Why the rumours about Aston Martin are little more than a storm in a teacup..

Aston-Martin-DB9

You may have heard the rumours which kicked-off a few weeks ago that Aston Martin was up for sale. I forget who started them, but it didn’t take long for the usual speculation to deduce this last great bastion of British performance motoring was to be snatched up by Indian tractor maker Mahindra and ruined.

Cue the wringing of hands and endless interweb discussion about the loss of another national treasure.

The problem with such rumours is they come to light from seemingly nowhere and like a localised tornado, whip up a frenzy of debate before any facts are available to examine.

Most of the people who know such facts are bound by NDAs and other such legalities, while even the company’s corporate communicators have to tread a fine line, or risk prejudicing related discussions. None of these are good (or helpful) things to do when running such a business, hence until yesterday there has been relative silence.

In reality, plenty of people have known that Aston Martin is seeking capital from the investment markets, and has been actively doing so for much of last year. Also, far from this being a ‘problem’, it is merely the consequence of reaching a point in their business plan where the next step-up is a significant one (and requires an injection of more shareholder capital).

In Aston Martin’s case, powertrains are the next big step they face, together with scaling their business model to take advantage of the growth in the BRIC (Brazil, Russia, India and China) and other high-growth nations.

Up until recently investors haven’t exactly been tripping over themselves to finance a specialist automotive business (Lotus take note), hence the time it has taken Aston Martin to find possible suitors. But yesterday an Aston Martin spokesperson told Reuters that “..it is in ‘advanced’ talks with potential investors over an injection of capital into the business.”

The aforementioned tractor-maker, Mahindra and Mahindra is one of those interested parties, as is Italian private equity fund Investindustrial. But no doubt other names might pop into the frame, as they tend to when the competitive market starts to work (rather like when bidders surface near the end of an eBay auction).

Kuwaiti investment house Investment Dar, who together with Adeem Investment bought the brand from Ford five years ago is looking to dilute its shareholding and offer between 40% and 50% of stock to raise the capital. It’s thought this will raise around $400m (£250m) – coincidentally a similar amount to that raised by the former-CEO of Lotus, Dany Bahar, to fuel his New Era plan.

Aston Martin also need significant investment capital to fuel the development of new products, hybrid powertrains and the expansion of its range beyond the 4,200 cars it sold in 2011. Basic economies of scale make this a precursor to future growth, as the global car makers get bigger and more efficient, so to do the obstacles for smaller car makers, especially those which feature bespoke components.

Aston Martin faces two options in this respect, either get bigger or form a partnership with someone who is.

Extra capital may not be enough, since growing its sales is dependent on a number of factors outside its direct control. Mumbai’s Mahindra and Mahindra is the world’s biggest tractor maker, but as far as I know there aren’t many (if any) common suppliers or components between a luxury sports car maker and one who builds tractors and SUVs.

This may be seen as a limitation with Mahindra and Mahindra’s offer, but it would still seem to make more sense than Italy’s InvestIndustrial bid.

The other potential issue comes from Mahindra and Mahindra’s reason for bidding. The company’s Chairman and MD, Anand Mahindra (@anandmahindra), holds a long-standing ambition to become a global automotive player, expanding outside India and breaking into the US and European markets. Owning a significant chunk of Aston Martin would help raise the group’s international profile – rather like a Black American Express card – and perhaps rub off on the company’s existing products.

Mahindra has tried similar strategies in recent years, acquiring South Korea’s Ssangyong Motors last year for $460 million after being outbid in 2008 when rival Tata paid $2.3 billion for Jaguar Land Rover. And earlier this year he expressed an interest in buying Swedish carmaker Saab Automobile, but lost out to a Chinese consortium.

So the case for Mahindra would appear to be one of prestige, with the current offer on the table valuing Aston Martin at around $1.1 billion – or a 40% gain on the amount paid by Investment Dar in 2007 – some perceive the stock as expensive, but it would be well within the means of Mahindra.

