MotorsFeature: Aston Martin Ford are selling Aston Martin - Can the brand survive against all the odds? Shane O'Donoghuereports
By the time the Ford Motor Company announced record losses in January, the writing on the wall had well and truly dried for continued ownership of Aston Martin. As far back as last August, Ford declared that the company had "begun the process of exploring strategic options for Aston Martin, with particular emphasis on a potential sale."
Two days ago, the rumour mill finally ground to a halt when it was announced that a well-heeled consortium, led by Prodrive owner David Richards, had bought a 90 per cent stake in Aston Martin from Ford for a reported €702 million.
In his speech to the media, Richards delivered an anecdote from the early days of Aston Martin, in which a keen buyer travelled from the US to England only to discover that the factory had closed down. The American promptly bought the rights, reopened the gates and produced a number of cars.
Once he had made enough for his own needs he closed up shop again. Richards noted that things have changed, and indirectly he was telling us that he and his team are interested in long-term investment.
It's tempting to look at how many similar deals have gone sour in the past, particularly in the British automotive industry.
After all, Richards himself is an Aston Martin owner, as is John Sinders, the second name on the list of consortium members. Could it be that enthusiasm for the Aston Martin brand is ruling the decision to buy it? After all, if a company the size of Ford decided it was not in its interests to hold on to the business, what hope has the new owner?
For starters, Sinders is no fool, coming from a background in finance and shipping in Texas and Dubai. Backing him up are two Kuwaiti firms: Investment Dar is the largest listed investment company in the Gulf, owning and managing a vast array of companies with total assets of €2.774 billion and a net income last year of €240 million; Adeem Investment may be small fry in comparison, with "just" €1.137 billion of assets under management, but it apparently has become the fastest growing investment, corporate finance and asset management company in Kuwait. In short, if these firms bought out a company selling ice to the Eskimos, you'd do well to buy some shares.
Then there's Richards himself to take into consideration. Having qualified as an accountant, he first became a professional rally co-driver, sitting alongside Ari Vatanen when he won the 1981 World Rally Championship. Richards then turned his mind back to business and by 1984 had created Prodrive, a company focused on motorsport. On that side, the company has been highly successful in the public's eyes, with six World Rally Championships, five British Touring Car Championships and success at Le Mans among many other achievements.
More recently, Prodrive has quietly established itself as a leader in automotive technology, with annual sales of more than €175 million. It has about 1,000 employees spread across operations in North America, Australia, the Asia-Pacific region and its Oxfordhire headquarters.
A visit to the latter facility will leave you in no doubt as to the size of the operation. Recent clients include not only Subaru, but also BMW, DaimlerChrysler, Ferrari, Fiat, Honda, Mazda, Porsche and, of course, Ford and Aston Martin.
So what makes the supplier suddenly think it can do a better job of running its client's organisation? Well, financial losses aside, Ford's way of doing business doesn't seem to suit a small specialised company such as Aston Martin. Internal Ford processes are, generally, designed for a large corporation, where parts are developed to turn a profit when used on hundreds of thousands of cars. The theory is the more cars sold, the better.
This thinking is slightly at odds with a brand of exclusivity. An Aston Martin owner won't be too happy to notice the same indicator stalk used in his DB9 as is used on a Ford Mondeo for example, and although Ford realised that, it seemed to struggle to understand how to resolve the situation. For instance, a huge amount of cost was absorbed by the development of the 4.3-litre V8 engine under the bonnet of the V8 Vantage in a bid to distance the unit from the 4.2-litre utilised by Jaguar, yet comparison tests between the Jaguar XK and the Aston often had the Jaguar coming out better, thanks in part to its lower price, but also due to the similarity between the two overall.
According to Richards, under its new stewardship, Aston Martin will become more exclusive than ever. This is likely to mean a shift upmarket, not just in terms of buyer perception, but also in price. Higher purchase prices mean that more cash can be freed to develop and produce low-volume, yet bespoke, components which are necessary to differentiate an exclusive brand from a mass-market one. It is likely that Richards has a vision for Aston Martin to become the British equivalent of Ferrari, itself a highly successful company.
The last piece of the puzzle may come in the form of Prodrive's confirmed entry in the 2008 Formula One season.
Though no reference was made to the sticking of an Aston Martin badge on the nose of the race car, it was confirmed that the British company would remain involved in motorsport. With Ferrari's phenomenal success in terms of podiums and finance in F1, the possibility should not be ruled out.