Aston Martin CEO Andy Palmer says the extension of the brand’s portfolio to add a luxury crossover will transform the company’s business model following the replacement of its ageing sports car range.
Speaking at the SMMT Open Forum conference in Birmingham, Palmer said that the key for Aston Martin is to find the balance between exclusivity and making sufficient numbers of cars to provide funds to reinvest in new product.
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“We need to find the right volume point where we can maintain exclusivity and reinvest in the brand,” he told delegates. And he went on to explain that there are a couple of luxury car brands that Aston Martin can learn from.
“The good news is that we have a couple of models out there to look at. One is Ferrari, with all that it has done with its models and Formula One. The other is Porsche – which was a basket case, with the 911 – but then invested in the Cayenne and everything changed. So we have got a couple of working models there. We don’t want to become Porsche or Ferrari, but we have something to work with to create a new business model.”
The big challenge for Aston Martin, according to Palmer, is to turn a great brand into a great business, without damaging the brand.
Palmer said there are three distinct phases to the strategy: stabilisation, core strengthening and expanded portfolio. “We are in the stabilisation phase right now,” he says. “We have got the portfolio of cars that we have had for a long time now and we needed to create a bridge to the introduction of the new cars.
“The introduction of the new sports cars starts this September with the launch of the DB11. We have had something like an 18-month bridge to that and we have done pretty well with that bridge. Last year we saw an 11% uplift to retail volume, year-on-year, despite the fact that the portfolio was older. This year we are seeing a continuation of that growth, which bodes well for the second phase, core strengthening. The core strengthening is about replacing the sports car. We start with the DB11 [replaces DB9], which now has more than 1,400 advanced orders, then we follow with the new Vantage and then new Vanquish.”
He sees the third phase to the six-year business model as the one that transforms Aston Martin’s business model. “This starts with the introduction of a car into the global luxury SUV space [which will be based on the DBX Concept and made in Wales]. We don’t call it an SUV. What we are trying to make is a very beautiful crossover. There is really only one car in this space right now, the Bentley Bentayga, but there is more coming.
“We are trying to find something exquisite that works with our desire to create automotive art and sits in that segment. That creates the revolution and changes our business model. It also allows us to build a new factory in Wales.”
Towards the end of the plan to 2021, Palmer says that Aston Martin will add a sports sedan under the Lagonda brand to round off the company’s portfolio. “And then we have a much wider portfolio of seven cars that is capable of covering the entire high net worth map of desires. Seven cars, seven year life, one new every year, copy, repeat, copy repeat.”
Palmer also says he is confident about Aston Martin’s plan because the luxury market is expanding fast than the overall automotive market TIV. Palmer said that the global population of ‘high net worth’ individuals (defined as those with over a million dollars of cash to spend) now stands at 60m. “It keeps growing and the location of where these people are is changing. The real growth is now coming in places like China and southeast Asia. They want something that stands out and is bespoke and that is a need that Aston Martin is focusing on meeting and what our brand stands for.”
