Aston Martin’s £5 billion miracle
Andy Palmer’s audacious management is paying of, and then some. By Gavin Green
I HAD DINNER WITH ANDY Palmer in Paris a few days after he was appointed boss of Aston Martin. It was September 2014. The ex-Nissan chief operating officer spoke of his desire (‘since I was 20’) to be a car company CEO, and of his passion for Aston Martin.
‘Am I ever going to be remembered for being number two or three at Nissan? No. But I would be remembered for turning around Aston Martin? Absolutely!’
There was another incentive for this former Rover engineer. Namely, a juicy bonus, agreed with Aston’s private equity owners. ‘My job is to make the company as valuable as possible as quickly as possible,’ he later told me.
With Aston Martin about to float on the London stock market, valued at around £5bn, Palmer should collect about £22 million in shares over the next four years. (But it could top £30 million, if shares trade at higher than expected prices.) Add a £1.2 million salary and about £5 million in performance payments, and he may well graduate from the Sunday Times Business section to the Sunday Times Rich List. The Kuwaiti and Italian owners are likely to see a ten-fold return on their investment. Initially 25 per cent of shares will be sold in the flotation.
It’s way too soon to say that Andy Palmer has ‘turned around’ Aston Martin. But he’s made a good start. The company is newly profitable, for probably only the third time in its 105-year history. It has been bankrupt more times (seven) than it’s made money.
There is a business plan – seven new cars replaced in seven-year cycles – that seems simple and sensible, and has been fully costed. The £200 million needed for the initial investment was raised, mostly from existing investors, in 2015.
There’s a new Welsh factory to build the DBX SUV and electric Lagondas. Significant growth seems likely: Palmer talks of boosting annual sales to 14,000, once the St Athan factory is at capacity. Last year, it sold just over 5000 cars.
These numbers seem ambitious but achievable, as long as the long-forgotten Lagonda brand resonates and the DBX appeals. Plus, Aston Martin is trying to elevate itself into a ‘luxury lifestyle brand’. These are valued higher by herd-like stock market investors than car brands, apparently. Witness fluffy non-auto Aston projects such as powerboats, Florida apartments and submarines (see panel, right).
More pertinently, there’s another hypercar on the way, due in 2021. ‘Project 003’ is the ‘descendent’ of the Adrian Newey-engineered Valkyrie. It’s more road-biased, more practical.
Meanwhile, Palmer is locked into another four years as CEO, which should reassure investors. That coincides nicely with his 60th birthday. After that he may decide to spend more time driving his immaculate ’70s V8 Vantage. By then, he’ll probably be able to afford Aston’s next hypercar, too.
And for his next trick…
Strange but true highlights of Aston’s product plan
THE THIRD HYPERCAR
The petrol-electric hybrid hypercar codenamed ‘Project 003’ coming in 2021 will be road-legal and steal tech from notroad- legal Valkyrie. Just 500 will be made; so far, it’s just a doodle.
Aston is teaming up with Italian coachbuilders Zagato to ofer 19 pairs of cars: a continuation of the ’60s DB4 GT Zagato and the Superleggera-based DBS GT Zagato.
Before the electric SUV and electric Lagondas, Aston’s first electric road car, late-2019’s Rapide E, is being developed with Williams. There will be 155 of them, built at the St Athan factory.
THE BOND VILLAIN SUBMARINE
Aston is working with Triton to provide budding baddies with their own subaquatic tyrannical transport. It will be based on the Triton 1650/3 ‘Low Profile’ three-person submersible.
THE ACTUAL PLANE
Volante Vision Concept isn’t another convertible grand tourer but a vertical take-of and landing aircraft, which Aston is developing in partnership with Cranfield University, Cran field Aerospace Solutions and Rolls-Royce (not that one).