Mahindra normally focuses on buying ‘distressed stock’ which can be cleaned up quickly and harvested for value, but Aston Martin doesn’t fit that profile – it’s an efficiently run business, able to develop new cars more cheaply than its rivals (predominantly due to the Russian Doll effect of its aluminium VH platform) – but it needs investment from someone who understands the premium car market and can provide engineering solutions to match the likes of Porsche and Mercedes.

The question is, does Anand Mahindra have what it takes to see Aston’s strategy through? He’s seen how successful it can be for his friend and mentor Ratan Tata, and after overtaking Tata Motors in their home market he would now like to emulate him on the global stage. But is it this in Aston Martin’s best interests?

Judging by Jaguar Land Rover’s improving fortunes, It’s easy to draw parallels about the role Mahindra could play in financing Aston Martin’s next big push, and while the infusion of capital would be welcome in the short-term, in the medium-term Aston also needs a technology partner who can help modernise their range and provide the means to scale up to more profitable levels.

  • Tata tat

    Mate, you ain’t got a scooby. The below article on AM from the FT yesterday, and the Moodys’ downgrade, makes your above musings ridiculous :

    http://www.ft.com/cms/s/0/d7112174-3ad6-11e2-bb32-00144feabdc0.html

    Aston’s f*cked.

    My reaction(copy and pasted here) to another ‘ain’t got a scooby’, supposed ‘industry pundit with an inside track’, Hilton Holloway of Autocar magazine. It applies to your ‘analysis’ too:

    ‘The reason Aston Martin is stuffed, is not because as your analyst mate and some bright spark say it can’t breach some mythical ceiling of 4,500 units/yr, but rather, unlike the German big premium trio, and Ferrari, Porsche, Bentley and Lamborghini, it has failed to get back to anywhere near its pre-Credit Crunch sales levels.

    The whole meme of the post Credit Crunch time, 2008-’12, has been the bifurcation of the car market into the rebounding, apparently hugely successful premium makers, especially the very high-end ones, and the near collapse of the mass-market, middle-ground makers.

    So why is Aston Martin, a Ferrari, Bentley, Porsche, Lambo etc. rival, not one of the high-end premium winners?

    Its sales in 2012 in the first 9 months, according to the FT article above, are 2,500; that’s on course for around 3,400 full year, which is around a 55% decline since 2007.

    No other high-end premium maker has seen such a decline, with the possible exception of Maserati; in fact, most of the above listed brands are at least back to pre Credit Crunch levels, if not a lot higher.

    The reason AM is in trouble and looking for a sugar daddy, is obviously the now public collapse in sales, by over half, but the reason for that is the lack of real investment since Ford turned the taps off in 2006, and pulled out in early 2007.

    Contrary to all the window dressing by Bez and Richards since, and wining and dining of car rag hacks, AM has been running on fumes since at least 2010, and no amount of James Bond PR hype can overcome the real lack of product development, to keep up with the giant ‘sausage factory’ of new product development churned out relentlessly by the Big 3 Germans particularly, and Ferrari, with the excellent, cutting-edge 458 Italia alone being a near fatal blow to Aston’s tired, rooted in the early 2000s product offering.

    The bottom line is, without continuous real product development, which needs huge amounts of cash, no brand, not even AM, with all its unmatched PR advantages, can survive over more than a max of five years, before the jig is up – which it is now – royally!

    What the UK needs, as James Dyson said this week, is more engineers – European level, professional status ‘Ingenieurs’, not ‘washing machine engineers’ – and fewer, far fewer City of London ‘analysts’ and ‘bright’ sparks.

    Separately, if JLR is so successful – it ain’t, it’s smoke and mirrors, to pump it for a now thwarted 2012 IPO – how come the long-trailed Jaguar 3-series/X-type replacement offering has disappeared?:

    http://www.autocar.co.uk/car-news/new-cars/f-type-leads-four-car-jag-model-offensive

    Tata are now stuck with the ‘asset’ JLR, that they had planned to get shot of in an up to $20bn-worth IPO, pre Facebook debacle, and global re-downturn, in 2012. Unable to cash in on the $3bn purchase in 2008, they are no hiking prices all over the shop and ‘sweating’ the asset, by continuing with the Ford era-developed platforms.

