I recently came across the story of Aston Martin, and I find it absolutely fascinating. As almost everyone I guess, the brand has to me a close-to-iconic status, but the business case itself is also very interesting !
Aston Martin, which was founded in 1913, changed hands many times, almost as often as it went into bankrupcy and as a matter of fact has hardly ever made any money in its history ! It was profitable last year but that was the 1st time in 40 years !
Despite these financial struggles, Aston Martin's strong brand and very unique positioning, at the crossroad between performance, luxury, design and somewhat of an inimitable "british class", have always kept the company afloat with passionate and providential white knights.
When a Porsche is a mass-produced car finely-tuned to German engineering perfection, an Aston is a hand-built sports car with bucket loads of style, attention to details, presence, character and even mystique, without mentioning the addictive soundtrack !
Beauty, power and soul is the mantra of the brand. On top of that, there's a unique exclusivity status : over its 94 years history, Aston Martin has produced a total of 30,000 cars only, which is more or less what Toyota or General Motors manufacture on average per day !
Most interesting (for the purpose of this post) is the last 10 years period which shows what a seasoned and creative management can build up out of a languishing but intrinsically strong brand.
In the early 80s, when Ford acquired the company, and as amazing as it may now look, only a few dozens cars were built by Aston Martin in a given year ! In 2006, over 7,000 cars were sold and the company is now aiming at 10,000 within the next 3 years. Aston Martin, which once again changed hands about a month ago (after 20 years of ownership Ford divested the company to a group of kuweitis investors led by britishman David Richard, keeping a small minority stake), is now in solid shape.
Sure, the continuing increase of millionaires around the world paves the way to the brand, but still, it could have collapsed once again if the right things had not been well executed.
So, this is what it took to Aston Martin to increase sales 100fold over the last 20 years :
- Great New Product. First and foremost, and as always, it's the product which first matters. After several, say controversial, unsuccessful models, Aston Martin got out of trouble in the 90s thanks to the launch of the famous DB7 (right photo), which has been the best selling model in Aston Martin's history with over 10,000 units sold in a decade. In 2004 the DB9 succeeded to the DB7 and now enjoys a even greater success with over 3000 cars sold every year. Both the DB7 and DB9 couldn't have been developed without the powerful financial backing from mother company Ford.
- Extended Product Range to Lower Segments and Wider Markets. The DB9 Coupé, successor to the DB7 Coupé, was the entry point in Aston Martin's product range, but what an entry point : over €150K ! This is a level which is extremely exclusive and as a matter of fact limits sales. Consequently, and once again thanks to Ford's financial backing, company developed a new model priced in the more accessible €100K area, the V8 Vantage, also dubbed Baby Aston, coming on Porsche's turf. The Vantage, which was introduced in late 2005, is a total success, making no compromise on Aston Martin's core values and intrinsic exclusivity, but for the price tag. Very recently company introduced a roadster version of the Vantage (photo right), that some considers to be the best Aston in a long time. Company estimates they should be able to sell between 5 and 6,000 V8 Vantage a year, with 50/50 Coupé/Roadster split.
- Wider Distribution. Ulrich Bez, a seasoned car industry executive who once was head of product development at Porsche and who took the top job at Aston Martin in 2000, also considerably increased the brand distribution network with now around 130 dealerships worldwide vs a few dozens only in the mid 90s. As for France, let's notice there's only one single exclusive dealer (with a showroom Avenue Franklin D. Roosevelt in Paris and another branch in the Riviera). Aston Martin is extremely demanding for its dealers, requiring a specific and expensive store layout and furbishment, with white marble as an example...
- Modern Production. In 2003 Aston Martin inaugurated a brand new production facility in Gaydon, UK, for the 1st time built up from scratch to its own requirements. In contrast, the historical facility in Newport Pagnell, which still produces the very exclusive and expensive Vanquish (due to be replaced next september by Daniel Craig's DBS in Casino Royale), looks more like an old-fashioned workshop than a decent modern automotive plant. Engines are developed and produced in Koln, Germany, in another modern plant. As a consequence, product quality is now better than ever, though cars have always been hand-built, which is one of the key characteristics of the brand.
All told, management has tremendously "modernized" the company in all aspects, product range, manufacturing and distribution, without compromising on the core values of the brand and its very exclusivity.
A brand with almost a 100 year history and such a pedigree can really be a gem. But that's no easy task, congratulations to the mastermind of the revival, CEO Ulrich Bez, and it's also by no mean cheap ! Ford has invested hundreds of millions of dollars to put Aston Martin back on track, with the result that the brand is now more solid than it has ever been in its 94 years history !
All told, with American money, German CEO Ulrich Bez has transformed this once struggling and hazardly managed British producer of a handful of old-fashioned cars a year into an acclaimed maker of ultraluxury sports cars passionately desired by some lucky and stylish ones ! Bez has capitalized on the exclusive and genuinely unique image of Aston Martin to create a money-making company, and as history has shown, that was a real challenge.
A great business case so far, though the road ahead, without the financial backing of Ford, still remains a bumpy and difficult one. Sure, Aston Martin was profitable last year, but it now has to evolve into a consistently profitable car business over the years and the long term, and that's no easy task and no given. Most probably the brand will prosper in the short term, thanks to the new models and investments done or started during the Ford era, but when the current line fades up in the distant future, the new shareholders will have to put big investments again. And we just hope that history won't repeat again...
If one looks at the worldwide sports and luxury car market, there's only one other brand which remains independent, it's Porsche, but it's 15 times bigger than Aston Martin in terms of unit sales (above 100,000 this year) and has consistently been profitable since the postwar era. All the others (Ferrari, Maserati, Lamborghini, Bentley, etc) are now owned by big guys such as Fiat (Ferrari and Maserati) or Volkswagen-Audi (Lamborghini and Bentley). Though an iconic brand, the Aston Martin long term model is yet to be proven, business-wise. Over the years, Aston Martin has been run by over-optimist passionate guys under whom it eventually went bankrupt many times...
One could use about Aston Martin the same joke Guy Kawasaki used in his brilliant speech about the art of the start : one of the reason I believe in God is because there's no other explanation for Apple's continuous survival !". Replace Apple, a 30 year-old company, by Aston Martin, almost a century old which several times went bust or on the very verge of bankrupcy, and you get something even more true, don't you ?
In a side effort to exploit and strengthen the potential and exclusivity of the brand, Aston Martin has recently teamed up with famous british fashion designer Amanda Wakeley to create the "Amanda Wakeley for Aston Martin" clothes collection which will be available sometimes this year. Great and interesting co-branding initiative between 2 brands which both stand for style, luxury, superb craftsmanship and use of top quality materials. Beyond this collection, Amanda Wakeley today acts as an ambassador of the brand.
A key quote from Ulrich Bez : "in 5 years we will be the most successful prestige brand in the world".
Oh, by the way, I sent an email to Aston Martin last saturday, asking some details about a particular point, and you know what, I got an answer this monday morning as early as 8:30AM UK time. Great reactive customer service !