Netherlands-based Spyker Cars is a maker of high-end sports cars that is attempting to rebuild its business after an expensive involvement with Formula 1 that saw its losses balloon. As well as hauling itself back on to an even financial keel, the firm is also working on new products and raised volume. just-auto editor Dave Leggett interviewed the CEO, Victor Muller, on behalf of Lotus Engineering’s proActive.
DL: How is business this year?
VM: We have seen a steady improvement and return to normal trading circumstances in the first quarter and we expect that to continue to improve through this year.
DL: What’s behind the large loss (EUR72m) the company made last year?
VM: Clearly that’s our involvement with Formula 1 – we ran into massive liquidity problems as a result of Formula 1. It dragged the rest of the business down and in the end we didn’t have money to buy parts for our cars and production dropped like a stone as a result.
We were almost in the black in 2006 and 2007 should have been an improvement, but Formula 1 changed all that.
DL: What went wrong with your Formula 1 involvement?
VM: We did not manage it properly. It wasn’t like we had the wrong ingredients…we just did not manage it properly. You can see with the performance of Force India – the buyer of our team – that even with the addition of US$50m budget, they still perform no better than we did. That shows how difficult it is.
DL: Who owns Spyker?
VM: We are a public company (listed on Amsterdam Exchanges) and there are four major shareholders. One is Vladimir Antonov, a new shareholder who came in at the end of last year. He’s a Russian banker who is very committed to the company and a keen car collector and financial investor. He has 30% of the stock. Some 25% of the stock is in the hands of government owned Abu Dhabi investment company Mubadala (which also has 5% of Ferrari).
Another investment company, Gemini, has 10% and I also have 10%. So collectively, the major shareholders account for 75% of the company’s ownership. The rest is in free float.
DL: What’s the ideal production volume for a company like yours making exotic high-end sports cars?
VM: The ideal volume is what the market demands minus one. In 2006 we produced around 100 cars and we intended to produce around 150 last year. Of course last year we did not get anywhere near that number because of the trouble that we ran into.
But we are seeing a tremendous increase this year over last year.
We could easily go to 250 cars a year within the existing production infrastructure so there is no reason that we wouldn’t aim to make that many if we can sell them.
DL: You have plenty of capacity then?
VM: Yes, plenty.
DL: Given the financial problems you have had and the disruption to production, are you confident that you can maintain loyalty from your customer base?
VM: Amazingly, you could say, we still have a very loyal customer base. We have lost a handful of dealers but a lot of new dealers have joined us. What really doesn’t help is the worldwide financial crisis that we are in, which will find its way into consumer spending. But our customers are, relatively speaking, not hit so much by that crisis.
DL: I guess your customers are fairly high net-worth individuals?
VM: We estimate on average US$50m.
DL: Where are they from?
VM: 50% are in America, 50% outside America. When the SSUV four-door four-wheel drive car comes we expect that there will be a shift, let’s say to the new economies – Russia, China and also the Middle East, because that’s where that car will be going.
DL: Making exotic sports cars isn’t an easy business to be in and you don’t need me to tell you that. What attracted you to it?
VM: It is a phenomenal challenge and I have always tremendously enjoyed challenges and little did I know just how challenging it would be…but it was all self-inflicted because I decided with the board that we should go into Formula 1. Obviously we did not manage that properly and paid the price. However, building exotic sports cars is still a tremendously nice and attractive business and when we get our new products on the road – the Aileron C-line and D-line SSUV – then we can demonstrate that this business is not only a challenging business but one that is also a nice business from a shareholder point of view.
DL: What is the basic company strategy for Spyker Cars?
VM: The basic strategy is to design and develop timeless sports cars. We are not going to make any new-edge designs or do things that might be considered out-of-date in five years. We want to control our distribution very carefully and we believe that there are three things that are really important to building our brand: consistency, consistency and consistency. It is very, very important to have a consistent brand image.
We also focus on a limited number of markets in our strategy and we are also dedicated to racing and especially GT2. Of course F1 was a great way to promote the brand but that, unfortunately, was short-lived. GT2 and Le Mans are part of our strategy.
DL: What are the core values in the Spyker brand?