    People are wising up to Tata/JLR’s BS PR onslaught, to cover up the lack of real/any investment in key products, like a 3-series competitor for Jag and a new platform to replace the Evoque/LR2, from the 2006 Ford Mondeo/Volvo S80 based, aging one.

    Sorry, mate, I thought you had a clue, reading your Lotus ‘insider’ stuff, but you haven’t, applied generally. Just another ex big 4 accounting firms, management consultant, who, because he can write, thinks he can trump real industry insight, based on an engineering perspective, not a parasitic management ‘advisor’ one – the curse of the UK, in comparison to the sustained success of engineering-based Germany and its owned, mighty automotive industry.

    ps if you can’t get past the FT paywall on the above link, just google ” Aston Martin downgrade FT”.

    • http://www.skiddmark.com Steve Davies

      Cool. Well firstly thanks for sticking your oar in on this point – it makes it far more interesting when this type of news can be ‘discussed’ and I should have covered Aston’s credit rating in my original piece.

      Let me take each of your points in turn, because I certainly agree with some of what you say. A quick point on Moodys’ (S&P et al) – they’re a statutory part of the financial system, but as I’m sure you know, their own credibility is in the gutter for the role they played in over-rating financial institutions involved in the subprime mortgage mess. I also find their forecasting methods deeply flawed for when systemic patterns change (as in the credit crunch). Over the years I’ve been responsible for similar forecasting services and they all focus too strongly on the outputs (reports & recommendations) rather than updating the complex algorithms used to model the economic environment – this is the most costly part of the process and ‘most’ of the time they can get away with modeling what they know, rather than the scenarios of what ‘might’ happen.

      But I digress.. in this case I agree there is cause to downgrade Aston Martin’s credit rating, due to their recent financial performance and relatively high gearing. As the FT article says, if they are able to secure this additional investment then their rating is likely to flip the other way, but they’ve been starved of investment capital during the past few years and have had to make the best of what they’ve got.

      Their third-quarter performance has been hit by delays in producing the Vanquish, but I expect the next quarter of sales to reverse this trend on the back of a strong order book for the Vanquish and all-new DB9. This, combined with a much needed injection of equity capital would leave them looking far from f*cked in the short-term, although still with plenty of work to do.

      When I examine a business there are three things I look for; the quality of its leadership, the value of their brand and their ability to harvest economic value from the assets at their disposal ( i.e. their competitive advantage). In Aston’s case they’ve got a very talented team of designers and engineers (guys like Chris Porritt and Marek Reichman), a highly leverageable brand and an impressively lean organisation (for example the One-77 cost just £30m to develop).

      So at the simplest level, we can relate these factors to the power and performance of a race car, with liquidity representing the fuel required to keep it in the lead. Let’s put its credit rating to the side for one moment, it’s important (life threatening even), but let’s assume Mahindra or someone else provides the long-awaited capital they need in the next week or so (which Aston has been working towards for 18 months or more).

      The challenge they still face is to develop new, smaller capacity powertrains (incl. hybrids), replacing the smaller Vantage (which is where the market is heading) and increasing volumes back beyond 2007-levels to achieve a more competitive EBIT performance. If I remember correctly, Aston is currently delivering an EBIT performance of around 2% compared to other luxury brands such as Bentley, which are up at 7-8%. Much of this stems from Bentley’s (or Lamborghini, or Porsche) ability to leverage shared platforms and components across the VW group. Assuming Aston Martin remains independent (from one of the major global car makers) it needs an environment in which it has access to capital and new technology, and although Mahindra is no Daimler-Benz, it would put Aston in closer proximity to the markets where most of the premium market growth will come from in the next 5 years.

      The reason for this article was to say much of the response to the Aston news (about Mahindra) was misplaced, the issue is not about preserving the British-ness of Bond’s favorite marquee, but instead providing Aston with the cash needed to pursue its future strategy.

