Aston Martin`s business performance roars back

For the first time in 40 years Aston Martin’s balance sheet is looking as good as its cars - reports The Times.

Britain’s most famous sports-car company — motto: “power, beauty and soul” — recorded a profit last year, something it has not done since the 1960s, according to Ulrich Bez, its chief executive.

The good news has been kept under wraps officially until now because Aston’s accounts are merged into the loss-making Premier Automotive Group (PAG) with Jaguar, Land Rover and Volvo. PAG lost $100m (£55m) last year.

The 62-year-old German modestly attributes the company’s success to the boom in the super-rich worldwide. A record number of millionaires (just look at the Sunday Times Rich List) is fuelling an unprecedented demand for Aston’s range, which starts with the £79,995 V8 Vantage, leaps to the £106,850 DB9, and tops out with the £177,100 Vanquish.

A return of the Aston Martin to the Bond films, after a flirtation with BMW, may also have something to do with the resurgence. Daniel Craig will be behind the wheel of a fabulous new DBS when Casino Royale is released later this year.

Bez, who was parachuted in by Ford to rescue the ailing British marque, has arguably done more for the British car industry than many home-grown car-company executives.

He has expanded Aston’s sales in America and is planning the carmaker’s first exports to Russia and China.

Since he took the helm in 2000, production has risen from 300 cars a year to 5,000 — and about 70% of Astons are now sold outside Britain.

Aston Martin’s Gaydon plant in Warwickshire is already approaching its maximum production capacity. The company’s older Newport Pagnell factory in Buckinghamshire will be closed once the ageing Vanquish goes out of production, although no date has been set.

Bez said that five years ago the cars were bought by “a few car freaks” with 80% of them sold in England.

With the company’s new DBR9 racing car, it has recaptured the sort of kudos Aston Martin last enjoyed in the 1950s (the car was pipped into second place in its class in this year’s Le Mans 24-hour race).

Bez, a former executive at Porsche — Europe’s most profitable car company — is eager to talk about a threat to the British car industry that he says has been hugely and dangerously underestimated. The storm clouds are gathering for western car manufacturers and their thousands of employees.

The Chinese are coming, and Europe and America are not ready. Within five years, the industry will be swamped by a wave of cheap imports.

Dr Bez’s prescription? Diversify into niche models and markets where the Chinese can’t follow.

The impact of cheap Asian imports is already being felt. Vauxhall is cutting 900 jobs at Ellesmere Port on the Wirral, Peugeot is closing its Ryton factory in Coventry, TVR is shedding workers and Jaguar, also owned by Ford, recorded losses of £492m in 2004 (the latest figures available).

But things are about to get a lot worse, Bez warns. The jostling between rivals such as Ford, Volkswagen and Renault for market share is like rearranging deckchairs on the Titanic.

It is naive to think, as some manufacturers do, that the opportunities offered by China outweigh the threat of competition, said Bez.

Under the cloak of co-operation and glad-handing with western car manufacturers, the Chinese have been quietly taking note of western designs and production methods and learning how to sell our own ideas back to us at knock-down prices.

Nanjing Automobile Company, which bought MG Rover last year, is gearing up to ship Chinese-built Rovers to Britain — at a price sure to be cheaper than they were produced here.

Last year, for the first time, China exported more vehicles than it imported. Most were trucks sold in the Middle East, Africa and southeast Asia, but that could be about to change.

“The euphoria about China will be a very short-lived thing,” said Bez. “It took about 20 years before the Japanese were successful in Europe, it took the Koreans 10 years to get a foothold, and the Chinese will be even faster.

“Until now it has been all about European and American companies in China. But tomorrow the Chinese will be here.

“They’ve started in America — they will sell 1m cars in America this year. We can smile about it, but the battle is not in China; it will be in Europe and America.”

Bez offers this gloomy prognosis from the boardroom at Gaydon, where the walls are lined with giant, moody photographs of Aston Martin’s current models alongside contemporary sculptures and works of modern art.

When Bez joined the company it had just one model — the DB7. Now its line-up is about to be joined by the roadster version of the Vantage, to be launched at the Los Angeles Motor Show early next year, with the prospect of the Rapide, a four-door, four-seater concept car unveiled at the North American International Auto Show in Detroit in January, going into production in 2008-9.

The latest Bond car, the DBS, will be launched as a £160,000 limited-run production model next summer.

In 1964, when Sean Connery drove a DB5 in Goldfinger and Aston first made its lucrative connection with Bond, 007 was about the only thing keeping the company alive. Today Bez describes their relationship as a “love affair”, and insists that the company pays no money for the connection (apart from the cost of the cars).

“We do not need James Bond, in the same way that James Bond does not need Aston Martin,” said Bez.

There is no doubt that Aston has received a boost from a growing market for high-end sports cars and saloons. Sales of luxury saloons, for example, rose 20% in the first six months of this year, compared with the same period in 2005.

But Bez also attributes the success of Aston Martin to the brand’s “honesty, integrity and quality”.

“There could be no lies, no superlatives over substance,” he said. “The product itself, how it looks, how it feels and how it functions, this is the key thing.

“The DB9 is the most beautiful, aesthetic car in the world. There is no competition. This is the base factor for its success.”

Making a car with distinctive character is vital for survival in an increasingly competitive industry, he said.

Bez believes Aston has created its own market. Ferraris are “too loud”, he said, Bentleys “too big”, and Porsches “mass produced”. An Aston appeals to wealthy buyers who want the sports performance and exclusivity of an Italian sports car, but with a touch of “English understatement”.

He accuses some mainstream manufacturers of relying on marketing claptrap as they battle it out for a shrinking pool of new car buyers.

“I don’t see a Seat or a Skoda or a Volkswagen necessarily as an authentic brand. For the mass-market customer, there are a lot of comparable products and a lot of advertising telling them what fun it is to drive this or that new car,” said Bez. “All this bullshit; people can’t hear this anymore. And then the cars last longer. Today, a car which is five or eight years old is still a good car. There is no need to always be buying a new one. This is the big problem.”

During the week Bez lives a 10-minute drive from the Aston plant. But on Friday afternoons he heads back to his home in Düsseldorf, which he shares with his second wife, Martina, and their two daughters, aged 10 and 14 (he has a son and daughter, both in their twenties, from his previous marriage).

He has the journey down to a fine art — chauffeured to Birmingham International airport to arrive only minutes before final check-in — and is often home before some of his employees have managed the slog through rush-hour traffic.

Known in the industry as a slightly eccentric but ever-so-capable engineer, Bez enjoys nothing more than to gaze on his past creations — a black Porsche 993 with a tan interior and a BMW Z1, which are separated from the family living room in Dusseldorf by a glass door.

The family are using a XC90, on loan from Volvo, as their main runabout.

Cars aside, Bez lists skiing and mountain biking, alongside a new love for clay-pigeon shooting, among his hobbies.

His other passion is football and he’s secretly rooting for England. But he confesses it in a whisper.

There are rumours that Coleen McLoughlin, Wayne Rooney’s fiancée, has just bought the England star striker a Vanquish. The PR department is not quite sure how well this will sit with Aston’s “understated” image.

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