Exclusive: Unfazed by Brexit and trade wars Aston Martin plans to double production
The chief executive of the British car maker plans to roll out 14,000 cars by 2022
Aston Martin, the classic brand made famous by James Bond movies, is unfazed by Brexit or trade wars, as the British manufacturer plans to double production by 2022 and roll out new models over the coming years, its chief executive said.
“In 2008 we sold 7,000 cars and we had three body types,” Andy Palmer told The National. “In 2022 we will be at 14,000 and we will be at seven body types. What’s happening is scarcity [of the product] is going up.”
The company is on target to produce 6,400 vehicles this year, Reuters reported.
In 2014, the former No 3 executive at Nissan joined Aston Martin, which has been insolvent seven times in its 105 years in existence. His mandate of turning the company around has been successful, building on his experience at the Japanese manufacturer, and importing the lean art of monozukuri principles across the corporate culture of Aston Martin.
“We pretty much follow the monozukuri model – across product planning, design, engineering, manufacturing except sales,” said Mr Palmer. “What we’ve done is taken lean [manufacturing] and we’ve said let’s go beyond lean. At each station you have a batch production and you can make a lot of different things on the production line.”
Historically, the company turned a page when it went public last month. Its share price did not perform well at the debut and is down 27 per cent since going public, giving the company a market capitalisation of £3.15 billion (Dh14.83bn). It’s a glitch in the short scheme of things, as the long-term evolution of the company is what matters, said Mr Palmer.
Turning the company’s fortunes around is embedded in a seven-year plan that diversifies the car models produced and scales up the business across the globe.
“Over half the cars we’ve sold, which is about 85,000 cars in history, over half of those were sold in the UK,” said Mr Palmer. “The UK is increasingly becoming a smaller proportion of what we sell. We now have 162 dealers in 53 countries. We’re widening the portfolio, deepening the sales. Rather than gamble on the UK economy …we go to a wider audience.”
As of this year, the US accounts for 30 per cent of the company’s total sales, followed by the UK. Europe and the Asia-Pacific region, which includes China, are closely in third and fourth place, respectively.
Despite the slowdown in China’s economy and the introduction of a luxury tax that has dented growth in the automotive industry in the country, Aston Martin’s annual sales have surged 118 per cent in the third quarter of the year. That is largely thanks to the roll-out of new car models, forging new dealerships and deferring to local talent to run the business.
The Middle East accounts for 10 per cent of the company’s sales and Aston Martin plans to have a concerted push as it looks to introduce its DBX 4x4 vehicle into the market next year.
“We’ve taken back control of our distribution so we’ve seen a bit of an uptick,” said Mr Palmer. “The Middle East is important to us for specials, limited editions, from that perspective it over indexes and to some extent that’s more important than the volume itself. We’ve grown year-on-year in double [digits]. Sales here correlate quite well with oil.”
Mr Palmer, who oversaw the Nissan patrol that is widely popular across the Arab world, anticipates selling as many as 5,000 DBXs globally.
“Hopefully a little bit of that fairy dust will find its way across,” he said.
The DBX competes with rivals rolled out by Bentley, Lamborghini and Rolls-Royce. Ferrari, which Aston Martin considers its peer rival since it is the only other luxury company that is publicly listed, is releasing its 4x4 in 2022.
Aston Martin also struck a chord with its Valkyrie model that has been developed with the Red Bull Formula One team. All 150 models to be produced have sold out, with 15 buyers from the Middle East, said Mr Palmer. Each car costs more than £2.5 million after customisation.
Mr Palmer has been vocal on Brexit. Aston Martin, in which Daimler Mercedes has a 4.9 per cent stake, sources some of its engines, namely the V8 and V12 from Germany. The risk of no deal between the EU and the UK, which now appears less likely after the EU endorsed Theresa May’s plan yesterday, means Aston Martin’s cars will cost more and its production process is impinged by bureaucracy at ports.
“We are less concerned by tariff than we are by non-tariff,” said Mr Palmer. “The non-tariff, 60 per cent of our parts by value come from mainland Europe, that equates to 3,900 parts across the channel, some cross twice.
“The biggest components are our engines. It’s fair to say the biggest concern is bits getting stuck at the port because of the volume of traffic. We’ve assumed a hard Brexit within our planning. I think we’re prepared.”
Mr Palmer had little to say on the downfall of his previous boss Carlos Ghosn, who was arrested last week and stands accused of financial misconduct.
“I don’t know. Nothing stands still forever,” Mr Palmer said, when asked if the three-way alliance between Nissan, Renault and Mitsubishi will last. “Undoubtedly Carlos Ghosn was or is an intrinsic part of that alliance. I don’t know whether he’s gone or temporarily indisposed.”
Asked if he was surprised by the scandal, Mr Palmer said, he is “mostly shocked for Nissan”.
“A lot of my friends are at Nissan and they probably don’t deserve the turbulence they’re getting right now,” he said. “I’m sure that they’re worried about what their future holds. Mostly I worry about them and not the individuals doing all the talking right now but mostly the good people that did a good job for me when I was there. I feel kind of sorry for them right now.”
Updated: November 26, 2018 01:55 PM