VM: We have five brand pillars: heritage, design, craftsmanship, performance and exclusivity. Those are the five core elements that constitute the Spyker brand.
DL: From a customer perspective, what should mark a Spyker out from an Aston Martin or Ferrari?
VM: The exclusive element is important and the hand-built element is very important, too. The other cars are mass-produced by comparison. And the aviation heritage is something that is reflected in the exterior design and the interior design.
The customer is eager to buy Spyker because it is something else; he wants something different, more exquisite, more exclusive and more hand-built. We are not competing with Ferrari or Aston Martin. When you have made your first million pounds then you go and buy a Ferrari, not a Spyker – not yet. That will take quite some time.
Typically a Spyker buyer already owns or has owned well-known brand supercars and wants something that is different from that experience. We are on average the seventh car in their collection.
DL: What models do you see as key to Spyker’s future development?
VM: C8 Aileron which we showed in Geneva last March. And the Peking-to-Paris D8 SSUV – production of which starts in 2009.
|Victor R. Muller CEO Spyker cars|
DL: What engine will the SSUV get and can you say anything about likely pricing for that vehicle?
VM: The engine will be V8-cylinder and most likely of American origin. Pricing for that model will likely be around EUR235,000.
DL: And how many of those SSUVs do you think you will be building?
VM: It will be in the hundreds a year.
DL: Will the tie-up with Lotus Engineering help with product development?
VM: Clearly. Working with Lotus means that we can plug into a very well-oiled machine, very professional, with very helpful and passionate people who love cars. By teaming up with Lotus we have reduced product development time and cost.
Now that we have signed a letter of intent with Lotus for cooperation and platform sharing, I hope that the cooperation intensifies to the benefit of both parties – it’s not just one-way traffic. Lotus can benefit, too: larger production runs mean lower cost, which should benefit both parties.
DL: Can more models follow?
VM: Of course, but let’s not get carried away at this time. We have ideas for other models, but we are focused on making a success of the new models that are at an advanced stage of development – C8 Aileron and the ‘Peking-to-Paris’ SSUV.
DL: And Lotus can act as a contract manufacturer for some Spyker models?
VM: I would sincerely hope so.
DL: I guess many people are aware of the Spyker C8 Laviolette’s role in the movie Basic Instinct 2 – how does that sort of product placement happen?
VM: We are consistently trying to get our products placed in movies and in advertising and that’s working well for us. We don’t use agencies to represent us in Hollywood or anything, we do it ourselves – they find us and we find them. We know a lot of people in Hollywood.
DL: Do you have many customers for Spykers in Hollywood?
VM: Oh yes, plenty – but I can’t name them.
DL: Would you go into Formula 1 again after the last experience?
VM: I would have no hesitation in going back in but only if there is clarity with the Concorde agreement. And we would have to be in the position of being able to manage things properly. But for the time being it is certainly not on our agenda and we have other fish to fry.
But you never know what may happen in the future…
DL: What gives you pleasure in this business?
VM: It’s a fantastic business and I love it to death. Being at Le Mans and seeing your car pass by – that’s really inspiring and a good feeling. Talking to existing customers who have lots of personal success with our cars is inspiring. The design phase of new car development is exciting. There are so many aspects to this business that inspire me and give me energy. And working with such dedicated professionals is very satisfying of course.
And the creation of a new product is very exciting. If it is well received that is extremely gratifying.
Victor Muller is one of the two founders of the company. As Chief Executive Officer he is responsible for implementing the overall strategy of Spyker. In the second half of 2007, Mr Muller temporarily tepped down as CEO because leadership of the company could no longer be combined with giving direction to the intensive media attention. Victor Muller started his career in 1984 as a lawyer at Caron & Stevens/Baker & McKenzie, Amsterdam. In 1989, he became a member of the management team of the offshore company Heerema in Leiden and was involved in several acquisitions. He became partial owner of Wijsmuller Salvage and Towage, IJmuiden, as a member of a consortium through a management buy-out. From 1992, he has managed and restructured several companies including Emergo Fashions Group B.V. that went public under the name McGregor Fashion Group N.V. in April 1999. Victor Muller was appointed Management Board member for an indefinite period of time.