulrich Bez.
Some observers have noted how small this sum of money seems for a global car company, with BMW for example investing over $1.4 billion in engine development during the next 12 months alone. But Aston Martin barely competes with BMW (except at M6 Coupé and Gran Coupé level), instead its main luxury rivals from Bentley, Ferrari, Porsche and Lamborghini provide a better context against which to understand the strategic nature of the company’s capital investment plans.
Since Volkswagen acquired Bentley Motors in 1998 it has invested more than £1 billion in new model developments and improvements to the company’s engineering and production facilities in Crewe. Such investment is ongoing, but represents an average run-rate of less than $120 million per year – whereas Aston Martin has proposed to spend around $160 million each year until 2017.
With sales of 7,593 cars in 2011 (down from a 2007 peak of 10,000 cars pre-downturn) on a turnover of US$1.5 billion, Bentley’s R&D spend equates to around 8% of annual revenues which is well below Aston Martin, but then Bentley is already delivering an impressive 7.5% EBITDA compared to a little over 1% for Aston Martin (so it needs to put in more effort just to keep pace).
In this respect, Aston Martin’s strategy will be aimed at building a competitive advantage and lowering the gearing of this investment ratio, delivering higher earnings for less spend.
Aston Martin Design Centre D4 684x424 Aston Martin serves up a lesson in corporate strategy
The one further caveat to bear in mind (and the reason why I’m skirting lightly over the figures) is how each of Aston Martin’s competitors choose to capitalise their R&D spend and recognise these in their accounts. Since all, apart from Aston Martin, are part of larger corporations it’s likely that all sorts of accounting treatments are in play (justifiably or not) which makes the comparison of public data less than reliable.
Ferrari announced earlier this year that it would be investing around $70 million over the next two years in developing the range of new engines for Maserati’s Quattroporte and Kubang SUV, plus top-end Alfa Romeo and Lancia models. The Italian sports car marque already spends around $140 million each year on product development on 2011 sales of 6,800 cars generating around $2.4 billion. This equates to around 6% of annual revenues, which again makes Aston Martin’s planned 20% investment seem more than reasonable.
Porsche are in a different league, volume (and profitability) wise – with revenues of $18 billion equating to around 20 times that of Aston Martin. With an operating profit margin of 18.5%, no wonder Volkswagen were so keen to buy the remaining shares in Porsche earlier this year. And despite plans to spend more than $1 billion per year on new models, that is still only around 5.5% of annual revenues.
And finally Lamborghini, with sales of 1,600 cars in 2011 and a global turnover of $420 million, the House of the Raging Bull is the smallest of the five luxury sports car makers. In the absence of any investment figures we can’t draw too many conclusions, but it’s unlikely to differ far from the other premium VAG marques, which would seem to confirm that Aston Martin’s $750 million investment over 5 years is far from ‘coasting’ and is just what the Dr (Bez) ordered to begin catching up their immediate rivals.
http://skiddmark.com/2012/12/aston-martin-serves-u...
To save everyone, reading the boring bits article says:-
In last Friday’s announcement we learned that Investindustrial will be making a cash payment of £150 million for a 37.5% stake in Aston Martin, then working together with the company’s other shareholders to invest around £500 million over the next five years in developing new models and pursuing growth in the emerging markets of China, India and the Middle East.
Whether this is a competitive level of commitment, only Aston Martin can really say, for it depends on the quality of programmes already underway and the assets currently in place, but it’s worth bearing in mind this investment in product and operational development represents around 20% of annual revenues, which in most industries would signify a major transformation.
Aston Martin Dr Ulrich Bez D2 Aston Martin serves up a lesson in corporate strategyAston Martin CEO Dr Ulrich Bez.
Some observers have noted how small this sum of money seems for a global car company, with BMW for example investing over $1.4 billion in engine development during the next 12 months alone. But Aston Martin barely competes with BMW (except at M6 Coupé and Gran Coupé level), instead its main luxury rivals from Bentley, Ferrari, Porsche and Lamborghini provide a better context against which to understand the strategic nature of the company’s capital investment plans.
Since Volkswagen acquired Bentley Motors in 1998 it has invested more than £1 billion in new model developments and improvements to the company’s engineering and production facilities in Crewe. Such investment is ongoing, but represents an average run-rate of less than $120 million per year – whereas Aston Martin has proposed to spend around $160 million each year until 2017.
With sales of 7,593 cars in 2011 (down from a 2007 peak of 10,000 cars pre-downturn) on a turnover of US$1.5 billion, Bentley’s R&D spend equates to around 8% of annual revenues which is well below Aston Martin, but then Bentley is already delivering an impressive 7.5% EBITDA compared to a little over 1% for Aston Martin (so it needs to put in more effort just to keep pace).
In this respect, Aston Martin’s strategy will be aimed at building a competitive advantage and lowering the gearing of this investment ratio, delivering higher earnings for less spend.
Aston Martin Design Centre D4 684x424 Aston Martin serves up a lesson in corporate strategy
The one further caveat to bear in mind (and the reason why I’m skirting lightly over the figures) is how each of Aston Martin’s competitors choose to capitalise their R&D spend and recognise these in their accounts. Since all, apart from Aston Martin, are part of larger corporations it’s likely that all sorts of accounting treatments are in play (justifiably or not) which makes the comparison of public data less than reliable.
Ferrari announced earlier this year that it would be investing around $70 million over the next two years in developing the range of new engines for Maserati’s Quattroporte and Kubang SUV, plus top-end Alfa Romeo and Lancia models. The Italian sports car marque already spends around $140 million each year on product development on 2011 sales of 6,800 cars generating around $2.4 billion. This equates to around 6% of annual revenues, which again makes Aston Martin’s planned 20% investment seem more than reasonable.
Porsche are in a different league, volume (and profitability) wise – with revenues of $18 billion equating to around 20 times that of Aston Martin. With an operating profit margin of 18.5%, no wonder Volkswagen were so keen to buy the remaining shares in Porsche earlier this year. And despite plans to spend more than $1 billion per year on new models, that is still only around 5.5% of annual revenues.
And finally Lamborghini, with sales of 1,600 cars in 2011 and a global turnover of $420 million, the House of the Raging Bull is the smallest of the five luxury sports car makers. In the absence of any investment figures we can’t draw too many conclusions, but it’s unlikely to differ far from the other premium VAG marques, which would seem to confirm that Aston Martin’s $750 million investment over 5 years is far from ‘coasting’ and is just what the Dr (Bez) ordered to begin catching up their immediate rivals.
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