Aston Martin survival relies on massive sales spike

Aston Martin chief executive Tobias Moers says the British car-maker will have to match Ferrari for sales if it’s to stand on its own two feet without regular cash injections from investors.

Moers made the admission to journalists just prior to Aston Martin posting smaller-than-expected first-quarter losses of £42.2 million (A$76m) earlier this month, compared to the huge £110.1 million ($A200m) deficit over the same period last year.

Marking almost a year in the job, the former Mercedes-AMG boss confirmed it had been a tough 12 months as he grappled with enforced COVID shutdowns, a huge oversupply problem, massive inefficiencies and the lack of a development plan for future models.

“It was not in a good place at the beginning of last year,” he said. “But since then we have changed the company internally and how the factory operates.”

Aston Martin is now on track for 6000 annual sales – but that’s still not enough for the company to be sustainable and fully funded for the future, according to Moers.

Despite stressing he wasn’t concerned with the numbers, Moers admitted Aston needed to shift around 10,000 cars annually to generate roughly £2 billion ($A3.6bn) in turnover – a target that’s reportedly set for 2024/25.

Meeting that number would see Aston match Ferrari, although the Italian brand’s towering share price is more to do with its hugely profitably merchandise sales than its range of supercars and GTs.

Moers said that as well as carrying out massive restructuring, it was only after he started the job he discovered Aston Martin’s chronic oversupply problem that had seen 3000 cars – almost a whole year’s sports car sales – allowed to build up within the dealer network.

The German executive said this had led to big discounts on models like the Aston Martin V8 Vantage and DB11 and was directly linked to the collapse of residual values on some of its cars.

“Some challenges I knew before, but some challenges turned out to be greater than I thought. We had too many cars in stock and when that happens you have to take hard decisions,” he said.

Perhaps helping his cause were the enforced COVID-19 shutdowns in 2020 that saw manufacturing close for almost half the year.

“The stock almost done, close to zero in all our regions. With just a few cars in dealership stock, but it’s now aligned with pipeline for what you need,” he said.

“With Aston, not every customer will order a car, some like to come into a dealer and have the car right now.”

Moers says that by turning off the tap and transforming Aston into a demand-driven manufacturer, the average transaction price has recovered and residual values have improved.

With the car-maker now more profitable as a result and aspiring to boost sales by more than 65 per cent, it’s tempting to think Moers might have aspirations to be the British clone of the Prancing Horse.

But that’s not the case.

“We’re not Ferrari, we’re not an ultimate performance brand. So we can move Aston as a brand a bit more broader,” he said.

Moers is referencing his desire to compete in new segments where brands like Ferrari are not expected to venture, with Aston able to push deeper into luxury vehicles, like a stretched version of the current Aston Martin DBX that will draw a completely different audience to the upcoming Ferrari Purosangue performance SUV.

Perhaps the final problem to solve was the most unexpected – at least to outsiders – as Moers claims when he arrived at Gaydon, development of future products had effectively stalled.

“When I came into the company there was no development in place,” he revealed.

“There was a reason for it, the company was not strong enough to set up any.”

This forced Moers and his new management team to not only secure further funding from the investment group led by Lawrence Stroll, but also shed costly projects that were in progress that he thought added little value – including the development of Aston Martin’s bespoke TM01 3.0-litre twin-turbo V6 hybrid powertrain.

The solution was to leverage harder the technical partnership with Mercedes-AMG, securing its prized ‘P3’ plug-in hybrid tech.

But the ramifications meant that the car-maker then had to start again from scratch on the halo Aston Martin Valhalla supercar, with a similar knock-on effect for its GT line and the new Vanquish that were all set for the V6 hybrid.

Aston Martin’s development team now faces a daunting prospect of not only re-engineering the Valhalla but readying an incredible 10 models (new and facelifts) for an introduction between now until 2023.

“This is what we cleared up and it was a very expensive journey, we burned a lot of cash last year. But it was worth it. We see a recovery,” Moers said.

“It’s unbelievable how we changed the company from September. It’s unbelievable. It’s not the same company. It’s a pleasure to see people engaging on a different level. You see energy in peoples’ eyes now – and that gives a lot back.”