DUBAI: Andy Palmer, chief executive of legendary British luxury car Aston Martin, could look back on a good week for the motor group as he boarded a plane in Tokyo last week.
He had just announced a £500 million ($645.2 million) trade deal between his company and Japan, and been singled out for praise by the British prime minister Theresa May, who hailed Aston as a “prime example of innovative and world leading firms” in the UK.
Palmer was still basking in the glow of the half year financial results announced a week before, in which Aston reported a near doubling of revenue and a half year profit of £21.1 million, representing a £100 million turnaround from losses last year.
Aston sold 2,439 cars in the period, up 67 percent, for an average price of £149,000, 25 percent better than last year.
In an interview with Arab News, Palmer acknowledged that a big factor behind the turnaround was the success of the DB11, the new “supercar” unveiled last year which has been selling in big numbers across the world, including the Middle East.
“A significant amount of the credit goes to DB11, but our ‘legacy’ cars have been performing very well too,” he said.
Under Palmer, hired from Nissan in 2014 to reverse years of losses at the iconic car company beloved of fictional spy James Bond, Aston is on track for its first full year profit since 2010, and a possible initial public offering (IPO) a few years from now.
For Aston’s main investors from Kuwait and Italy, that would be reward for the hundreds of millions of pounds they have sunk into the company, in contrast to the repeatedly failed efforts of previous investors – including US car giant Ford – to make a financial success of Aston.
The Kuwait connection – two groups hold around 60 percent of Aston shares – could be expected to be an instant springboard for growth in the region. But there were challenges in the Middle East that Aston did not face in other global markets.
Earlier this year, during a media gathering at Aston’s UK headquarters in Warwickshire, Palmer outlined the issues.
The brand faced stronger competition from marques like Ferrari and Lamborghini, which appealed to younger affluent Arabs, and bigger luxury cars like Rolls-Royce and Bentley.
There was some confusion too over the brand image.
“The Middle East was the first region that said to us: ‘We don’t understand what you are. We understood James Bond, but not what you stand for now.’
“We are not seeking to be Ferrari, nor a maker of luxury trucks. We’re British, and we believe in the pursuit of beauty in car making. But I don’t think we explained that well enough in the Middle East. We’ve got more work to do there,” he said.
That work is beginning to pay off in the first half of 2017, with a significant increase in sales even in the tighter financial conditions brought about by low oil prices. The DB11 was a prime reason.
“The Middle East luxury sports car market is heavily driven by new products and the introduction of DB11 has supported a significant increase in our market share in the region,” Palmer said.
“As you would expect, the UAE is the biggest Middle East market for Aston Martin and, obviously with our ownership structure, Kuwait is also a key market for us. With Saudi Arabia as the second largest luxury market in the region, we also see this as having strong potential for Aston Martin,” he added.
Other parts of the world have traditionally been bigger buyers of Aston Martins since the 1960s, when the cars’ appeal was broadcast internationally by the James Bond movies.
Some 80 percent of the cars built in Britain are for export, with North America the biggest market, followed by the European Union, Asia Pacific and China.
Such a wide global spread leaves Aston open to the vagaries of global forex markets, which has been a big factor following the Brexit vote in the UK and the decline of British sterling.
So far, however, as a big exporter, currency factors appear to have worked in Aston’s favor. “We have continued to see some upside from exchange benefit in the first half of this year, but the improving business performance is mostly attributable to our underlying sales and operational performance,” Palmer said.
The financial and trading success of the first half gives him the confidence to go ahead full-throttle with the next phases of the “second century plan” put in place when he got the top job.
This involves a renewal program for its sports car marques, of which the DB11 is the first, a move into the SUV market, new saloons under the Lagonda sub-brand, a mid-engined sports car to increase the competition with Ferrari, and a fully electric car by 2023.
“The priorities are now to deliver a new Vantage which you will see at the end of this year, with a new Vanquish next year and the DBX in 2019,” he said.