      To be honest, every business I’ve worked with is somewhat of a ‘basket case’, what the public see as being a successful brand is usually just one decision away from failure, but that’s how it should be – if you’re not on the edge, then you’re not pushing hard enough. What you see with Aston Martin comes from the problem of being an independent premium car maker – they’ve done remarkably well for such a tightly financed brand.

      • Tata tat

        “I expect the next quarter of sales to reverse this trend on the back of a strong order book for the Vanquish and all-new DB9. This, combined with a much needed injection of equity capital would leave them looking far from f*cked in the short-term, although still with plenty of work to do.”

        – you’re missing the point. This whole episode has been triggered by the Kuwaitis, majority-share owners, wanting out. They have both the need to pay off debts elsewhere and must see the way the wind is blowing, and are jumping ship, before the worth of their AM ‘investment’ crumbles further.

        “The challenge they still face is to develop new, smaller capacity powertrains (incl. hybrids),”

        – nope. There’s nothing wrong with a 6-liter V12 per se. The problem is, that engine and their AJ-V8 related V8 are old, old, old. Pagani doesn’t go looking for downsizing, or hybrids. Neither does Lamborghini. Bentley professes to keep the faith in its 12 cylinder(‘W’12) engine too, albeit with cylinder deactivation. All use large capacity V12s. All are AM’s competitors. However, all can call on heavy-hitters, Daimler and VW group. The reason for the believed interest of Investindustrial is to get a deal for Mercedes to supply their V12s, which now AMG look after wholly. A V12 will always have cachet.

        “Assuming Aston Martin remains independent (from one of the major global car makers)”

        – er, ain’t gonna happen. That’s what this whole episode is about. Bez and Richards would love nothing more than a sugar daddy to roll in and save their sinking ship. If no one rolls in, it’s over bar the administrators’ fees, within 12-18 mths, like a Manganese Bronze(LTI), a Fisker, a Lola, a Cosworth, a Lotus… .

        Bez, with his obvious German connections tried to pull this off back in 2009, with the ‘trojan horse’ of the Aston Martin Lagonda SUV concept, which was meant to be the ‘vehicle’ for Mercedes to get on board, providing th platform, engines etc.. Due probably to the after effects of the 2008/9 slump and the poor reception to the concept itself, it never happened.

        “they[AM]’ve done remarkably well”

        – no they haven’t. Of all the high-end premium makers, barring possibly the flailing Maserati, AM is the outlier. The from mid 2009 to early 2012 rebound boom period for the premium makers has passed AM by. Its sales are less than half currently that in 2007. The new products you talk of, with which you expect a sales surge in Q4 2012, are warmed-over stuff, still rooted back in the earky 2000s. People aren’t that stupid, even if they have £200k to waste on a car.

        The real reason AM is tanking, at less than half its 2007 sales level, is the competition has moved on massively in the last few years. For example, the Ferrari 458 captures the imagination of leading edge sports car performance. The unexpectedly very successful Mercedes SLS AMG, coupe and roadster, has eaten into Aston’s high-end offerings, since its launch in 2010. The 2012 Mercedes SL(R231), being so competent, and offering all-season practicality, a coupe/convertible in one, eats further into Aston’s lower end offerings. And so it goes on. Aston is floundering, against massively intensified, extremely competent competition, even compared to say 2009.

        This is not a story of a ‘plucky Brit upstart’, making good battling Goliaths; rather a story of how a decaying company, post Ford’s purse being withdrawn, has sought to use marketing and PR to hide the lack of investment in real new product development, and has had eventually to admit this fact – see the application for UK taxpayer money through the Regional Grant Fund, for new engine development purposes explicitly – and one of the Kuwaiti owners seeing the writing on the wall, and getting the hell out before they get mere pennies on the dollar on their 2007 investment. Let’s get real.

        In concluding, AM’s best and only hope is Mercedes-Benz. If Bez can charm his compatriots to throw big bucks into AM, like Ford did in the late 90s, early 00s, they, AM, might come back. I would advise Daimler against it. However, there might be method in the madness of a Mercedes involvement, as follows.

