By on March 19, 2007

astonmartin_det06222.jpgLast Monday, an English racing mogul, a car-collecting Texas tycoon and a gaggle of Kuwaitis bought Aston Martin. While Ford’s retained a stake in the luxury automaker, The Blue Oval Boyz no longer have a say in Aston’s future. The press spun the deal as a sad but inevitable move: a sign of FoMoCo’s willingness to face financial facts. Well, here’s a bit of Inside Automaking: Ford didn’t put Aston Martin up for sale. Aston Martin jumped ship. 

From its inception in 1913 through 1987, Aston Martin was a poster child for bespoke luxury automaking– and “hobby trading.” Before Ford bought 75% of Newport Pagnell’s finest, Aston Martin had lost its numerous owners numerous millions. Under Ford’s management, Aston Martin achieved something akin to a miracle: profit.

Last year, Aston made an indeterminate amount of money (Ford has always refused to separate Aston’s finances from those of the Premium Automotive Group). Aston reprised its role as James Bond’s steed of choice (both old and new) in Casino Royale. And the company unveiled the Rapide, a four-door luxury sports sedan with a built-in chess set and champagne cooler.

This year, The Times estimates that Aston Martin will earn $74m on worldwide sales of some seven thousand cars. While that’s a cause for celebration for Aston fans, the production run represents roughly 0.1 percent of Ford’s 6.5 million annual vehicle sales. Even if Aston Martin beat their best estimates by 50 percent, it wouldn’t do squat for Ford's finances.

In 2006, Ford’s Premier Automotive Group (PAG)– Aston Martin, Jaguar, Land Rover and Volvo– dropped $327m. PAG sales were off just one percent, but their bottom line was beaten down by unfavorable exchange rates and warranty accrual adjustments at Jaguar and Land Rover. So Ford cancelled the Aston Martin Rapide.

This decision did not sit well with Aston’s management. Although John Walton, General Manager of Aston Martin North America, emphatically and repeatedly asserted that Aston was not for sale, someone forgot to tell its managers. Led by engineer, speed demon and Aston CEO Ulrich Bez, the execs made a bold move of their own: they started looking for new owners.

Discretion being the better part of valor, Aston Martin began quietly reaching out to potential suitors; by invitation, as it were. They found a willing conspirator in David Richards. The founding chairman and chief executive of ProDrive, a motorsport and automotive technology company, was already plenty cozy with Auntie Aston. Since 2004, ProDrive has been running Aston Martin’s FIA GT racing team. The UK company also prepares the GT1 DBR9 and the GT3 DBRS9 race cars for well-heeled privateers.

Richards liked the idea of owning Aston, but, sensibly enough, preferred to use OPM financing (Other People’s Money). Enter Houston energy investment banker, car collector and race team backer, John Sinders. Oh, and two Kuwaiti investment companies: Investment Dar and Adeem Investment Company. Despite the backroom maneuvers, or perhaps because of them, ProDrive’s proactive $848m offer found fertile soil in Dearborn. 

Apparently, not everyone was in the loop on this one. At a recent press conference, AM’s US GM described Aston’s separation from Ford as “bittersweet.”  Looking dapper in a navy blue pinstriped suit and perfectly enunciating the Queen’s English, Walton said that his longtime friend, Bill Ford, called him post-sale to ask, “Are you celebrating?” “Are you?” Walton said he replied.  “No,” said Ford.  “Nor are we,” Walton responded.

While Walton may be royally pissed that he was kept in the dark, he’s being something of a drama queen. The Aston sale resurrects the Rapide, a model crucial for Aston’s expansion. Also, as Top Gear’s recent Aston vs. Jaguar article demonstrated, Aston Martin needs to develop its models’ gearbox, handing, ride and engines. As EVO magazine’s review of a ProDrive modded Vantage demonstrates, the company has both the spirit and the technology for the job.    

The deal also assures access to Ford’s international resources. Remember: Aston relies on Ford for everything from its V12 to its Volvo air vents to its switchgear. With Ford’s $77m stake in the biz, the “new” Aston Martin can continue to dip into The Blue Oval’s parts bin and gain access to mission critical research, manufacturing, safety and legislative expertise. 

