Wednesday, February 12, 2020


Two established brands, two new identities, and the money-go-round puts the automotive world in a spin.

Aston Martin has been acquired by a consortium led by Lawrence Stroll (left).

And, overnight, Stroll announced that Aston Martin will have its own F1 team.

Hopefully Stroll and his consortium can dig Aston Martin out of the financial shit it has placed itself.

Lawrence Stroll’s consortium raised emergency funding of £500 million to support the ailing sports car manufacturer, which includes £182 million from Stroll himself.

The current chairman Penny Hughes will step down, and Lawrence Stroll will become executive chairman of Aston Martin Lagonda.

Stroll said: “I, and my partners, firmly believe that Aston Martin is one of the great global luxury car brands. I believe that this combination of capital, and my experience of both the motor industry and building highly successful global brands will mean that, over time, we fulfil Aston Martin Lagonda’s potential.”

And ‘blending’ his investments, Stroll announced to the Racing Point F1 staff at Silverstone that Racing Point F1 (nee Force India) would be re-branded Aston Martin F1 from 2021. Nothing changes for this year.

No word yet on the future of Aston Martin’s current CEO, Dr. Andy Palmer, or any significant changes to the structure of the company. In 2019 Aston Martin was forced to borrow £120 million at a huge interest rate, to inject capital into the company following “difficult trading conditions”.

Currently, dealers are not ordering new cars, but quitting their existing stock, which has seriously affected Aston Martin’s cash flow and it’s building up stock ‘at grass’. Palmer recently told the UK media that he ordered a massive cut in production (to stop further build-up of unsold cars).

However, London analysts say the major issue with Aston Martin’s finances has been its investment in the DBX crossover, and the subsequent decision to open a dedicated factory for the DBX in St. Athens, 15 miles south of Cardiff in South Wales.

Aston Martin's dedicated DBX factory in St. Athens, Wales

Its current 300 strong work force will build up to 600 to deliver the new model. All of which puts further pressure on the company’s balance sheet. Especially servicing the new debt at high interest rates!

CEO Palmer announced a week ago that the company had slashed its sales forecast for 2020 from 7300 to 6500, but that’s simply a veiled message to the markets that it’s taking its woes seriously. However, in actual fact the ‘real’ production numbers for this year will fall further. I suggest that the restructured forecast was simply a move to stop the analysts digging further into the company’s problems, until the new consortium deal could be put in place.

No word yet on the complicated problem surrounding the engines which Aston Martin F1 will employ next year. Currently Racing Point F1 is a Mercedes-Benz customer.
Racing Point's Lawrence Stroll with Mercedes F1's Toto Wolff

Of course, this could always be explained by the fact that Daimler Benz AG already has a 5% stake in Aston Martin, and Aston Martin is also a Mercedes-Benz customer, using its AMG V8 to power the Aston Martin Vantage sports coupe.

I forecast that within the not-too-distant future we will see Daimler Benz AG increase its holdings in Aston Martin – much in the same way VWAG is now the owner of Bentley Motors.

Aston Martin is one of the few remaing independent car firms left in Britain, but I believe that independence cannot last.

John Crawford

No comments:

Post a Comment