        Merc don’t exactly shift many of their lovely V12 engines, in S600s, S65s, SL65s and so on. Pagani takes a few, yes, but literally a few. The ability to have a few thousand more a year ‘sold’ to AM, would make the cost accounting of the continuance of the V12 at Mercedes-AMG that much easier. Plus of course, with the engine would naturally go the Merc auto gearbox, with the new nine speed one, due in late 203/early 2014. With this new powertrain AM’s performance profile would be transformed, and would put it at least on eye level with Bentley and even Ferrari’s F12, for example. Inevitably Merc would also provide the associated control systems and electronics, so that eventually, most of the tech basis of an Aston would be Merc, like a Bentley’s is VW’s, or a Rolls Royce’s is BMW’s.

        But, the real lure for Mercedes could well be a Aston Martin/AMLagonda-badged SUV. As you’ll know, the last few years have seen a take off in high-end premium SUVs, Merc have the newly facelifted G-Wagen, ML and new GL – all very good and successful. But do they have a viable contender for competing with the coming up Bentley Falcon, mooted Audi Q8, Range Rover Autobiography, and others unknown, with tarting up ‘soccer moms’ MLs, GLs, and so on? As I said before, Bez hoped in 2009 to use the AML SUV concept to get Merc on board. Now that £100k+ SUVs are still apparently taking off this could be Merc’s chance to use the AM ‘shell’ to badge rebodied MLs and GLs, and the coming 2014 BMW X6 Merc competitor, to be built in Alabama, to make themselves a viable contender in this expanding, highly profitable segment.

        Another point, anyone with half a brain knows Global Warming is a scam. The world has been cooling since the late 90s. Markets like oil-rich Russia tend to be, er, cold, as can be the interior of China, and the oil/gas-rich Arabs still like acting like children, dune-bashing, or whatever they call it. The point is, with the climate getting colder, with more snow and ice, and so on, these top-end SUVs will even have some practical use, as a cloak to defend their usual anti-socialness, and F*ck You! image. It could be quids in for Daimler.

        • http://www.skiddmark.com Steve Davies

          I don’t see Aston Martin on the same level as Lamborghini, Ferrari or even Bentley in some respects. They’ve got a well admired brand, but it would struggle to sustain a £200k+ price point – just look at the resale values of Vantage, DB9, DBS etc. The One-77, which had to be priced at £1.2 million so that AM didn’t lose money, does little to raise the ceiling of the brand.

          I don’t have any experience of the Kuwaiti’s level of financial comfort, but if they were expecting to reap the value of their investment anytime soon, now might well be a good time to exit from some of their risk. There’s still a long way to go
          for real returns and plenty more investment needed to get there.

          I disagree on the issue of powertrains – yes customers are still buying V12 engines at the top-end of this sector, but as I say, Aston haven’t really been competitive at this level. Their V12 isn’t powerful enough, nor as efficient as the competition and I’ve never been impressed by the V8 used in the Vantage. I remember driving one of the early 4.7-litre Vantages back from a group test and then jumping in an E90 M3 Saloon – at nearly half the price the BMW was twice the car. Then we could mention the old switchgear, dated ergonomics and the sense of style over substance. They’ve done a good job of polishing and rehashing a limited range of cars (i.e. more successfully than I would have predicted in 2007), but I agree those engines are tired and they’ve got to move on from cloning endless iterations of the DB9.

          As I say, based on their market position, I would be looking to the latest turbocharged V8 engines as used by BMW M and AMG Mercedes as a powerplant that can be scaled across several models (as McLaren are doing with the 12C & P1), along with energy recovery/hybrid tech for European/US markets. The point is to have the flexibility to scale and adapt, where a V12 would be something of a dead-end. Show me a manufacturer who’s developing a new V12 engine apart from Lamborghini and Ferrari?

          Sales of V8 Vantages as a percentage of Aston’s total volume have increased in recent years from 32% to around 38-39%, which says a lot about Aston’s natural price point – especially given how dated the Vantage now is. The 911 has moved on through a whole generation of development since ’07 and now completely outclasses and outperforms it. I’d be much more inclined to focus on tackling this thorny problem, rather than betting on with a V12 renaissance.

