⊲ Is Aston Martin going bankrupt
all over again?
Not yet: but like its most famous
customer in Goldfinger, the laser is
heading straight for its testicles and CEO
Andy Palmer will need to do something
smart – and soon – to switch it off.
⊲ But when it floated a year ago,
Aston nearly joined the FTSE100.
What went wrong?
The flotation valued Aston at £4.3bn,
and returned £1.1bn to its Italian and
Kuwaiti private-equity owners. That val-
uation was based on the glorious future
envisioned in Palmer’s ‘Second Century’
plan, in which a seven-model line-up
including SUVs, saloons and EVs doubles
Aston’s volumes to 14,000 cars by 2023,
finally giving it the scale and stability it
has always lacked.
That plan is still on track, just about.
The trouble is that old Aston is getting
in the way. The share price had been on
the slide for a while, but the announce-
ment in late July of an £80m loss in the
first half, slumping sales in the UK and
Europe and a sharp downward revision
to estimated full-year sales caused it to
plummet, halving to less than a fiver at
one point and leaving Aston worth just a
quarter of what it was a year ago.
⊲ Isn’t this precisely the sort of
instability Palmer’s plan will fix?
Yes, but that share price slump reflects
investors’ concern that Aston might
break before it can get to Andy’s
promised land, its cash burnt up by the
toxic combination of turbulent current
trading and the cost of developing those
new models. It needs more money.
The proceeds of the IPO didn’t go into
the business but straight back to the
investors. They won’t want to dilute their
holdings by raising the required cash by
issuing new equity, so Aston will have
to borrow the money. But that will be
expensive and will add to its debt pile.
⊲ So what are Aston’s chances?
The leading auto analyst Max Warbur-
ton has examined Aston’s accounts and
in a private note to investors says he be-
lieves the company will find the funding
to make it through to 2021, when the
crucial DBX arrives and adds around
4000 units to Aston’s sales.
The firm will need to cut costs sharply,
possibly slowing its growth plans beyond
DBX by slowing or pausing development
of the mid-engined Vanquish and Valhal-
la (below). The Valkyrie is pretty much
done and will make a useful contribution
to Aston’s coffers once it starts selling
at the end of the year, but Warburton
warns that there’ll be no ‘wiggle room’
in Aston’s escape plan: Valkyrie and DBX
will both need to arrive on time.
Aston Martin has been bankrupt
seven times in its long history: everyone
watching is hoping that like paper, it
won’t fold eight times.
depends on this.
If the DBX sells,
Aston boss Andy
he’ll get the
money to enact
An £80m loss and
slumping sales caused the
share price to plummet
Andy Palmer’s vision of a sunlit future is still a winner –
but getting there is looking trickier. Ben Oliver explains
Dark times ahead
for Aston Martin?
14 CARMAGAZINE.CO.UK | OCTOBER 2019