Made famous by James Bond, Aston Martin’s success is now dependant upon a Canadian billionaire, Daimler Benz and Middle Eastern sales.
After a much vaunted 2018 IPO, the business subsequently stumbled and in 2020 received three capital injections. In the latest twist, Lawrence Stroll of F1 fame took a 25% share along with Mercedes who now own 20%
Whilst exports are 80% of revenue, global sales dropped 38% last year following a decision to ‘destock’ dealers. Stroll is adamant that scarcity is key to driving up brand value.
Aston Martin’s biggest region is Europe and the Middle East accounting for 30% of sales. Here there are more dealers than either the US or Asia-Pacific.
“As you would expect, the UAE is the biggest Middle East market for Aston Martin and Kuwait is also a key market, with Saudi Arabia as the second largest luxury market in the region,”former aston martin CEO
Perhaps the DBX, Aston Martin’s new SUV is the solution to the brand’s woes? It’s targeted at female buyers and was conceived by an all-female advisory panel. Only 10% of Aston Martin owners world-wide are women.
In the Middle East there is a much lower ratio of female/male drivers. In Saudi it’s estimated there are only about 2m women driving (population 34m).
Recently Aston Martin’s share price has recovered slightly. One reason, sales of the DBX globally have shown early promise.
Aston Martin runs a dealer franchise business model enabling the company to maintain strong control over image while limiting capital investment. Dealer margins are said to range between 10-15%; they make much more on parts & service, financing & insurance and perhaps surprisingly, trade-ins.
Overall Aston Martin’s gross margins average 18% and net profit margin was -67%. (Shockingly low I know) For Lawrence Stroll’s turn around to succeed, Aston Martin needs to hold firm in the Middle East, and improve mix with models like the DBX, priced at a cool £158,000.
In parallel the company needs to rebuild China which performed poorly in 2020.
I hope the DBX isn’t too little too late. Whilst I can understand management’s desire to appeal to a broad target market, the most successful brands are focused on a very specific demographic, and remain true to their core essence.