While the latest James Bond film once again focuses attention on the glamour of the Aston Martin brand, the CEO of the luxury carmaker speaks to Business Voice about his real-world mission to transform the company.
“What’s James Bond without an Aston, and what’s Aston without James?” asks Andy Palmer, the man in charge of the country’s only remaining independent car manufacturer, just over a week before the latest 007 instalment hits the big screen.
Spectre marks the 12th outing for Aston Martin as James Bond’s car of choice, during a partnership that has lasted 50 years. The model this time is a DB10, which was designed specifically for the movie.
But Palmer disputes media reports that seven of the ten cars Aston Martin made were destroyed during filming. Instead, he’s keen to highlight the legacy they’ve left behind.
“This is the first time that we’ve put in a concept car. But it’s more than just a concept – it has real intent and showcases the next generation of our styling.”
The film also helps with international brand recognition at a time when Aston Martin is focused on new markets and global growth.
For the first time, the company has leveraged its involvement in the franchise by releasing the DB9 GT Bond edition. The limited run of 150 cars each come with exclusive Bond-themed accessories, including a watch and luggage.
One has gone into every Aston Martin dealership around the world. “It means they’ve got something to use to bring customers into the dealership, and helps them teach people more about what Aston stands for,” says Palmer.
All of them have been sold.
A fundamental transformation
But if Anglophile customers see added value in buying something from the last independent British car manufacturer – or, as Palmer calls it, “the last of the line” – from a business point of view, that position is far from easy to maintain.
“I don’t have a couple of parents sitting behind me waiting to throw money at me during the difficult times,” he says. The nearest Aston comes is having an “adopted brother”, Daimler, which owns 5 per cent and provides access to some of the more complex technologies.
And Palmer, who joined the company from Nissan in October 2014, outlines the scale of the challenge he faces: Aston has only achieved positive earnings before interest and tax twice in its 102-year history – and it’s never been cash-flow positive. Pre-tax losses for 2014 were £72m.
To change that, in March he announced his Second Century Growth Plan. The headline grabbers include a new product line-up, greater personalisation from its ‘Q by Aston Martin’ service, and targeted growth in Asia, the Middle East and North America. The latter is particularly well suited to Palmer, an engineer who has lived and worked abroad for 14 years.
“But that’s the sexy stuff on top,” says Palmer. “It’s a six-year plan that requires a fundamental transformation of the business. To make that happen, you have to do lots of things. Part of that is about improving efficiency and restructuring to represent modern-day manufacturing.”
The good news is Aston Martin has successfully raised an additional £200m in preference shares to carry out its plans. "We had significant over-subscription meaning there's a lot of goodwill and there's a belief that we can do this," says Palmer.
We're going through the dark before the dawn
Combined with money from existing shareholders and a grant from the Regional Growth Fund, investment has already included opening a new engineering facility at MIRA Technology Park and a new logistics facility down the road from its Gaydon headquarters in Wellesbourne.
Over the past few months, Aston has also opened its first dealerships in Seoul and Jakarta, launched a limited company in Japan, and continued to expand its presence in North America – which has grown more than 20 per cent over the past two years.
“The bad news is that in the shorter term we need to restructure to make sure our product developments and marketing processes are world class, so that when new products come to market, we can exploit them and we can grow again.”
The company is currently consulting its workforce, with the expected result of up to 300 job losses.
“The best way I can explain it is that we’re going through the dark before the dawn,” says Palmer.
The company will drive into that dawn with new products to widen the appeal of Aston Martin. It recently announced its new sports car will go under the familiar “DB” moniker, as a DB11, signalling its intention to continue “the very bloodline of our brand”.
It has also built on its racing experience, launching a limited edition of just 24 Vulcan track-only supercars.
The company chose to unveil a new chauffeur-style saloon, the Lagonda Taraf (or “ultimate luxury” in Arabic), in Dubai last November, before announcing it would also be available in other markets.
And the DBX, which is expected to go into production in 2019, takes Aston into the all-wheel drive crossover category. By adopting some of the features seen in sports utility vehicles, Palmer explains the business is trying to combine its traditional emotional appeal with more practical buying considerations. In a nutshell, that should bring more women into Aston Martin’s audience. It will also attract customers in North America and Asia.
Aston Martin has said it will produce an electric version of the DBX. And during the China state visit, it unveiled an electric concept version of its Rapide, the RapidE, which could be bought to market in around two years – in partnership with Chinese investment group ChinaEquity.
As well as highlighting the huge (and continued) potential of the Chinese market, Palmer calls the move to electric vehicles “a done deal”.
And it’s no surprise that he is an advocate of electric – at Nissan he led development of the Leaf, the world’s best-selling electric car. “I think most of the industry thought we were lunatics, even four years ago. There were an awful lot of challenges, from range anxiety, cost and profitability, to [the idea that] diesel technology was better. Now every manufacturer has accepted and actioned EVs in their range.”
Demand and competition will bring down cost and find a cure for range anxiety. The Volkswagen scandal is likely to accelerate developments too, he adds.
“If you’re talking about winning back consumer trust, at least you know you’ve got no NOx [nitrogen oxides] emitted from the vehicle.”
Palmer is happy that he’s already seeing results from the new strategy. “We’ve grown significantly in the UK this year with a relatively old product,” he says. And he expects “no more excuses” once Aston has had a full year to sell new products.
But for all the talk about new cars, he adds that Aston will always steer clear of mass production. “We want to stay rooted in luxury.”
Although the DBX is likely to be produced at a new manufacturing site, Aston Martin is currently upgrading production facilities at its Gaydon headquarters, which will be responsible for all its sports cars. Palmer has set his sights on production at the factory reaching – but not exceeding – its capacity of 7,000 cars a year. That level has only ever been reached with the launch of the DB9, but to hit it each year would eliminate the “feast or famine” cycle Aston is accustomed to and generate waiting lists that will cut any need to offer discounts, explains Palmer.
However, that will also take investment in people. Aston Martin cars are handcrafted – and require skills that are not widely available. “Apprenticeships are vital,” says Palmer, who started his own career as an apprentice. “Probably more vital for us than for any other manufacturer because we’re such a small company and we need people with wide skill sets.”
I don't need a levy to understand the motivation to employ apprentices. For me it's just another tax
The company has recently expanded its apprenticeship programme from 40 to 50 – and with such a tight focus on turnaround and indeed survival, Palmer is worried about the proposed apprenticeship levy. “I don’t need a levy to understand the motivation to employ apprentices. For me it’s just another tax,” he says.
He’s also worried that Aston will be hit by road tax reforms announced in July. From April 2017, anyone purchasing a new car costing £40,000 or more will have to pay an additional surcharge of £310 a year for five years.
“It seems a little bizarre that a government applies a luxury tax in a country which builds practically all of the world’s luxury cars – especially when your home market is always your most important,” he explains.
He has the same kind of exasperation when it comes to the government’s commitment to industrial strategy and associated funding, as he believes it has contributed significantly to revival across the automotive industry in the UK.
Aston Martin has been a beneficiary of it – and even for its own investment decisions, Palmer warns that the UK is “in competition with other places”.
Bond may be flying the flag for Britain and Aston Martin on the big screen, but Palmer’s mission is firmly rooted in the real world. As he strives to turn the business around, he’s hoping that the UK government has his back.
The Palmer CV
October 2014-present: CEO, Aston Martin
1991: Nissan Motor Co, working his way up to chief planning officer
1986: Austin Rover, becoming chief transmissions engineer
1979: Apprentice, then product engineer, Automotive Products Ltd