          I think we agree that competition has moved on significantly in recent years, while Aston has been hobbling along making do with limited resources, but where I continue to disagree is that Aston have the potential to achieve much more. I’ve been impressed with some of the people, they’ve got a lean business and one of the industry’s highest brand power indexes (proportion of economic value driven by the brand) – although for heaven’s sake stop killing it with the Cygnet.

          Bez is a unique character – we thought he was on his way out some time ago – and I wouldn’t be surprised if Richards and other investors were looking to cash out before the next charge. I’m sure they’d like the stability of a big car maker and it will be increasingly difficult to survive outside those premium groups in future, but they’re not at Manganese Bronze levels of distress yet. But I don’t disagree that they’ve got some tough decisions to make to avoid the same ending.

          Interestingly, none of the premium brands have come up with a viable Range Rover competitor yet, despite the obvious potential and customer demand. And much as a Mercedes-based SAC clothed in Aston’s design would make a great deal of sense, I don’t see it happening anytime soon unless through some form of JV.

          • Tata tat

            “it’s hard to see Aston Martin on the same level as Lamborghini, Ferrari or even Bentley. They’ve got an attractive brand, but it would struggle to sustain a £200k+ price point”

            Eh? Ferrari’s bread-and-butter seller is the 458, and that’s not £200k – yet. Bentley’s is the Continental GT, again below, well below £200k. Lambo’s numbers are smaller to begin with, compared to Ferrari and Bentley, and the new Gallardo, expected for late 2013/early 2014, will again be its bread and butter, and priced as a direct competitor for the 458. So where’s this ‘£200k+’ red herring? Anyway, have you checked the price of a tarted-up DB9, a ‘Vanquish’? £190k, before options. A stretched DB9, aka ‘Rapide’, £160k, before options. Conclusion: they’re all pretty much in the same ballpark.

            “The latest turbocharged V8 engines, of the type used by BMW M and AMG Mercedes, would provide a powerplant that could be scaled across several models (as McLaren are doing with the 12C & P1)”

            I don’t agree. Aston is really all about V12s. That’s why a Merc involvement would be a fit. Just the fitment of Merc’s naturally aspirated V12 would move Aston on about five lost years. From there, you could start looking at turbocharged V12s, like Pagani now gets from AMG.

            You see Aston as race car brand, like a British Ferrari or Porsche. It isn’t. To go down that route, at least for the next few years would be a big mistake. The current AM cars are very easy on the eye; people do love the look of them. It’s just the outdated tech, and stuff like naff satnav, crap steering wheels, and so on, which is repelling prospective punters. Put that stuff right, put a dicreet badge on, “powered by Mercedes-AMG”, and 99% of the current problems go away.

            “show me a manufacturer who’s developing a new V12 engine apart from Lamborghini and Ferrari?”

            As I said, from memory, Bentley(VW group) has just in the last few weeks reaffirmed publicly their commitment to continue further development of the W12. Mercedes has done similar, in the last couple of months, stating the V12 will continue, not be dropped, as some ‘experts’ predicted earlier this year, and have assigned their in-house tuner/engine builder, AMG, to continue development of it. BMW may be assessing the use of the V12 in the next 7-series, but that still leaves their V12 in the Rolls Royce Ghost.

            As I said, V12s have great cachet. Why are you so disbelieving of the continuing, broad existence, and market usefulness of V12s?

            Mercedes-AMG V12: http://www.gtspirit.com/2012/08/29/amg-to-develop-all-future-v12-mercedes-benz-engines/

            Bentley’s W12: http://www.whatcar.com/car-news/bentley-to-continue-with-w12-engine/261341

            With great AMG engines/powertrains on-board, and all the crappy cabin bits relatively easily fixed, with access to Merc’s parts bin, Aston can start challenging again in the £130-200k price bracket, without looking stupid. Doing it your way, concentrating on the Vantage, with say Merc’s 4.7l twin-turbo V8, just makes an aging car go a bit faster. It does not make it a convincing Porsche 911 competitor, especially if it still starts at over £100k.

