Outspoken Aston Martin CEO Andy Palmer never shies away from providing blunt answers, and that was certainly the case when he sat down with AUTOMOBILE during the 2015 New York International Auto Show.
Andy Palmer: Yes, it was always going to be; it was from the very beginning. That was the line in the sand that said, whatever we’re going to do, whatever the plan, you’ve got to put a finite time on your plan because then you’ve got to execute. So the finite time on the plan was an approximate 100 working days [which was basically Geneva]. It was basically, make sure we’ve got shareholder approval, financing in place, etc., and be able to announce it in Geneva. It was short to be able to put a six-year cycle plan together, to work out what you’re going to do with the brand, to work out what the business model looks like and then to go fund it, it was tight. But it’s good to have the tension.
AP: Yes, and the DBX I suppose is the poster boy of the “second-century plan,” as we call it; it takes us out of the traditional groove — and the traditional groove has been great. We’ve made great, great sports cars but left them too long in their life cycles so we didn’t have the money to keep them up to date. And the average volume over life is probably 4,500 units, and that’s not enough to sustain a business model that allows you to make the new car seven years later.
So simplistically the business plan is built on three pillars: Replace the existing sports cars with a brand new platform, cap it at 7,000 units so you maintain your life cycle, and keep it capped at 7,000 so you’ve always got demand and waiting lists. That does good things for prices, residual values, and things like that. Add the DBX, which is looking to get to new customers; it’s probably a younger customer, a female customer, an Asian customer, basically where we haven’t been before. And then end the plan with getting a [new] Lagonda in place, which basically legitimately puts us into the kind of Rolls-Royce arena.
So obviously within that there are replacements for the existing cars plus three new cars, and that gives you sufficient free cash flow to be profitable and to fund the portfolio going forward. In [Aston’s] first 102 years, I think we’ve been bankrupt seven times. The next century is about never going bankrupt, never running out of money and being able to sustain an independent carmaker.
AM: So the DBX is an electric vehicle. There’s talk about a super-high-end EV …
AP: Yes, the Rapide EV.
The 2015 Aston Martin Rapide S
AM: Is this something you think Aston’s customers will react well to?
AP: There’s two ways of looking at EV and the reaction of customers. I am pretty darn sure that our customers will react very well to the fact that they can continue to buy a V-12 in the future. Unless you have something to offset the emissions, you can’t have a V-12 anymore because you can’t meet the CAFE and CAFC [fuel-economy regulations]. So there’s a compliance reason for doing it.
The second reason for doing it I would say is that it fits … if you follow the traditional auto industry route, the V-12 would become a V-8, the V-8 would become a V-6, the V-6 would become an I-4, the I-4 would become an I-3. I don’t want to put a four-cylinder engine into an Aston Martin, frankly. It just doesn’t sound right.
If it’s the sound that characterizes an Aston Martin, or at least part of an Aston Martin, along with the beauty, what are you going to do about the sound? I would argue that silence is better than the sound of an inline-four. So it’s the zing and the zang, if you want, but the fact that you can get hypothetically 1,000 hp, instantaneous torque, and silence, that’s probably [just] as exhilarating [in its own way].
AM: To that point, the notion that many car enthusiasts and some media members seem to have is, if a certain type of car company builds something outside of its traditional wheelhouse, it ruins the brand or devalues the cars that people do love about the brand. But take Porsche, for example. Despite all the whining about it building SUVs, it hasn’t hurt the company, has it?
AP: Porsche proves it’s not true. I do think you have to be more or less loyal to what your brand is. So the reason I won’t do an SUV [at Aston] is that an SUV by its definition is square and boxy, and therefore, by definition, not beautiful. So my dilemma coming in is, yeah every one of my customers in the United States has either got a Cayenne or a Range Rover in their garage. You know, I’d love a bit of that action. But I can’t produce an SUV because it’s not genuine to the brand.
One of the key [reasons some people don’t choose Aston Martin] is that it is intimidating, particularly the seating position. You’re low down in the car, and the sills come up high, and therefore it doesn’t feel safe, which of course isn’t true. But some people feel that way. They want to have a sense of commanding position, they want to see the road; it’s a comfort perception. On that basis, if you simply took a Rapide and jacked it up, you’d probably get a long way down the road of attracting new customers. Make sure there’s enough room in the back and enough room in the trunk. Now you’ve got a DB sports-car crossover.
