Aston Martin is counting on its SUV to propel it into the next decade
Detroit — The arrival of Aston Martin’s DBX sport utility vehicle (SUV) in 2019 could help more than double sales of the British sports car maker by early next decade, its CEO, Andy Palmer, told Reuters.
The company’s entry into the fast-growing super-premium SUV market "absolutely changes the business", Palmer said in an interview in the US.
It could boost sales to as many as 12,000 vehicles a year by early in the next decade, more than double the roughly 5,000 sports cars the company expects to sell globally this year, he forecast. Aston Martin’s previous peak sales year was 2007, when it sold 7,300 cars just before the financial crisis.
Palmer said US sales could reach about 1,300 cars this year, propelled by the new DB11 model. "I am not claiming success," he said, as Aston’s goal is to get more than 2,000 cars a year in the US.
The DBX will be a four-door SUV designed to compete with models such as Volkswagen’s Bentley Bentayga, a $229,000-and-up vehicle billed by its maker as "the fastest SUV ever built".
The DBX’s design "is complete", Palmer said, and the factory should be building prototypes by the end of 2018. Aston Martin, the preferred drive of fictional British spy James Bond, is late in joining the SUV mania gripping the global luxury car business.
The financial incentives are clear. In the US, SUVs accounted for nearly 40% of total US vehicle sales in 2016, up from 32.6% in 2014, and super-premium models are one of the fastest growing segments.
Privately-owned Aston Martin reported £94.6m ($125.1m) of cash from operations during the first half of 2017, after years of losses. Under Palmer, a former Nissan Motor executive, Aston Martin has restructured and issued £550m in debt securities that are due in 2022.
That year is also near the end of Palmer’s restructuring plan. By then, Aston Martin — with the DBX SUV and the re-launch of the Lagonda brand — will have a profile similar to Ferrari, Palmer said, adding: "Ferrari is a $15bn company." Decisions about a public offering or a sale of the company are up to the Kuwaiti and Italian investors who control it, Palmer said. "One assumes they will want an exit."
Britain’s departure from the EU could make Aston Martin’s road tougher if the two sides fail to maintain favourable trade rules, Palmer said, with non-tariff barriers that could slow deliveries in Europe being his "first concern".
"Our brand is largely rooted in the UK so it’s a tough call" to consider factories elsewhere, he added, but a weaker British pound and the ability of Aston’s client base to absorb the costs of tariffs could offset Brexit costs.
In the meantime, Aston Martin faces the same pressures to develop cleaner petrol-fueled engines and electric vehicles (EVs) as better-funded rivals. Aston will eventually offer hybrid options of all its models, and will build a limited run of 155 RapidE EVs in 2019 that will serve as a test fleet for developing a future generation of EVs, Palmer said. "The idea that every vehicle on the road will be electric in 2040 isn’t going to happen."
Aston’s more valuable play in the EV field could be as a consultant for EV start-ups that don’t know how to build lightweight vehicles, such as Aston’s aluminium-bodied sports cars.
The company recently established an engineering consulting arm which, Palmer said, "Is starting to get its first contracts."