            Basically, no engine, even a great Merc V8 bi-turbo, will fix overnight a car like the 7 year old ‘sports car’ Vantage, transforming it into a scalpel-for-the-road, like the amazing 991 911. That would take years and years of development. But, by fixing the powertrain and cabin of a DB9, DBS and Vanquish – forget the crap Rapide – you can, overnight in comparative time terms, make a convincing ‘gentleman’s express’, GT car, boulevardier, and be on a par with a Continental GT, at least.

            That’s where I would start, at the top, so to speak, not the bottom.

            Finally, as to an Aston Martin/Lagonda re-branded Mercedes MLC, GL, and so on, to compete with top-end Range Rovers, all I’ll say is, whoever pays the piper calls the tune. If Mercedes get involved, put major money in, or buy a controlling stake/the whole thing, Aston will do as it’s told by Stuttgart, and as I see it, Stuttgart could possibly use an ultra ‘posh’ badge to rebadge their humdrum SUVs, to enter the £100k+ uber SUV market. By the way, I checked, Ulrich Bez was born in Bad Cannstatt, so just down the road from Mercedes-Benz HQ. Just saying.

    • http://www.skiddmark.com Steve Davies

      p.s one further thought. I’ve not touched on Tata/JLR in my response, as this would be better done in a whole new article.

      As you’ll no doubt have guessed, I chose the title for this piece to deliberately provoke thought (as you have shown), due to the superficial discussions I had noticed elsewhere. I still don’t agree that Aston are f**ked – they just face the kind of challenge many other companies do when the strategy they’ve followed reaches a turning point and a major restructuring is called for.

      There’s plenty of distance to cover before they deliver the kind of shareholder returns that Investment Dar must have hoped for, but I’d be happy to bet they’ll eventually get there as long as they are provided with the tools to do so.

  • Gus82

    The more I read about this the more I wonder that the reports are close to being accurate, but a little confused on the detail. The Investment company quoted is alleged to be linked to Mercedes or AMG. However is it possible that there is a deal between Aston Martin and either AMG or Mercedes, and whoever puts in money will fund this whoever it is?

    • http://www.skiddmark.com Steve Davies

      Angus, the second bidder, Investindustrial are a private equity firm, who previously owned Ducati and sold it to Audi earlier this year. I believe they have a relationship with AMG Mercedes (as they do with many other automotive companies) and they are rumoured to have included some contribution from Mercedes (in terms of technology or resources) in their bid. With none of the parties providing any detail at this stage, the info sources are either bond holders who were on the call with Audi’s CFO last Wednesday, or people close to the bidders. We were told last Friday that an announcement would be forthcoming in a matter of days, so all should become clearer in the next 48 hours.

      • Gus82

        I just wondered as there have been a number of stories over the past two or three years that had suggested a tie up with Mercedes was about to happen (the most recent involved a plan to save Maybach), then came to nothing. Interestingly one story today mentioned Toyota as a possible bidder. Not seen mention of this elsewhere though.

        • http://www.skiddmark.com Steve Davies

          I wrote about Toyota throwing their hat into the ring earlier on this morning, so the story you saw may have been be a rehash of what I’d already covered, or insight from another source. I haven’t heard anything more than their name being mentioned, so whether they’re a serious bidder or a co-bid with Mahindra, we don’t yet know.

          It’s probably fair to say that Mercedes are more open to industrial partnerships than most big car makers, so it doesn’t surprise me they’ve been linked with Aston several times now. Aston need a new engine supplier and I see Mercedes as being more open to this than Volkswagen or BMW. Mercedes also seem more comfortable than the other players in not necessarily owning and controlling the partners they work with.

          Investindustrial made a killing when selling Ducati to Audi (over 3 times ROI), so it’s obvious why they’re interested, although Aston’s stock price is relatively high if you take a conservative view of their future prospects. But there’s unlocked potential in the Aston brand, they just need to convert a larger proportion of their admirers into paying customers..

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