AM: Would a wagon or shooting brake work or fit in?
AP: You could but it doesn’t get you over that, I want this high driving position, particularly for female customers. That high-hip position is important. And shooting brakes are also rather hard to make look nice.
AM: What is the expected life cycle of new Aston models now?
AP: Seven years.
AM: What was it in the past?
AP: Whenever we had the money to make a new one. That’s why we went from DB7 to DB9 and skipped DB8. And it’s not just the replacement but also the face-lift in between [that you have to fund].
AM: Exactly who are your customers, or prospective customers at this point? If they are not driving an Aston, what are they driving?
AP: That’s actually a very good question. There isn’t a direct competitor to Aston, which is probably why we have a very stable 4,000-a-year customer base, and when we introduce a new model it goes up to 7,000 or 8,000. There is some cross-shop with Ferrari and Lamborghini but not so much; Ferrari more so maybe. On the other side of the equation a little bit with Bentley and Rolls-Royce; not really with Porsche or AMG, maybe a little. So we’re kind of nibbled at around the edges. But there’s this core of, you are an Aston person and always will be. There really isn’t anything else like Aston: Anglophile, crafted, luxury sports cars. We just have this classical beauty.
AM: Speaking again about electric-car companies, Tesla appears determined to go down-market. Do you see an opportunity there to go up-market in that realm?
AP: That’s exactly why I’m interested in the Rapide. If you look at just pure configuration, Tesla Model S and Rapide are not so far away from each other. I am sure most of the Teslas of the world are heavily loaded and maxed-out on all of their options, and I’m pretty sure most of the people buying them would spend more money if there was something else available, and there’s not. I think there are more than a few customers that would be interested in [an Aston that met demand].
AM: How high can you go in that space?
AP: I think it’s $200,000, $250,000, something like that. There’s an optimum space where it’s still exclusive but it’s not ridiculous. That’s where a Rapide or a Vanquish would be today. I don’t think that’s impossible.
AM: How would you source an EV powertrain?
AP: Batteries in particular become more and more of a commodity. We could go out to the LGs and Panasonics of the world to source the cells; we’re not going to make our own cells. We can pack them in Gaydon. Motors, there are a bunch of Japanese manufacturers. We’ll buy the units themselves, but always the clever part of an electric car is the integration. Hopefully, at least with you guys, having done [the electric Nissan] Leaf I have the credibility that I know how to do that.
AP: Yeah, we don’t keep the car as some other manufacturers do [Editor’s note: see Ferrari … ]. If you spend 1.5 million pounds with us you can most definitely have your car! We offer a whole package with it including driver training, it’s got a power setting you can switch through as you get more comfortable with the car, and of course there’s the camaraderie and lifestyle of being able to see the other 23 customers [who buy the car]. You don’t have to do that, of course, no doubt some of the cars will simply disappear into collections somewhere. But it’s very much designed as a race car; the engine is designed by Aston Martin racing, certainly couldn’t use that car very easily on the road, and it’s not road-legal.
[As for the Vulcan,] to be frank, I don’t know how many of the cars will be driven or raced and how many will just disappear [into collections]. If we can get 12 enthusiasts that are prepared to come and race their cars, we’ll organize a race series for them. If it’s basically one guy (laughs) and everyone else has gone into the collection, then we’ll do our best for them.
AM: How happy are you with Pirelli World Challenge, running cars in that with TRG running the program for you?
AP: Yeah, obviously we franchised [that program] out. I have an outstanding question: How much racing do you need to do around the world? Do you need to race in all the countries or do we concentrate on one or two? Racing in the U.S., it’s our biggest single market so it kind of makes sense that we find a way to do it.
AM: Is GT3 racing a moneymaker in terms of being a customer program? Or is it, due to the amount of support you also have to provide, not necessarily what some people think it is as a business?
AP: Most of it is [a wash]. So is it a moneymaker? Not really. If it is a moneymaker, I need to go and kick some ass back in Gaydon because we’re not making any money on it. (Laughs.) Our business model [on it] is not to lose money. You get the marketing benefit from having it, which becomes free, fixed marketing-money [if you can break even]. Not many people make money out of racing.