All of which means Billy Ford’s tears were of the crocodile variety. Although billed as an exit strategy, the Aston “sale” isn’t so much a matter of cutting deadwood as a tacit admission that the domestic automaker simply can’t afford to fund its former British subsidiary’s ambitions.

Bottom line: the corporate mothership is no better or worse off for jettisoning Aston Martin. But Aston Martin will be far better off with someone else taking the majority of the risk, and reaping the lion's share of the rewards.

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34 Comments on “Ford Sells Aston Martin: Did They Jump or Were They Pushed?...”


  • avatar
    troonbop

    The new team sounds like the perfect group to own Aston Martin; at least the image i have in my mind from reading bond novels. I suspect many interesting things wil be on the way.

  • avatar
    yournamehere

    it almost sounds like a bond movie with all the hush hush things going on. i wonder if the writers for the next movie could make bill ford the next bond badguy! James Bond 007: Rapide Descent

  • avatar
    SherbornSean

    We always damn the domestics for lousy hookups (Fiat, Jaguar, SAAB, Mitsubishi). With AM, Ford got things right, buying cheap and selling high.

    The sale is great news for Aston — they’ll have an ownership team that is 100% focused on AM.

    And it’s good news for Ford. There was no synergy to speak of between AM and the rest of PAG, and they get nearly $1B in cash. Now Jaguar is free to push further upscale with threatening anyone else within Ford.

    As for the rest of PAG, Volvo is now so tightly tied up with Ford, it would be hard to push them out. Jaguar is too much of a mess right now for anyone to ante up real money.

    Land Rover, on the other hand, might be attractive, and the synergy with the rest of Ford is not insurmountable.

  • avatar
    tony-e30

    Under Ford ownership Aston Martin developed genuinely beautiful and high quality automobiles that salvaged the brand and re-created an iconic image. Overall, Ford did very well with Aston Martin (or Aston Martin with Ford).

    Am I the only one who is slightly worried about what will happen to AM under Investment “Group” ownership?

  • avatar

    Excellent write-up. It gets to the heart of the matter: Aston Martin will continue to depend on Ford for technology and parts, but needed outside capital. This arrangement works out all around.

  • avatar
    BigChiefMuffin

    Ford have done pretty well by selling AM $848 for something maybe earing $74M a year( and you can imagine that some pretty creative accounting would have gone into that figure ) plus they still supply a lot of the bits that go into the car ( and hence will keep a lot of that profit ). The luxury car market is very cyclical and Ford may well have exited near the top – there are a lot of cars ( Audi R8, Alfa 8C etc) also coming onto the market which will be chasing after AM's market share… Ford also now have the freedom to chase after part of this market with the rumoured Jag XKR-R, which they would make far more on on each unit sold than an Aston…

  • avatar

    I also think this frees up Jaguar to edge upwards where they belong. The X-type fiasco need never happen again, and the XJ and XK can be appropriately up-market, unhampered by Aston above.

  • avatar
    Dream 50

    If the new ownership group can get me something Austin sexy with a screaming straight six for about 20 grand, I'm in… K

  • avatar
    BostonTeaParty

    Sherborn, If they sell Land Rover then Jaguar has to go with it, they are so interlinked through R&D etc they are basically one company now. As for moving Jag upmarket, it makes sense. Ian Callum was always wanted to play with his gloves off since AM design was taken away from him, nows his chance to do it and save the jag brand in the process.

  • avatar
    Jonny Lieberman

    BTP,

    If the new XF (S-Type replacement) shows up looking 80% as hot as the C-XF, Jaguar is born again.

  • avatar

    SherbornSean, Ford had a WILLING buyer for jaguar in the form of JCB’s Sir Anthony Bamford, but he only wanted Jaguar, not Land Rover and Ford insists on making it a package deal. Go figure.

    I agree that this could be a green flag for Jaguar to make actual sports cars and brutal GTs once again. Could save the marque.

