Ford will sell Aston Martin
Iconic company goes under the hammer
Aston Martin: who will buy?
The Blue Oval said it was "exploring strategic options with particular emphasis on a potential sale of all or a portion of the unit". It folllows speculation that Jaguar might also go under the hammer.
AM has gone from strength to strength in recent years, thanks to inspired design, excellent engineering in the form of its VH platform, and shrewd marketing of the AM brand. But despite being profitable, this news means uncertainty for AM staff at Gaydon and Newport Pagnell.
The problem is that Ford, one of the oldest carmakers, continues to haemorrhage cash -- it would be foolish if it didn't look into the possibilities of selling loss-making assets. According to Business Week: "Ford is facing the reality that its market share and profit outlook is falling much faster than it can possibly bring new products to market."
Ford has 100 plants and 300,000 employees round the world; from the point of view of Ford's accountants in Dearborn, Michigan, AM is tiny. It's highly visible but as a balance sheet item, it hardly counts.
Yet that visibility could help it raise a substantial price. One American automotive analyst reckoned that AM could be worth hundreds of millions of dollars, thanks to AM's prestige value. "It's a very large billboard with James Bond on it that is a serious marketing tool. It's a prestige name that a Peugeot or a Fiat might be interested in," he said. Another, Philippe Houchois, motor analyst at JPMorgan, estimated Aston’s value at about £270 million.
And Ford believes it's worth money too, as the auction tag for AM is pencilled in at a whopping $2 billion.
Who will buy? According to the FT, talks with interested parties are already underway. Ford's been talking to Jac Nasser, once the Ford CEO and now a partner at One Equity, the private equity arm of JPMorgan. Sir Anthony Bamford, boss at the resurgence digger company JCB, said he wanted to buy Jaguar but wasn't interested in Aston Martin.
It could be a great opportunity, with hindsight -- depending on the buyer. What often happens when companies get sold however, is that a venture capital company buys, strips the assets to make it more profitable, and sells it on at a profit.
In AM's case, this would not work, as it's the bespoke and rare nature of the cars that makes the marque so valuable. Automate and mass produce, and the brand value evaporates. Ford must find the right buyer...
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In order of significance...:-
1) Price - AM is worth a LOT less than Ford want for it. It may be profitable but it's very small-volume and is still paying off a spanking-new factory. Not THAT great an investment, from a business perspective.
2) Parts / partnerships / supply chain - a fair few parts are also 'Ford' parts (inc. PAG companies), so will have to continue to be sourced from Ford/PAG...that'd have to be carefully negotiated. Ditt
3) Location - Gaydon is on the same site as the J&LR design centre...would need to change the security gating and add additional fencing, plus they share access to a public road. And would AM be a 'tenant' of J&LR?
4) Technology transfer - AM probably have incorporated much of Ford's latest tech (diesel excepted)...what will be the IPR issues there?
Bizarrely, the one company I CAN see being interested is BMW (who built Gaydon in the first place, during the Rover days). They've the financial ability, they've the image/quality connotation, they've not got a competing product (M6 vs AM V8 perhaps) while their main competitors have (VAG's Bentley Continental, Porsche 911 and Panamera, Merc SL/CL)...what do you think?
Least damage would be BMW in my view. I like the new Phantom which to me really represents true British luxury (I can see the eggs flying into my direction already...
). So they actually could be able to understand the AM brand. No French brand has any reasonable track record beyond hatches and people carriers and the Italian approach to GT's is quite different.From an operating standpoint, selling AM will <i>cost</i> Ford because of all the shared development/operating costs with the other British brands.
From a p.r. standpoint, it will be a disaster. One of the biggest hurdle Ford is up against is the consumer confidence. Dumping AM would be like jettisoning the cannon. It's an act of desperation, and who wants to buy a car from a desperate company.
Besides, sell it to the French? What will they do? Turn the transmission around so it has six speed in reverse?
And don't mention the Chinese...
Hear, hear for the Anglosphere!
I really HATE it when management and 'bean counters' get all the flack for 'squeezing pennies' out of the cars. Our system is a capitalist system, largely. That means that investors NEED a return, or they won't invest. Companies need money invested in them in order to function. So companies need to offer investors a return, i.e. PROFIT. Car companies ARE NOT charities.
More to the point, CUSTOMERS keep demanding more of everything - more power, more gadgets, more fuel economy...this all costs money to research, yet customers don't want to pay more for their car than for a broadly equivalent car. So companies HAVE TO cut their cloth accordingly. Otherwise they either lose money on each car sold, or they don't sell cars because they're too expensive in the marketplace.
So, it's SHAREHOLDERS and CUSTOMERS that actually drive the market, management just interpret their needs and guide the company accordingly (admittedly sometimes well, sometimes not so well). And before you start having a pop at shareholders, the majority of shareholders are investment houses, whose main product is: PENSIONS...i.e., you and I, indirectly, are shareholders in many companies.
So, can we quit with the aggro against 'bean counters'. In this case, Ford is in financial dire straits (I used to work for them), and needs to do SOMETHING, or it will go under. I'm not convinced selling off Aston is the right move, but if a cash buyer comes along willing to pay over-the-odds, they'd be foolish to ignore it.
I think that the AM "auction" is either a stalking horse for Jaguar or a last ditch means to invest in Jaguar, give it another year and then either keep or sell.
However we must be thanful to Ford for investing so much in AM, keeping it in business and making the products world class.
Jaguar-Land Rover to JCB for a very powerful triple-brand.
MBO to take control of Aston-Martin as a standalone, though unlikely with the Ford price tag.
In which BMW could probabaly make a case.
Still, who knows, the Chinese may wish to add a disgusting smiley grille to Bond's best.
I would love both Aston and Jag to be truely British again, but I can't see how when there is no large car maker to fund them. Oddly, and I never thought I would say this,I'd like some link up with Lotus/Proton ( as someone already mentioned ) to have three great brands located in the UK all working together. Never going to happen,but I can dream.
Selling to a bunch of flag waving Brits would proabaly only get us a repeat of the Rover situation where they have a half decent range of cars at the time of sale,only for them to quickly become out of date and then have no money to develop a new range.
Just my 2 pence worth .....
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