Is Aston Martin in trouble?
Sales are down, profits are down, the CEO said it's been "very disappointing". Should we be worried?
Aston Martin CEO Andy Palmer has confirmed that the British brand has "suffered a very disappointing year" in 2019, having sold 5,819 cars, 7% down from the previous year. There have been speculation and rumours about potential new investors, especially regarding Canadian businessman and billionaire (est. net worth of about £2 billion) Lawrence Stroll, the father of racing driver Lance Stroll and owner of Racing Point F1 team, but Mr. Stroll has so far declined to comment on the subject.
Photo by Matthew Wiebe on Unsplash
The company went public in 2018 with an IPO on the London Stock Exchange. It was valued at around £5bn, which many believed to be too much, and AM shares have basically been going down since. The problem, according to Mr Palmer, doesn't end with sales or stock value because profitability is actually the key issue. Palmer said that earnings margin for 2019 is around 13% with adjusted earnings before interest tax depreciation of anywhere between £130m and £140m, and that's around £60m below expectations.
Aston Martin is currently 100 % invested in the forthcoming DBX SUV. The car has huge potential, and is arguably one of the best-looking SUVs out there, with great interior and a big V8 heart, but at the end of the day it's all about sales and profit. Aston really, really needs the DBX to work from a financial and commercial point of view, but this new SUV might help Aston in the same way the Cayenne helped Porsche, as a make-or-break vehicle for the brand's resurrection. For now, Aston has received 1800 pre-orders for the DBX, with deliveries only starting later this year.
At the moment, the only thing we know for sure is Aston is indeed looking for new investors, reporting interest from several firms in the Middle East, India and China. Having said that, Lawrence Stroll definitely sounds like a potential candidate. Stroll made a fortune investing and building up brands like Ralph Lauren and Tommy Hilfiger, which means that, apart from monetary value, his ideas could help Aston Martin rebuild the brand and make it bigger.
Can I help?
Well, you could buy an Aston Martin. But they are expensive. Maybe buy a Lego version, if you can't afford the real thing?