    –chuck

  • avatar
    Adamatari

    I’ve said it once and I’ll say it again: Jaguar needs to work on it’s bread and butter. Sure, there is the possibility that going upmarket could work, but then again it could fail too. If anything I say they should make their entry level X-type into something people would rather have than a BMW or Merc. Keep in mind their biggest seller is the X-type followed by the S-type. BMW doesn’t survive solely on M badged cars, 6 series and 7 series. No, they have a 1, 3, and 5 series as well.

    Aston Martin has always been focused on a much smaller range – for years all they had was the V8 (a GT) and the V8 Vantage (a ‘supercar’)! Jaguar can’t play that game.

  • avatar
    SherbornSean

    Chuck,
    You’re right! But given all that Ford has invested in Jaguar, it would be hard for them to sell now, especially if they think that Jag can finally make a go of it over the next 3 years.

    Of course, beggars can’t be choosers; I can almost hear Robert reminding us of how close Ford is to bankrupcy. If they could get $3B for Jaguar today, who’s to say they shouldn’t take it?

  • avatar
    SherbornSean

    I dunno Adamatari, I think that one has been tried and failed. The BMW 3-series is an enticing target, but the competition at $35K is beyond fierce. Acura/Toyota/Nissan can play in that game because they have the Accord/Camry/Z platforms to leverage. All Jag can leverage is the Mondeo/Mazda6, and the X-type has been a failure in several dimensions.

    I think Jaguar’s current strategy is the right one — use 1 unique platform for 3 cars (luxury sedan, sporty sedan and coupe)and compete on the sensory level — gorgeous styling, luxurious leather and great driving feel. Stay above $50K and don’t compete on price.

  • avatar
    Jonny Lieberman

    Adam,

    Jaguar should work on it’s wild boar sausage and lamb shoulder.

    Leave the bread and the butter to the plebs.

    i.e. murder the X-type.

  • avatar
    sitting@home

    It’s good to see a car company moving out of the hands of the business school set, and back into the hands of a car enthusiast.

    Astons, like all exotics, sell on style, performance and exclusivity, despite dubious construction and reliability. This is a whole different model of selling vehicles than the “shift the metal for whatever it takes” mentality of the rest of the Ford lineup (including Jaguar and Land Rover).

    Having someone who is more concerned about cornering and braking rather than saving $10 by using the same tacho as a Taurus can only be good for the future of vehicles from the company.

    Having said that, history is full of failed car companies that were run by car enthusiasts.

  • avatar
    BigChiefMuffin

    For what it’s worth, I think Jaguar have to persist with the X type. From the sounds of it, the new Mondeo platform ( which would, one assumes, be the basis for it )is great. The only niche manufacturer who makes a success of going it alone upmarket is Porsche, and I can’t see Jaguar turning into another Porsche.

    Small up market saloons is where the action is ( well, certianly in Europe ) as people trade up out of their Fords/Opels/Renaults etc… Ford does not have a car in this sector ( though new Volvo S60 could do it ).

    There was nothing wrong with the concept of the X-type ( Small sporty alternative to the 3 series ) it was just the execution which was dire. Jag made the same mistake with the S-type and appear to be fixing it with it’s replacement – there is no reason why they cannot do the same with a new X-type

  • avatar
    BostonTeaParty

    Johnny you better believe it, the Cats coming back. At long last they’re getting rid of the old retro and bringing in modern british contemporary design. Back to what Jags used to be. About time too.
    Adam, jag lost so much money on each xtype through incentives, i can’t understand how it survived so long. If they’re going upscale why have a vehicle like the x type, what they should have done was get the R-D6 into production, get the younger generation in.

  • avatar
    Hellhund

    Dream 50:

    Yeah, well, I don’t think THAT’s ever gonna happen.

  • avatar
    Jonny Lieberman

    Yeah — I don’t understand why Jaguar has to sell anything like the 3-series.

    They never did before. I would say focus on luxurious luxury and mad, TVR style sports monsters.

  • avatar
    blautens

    From what I've read and watched reference David Richards and ProDrive this is good news for Aston Martin.

  • avatar
    Roger Hislop

    >if the new ownership group can get me something
    >Austin sexy with a screaming straight six for
    >about 20 grand, I’m in…

    Or, alternatively, Jaguar come up with a small, enthusiast sports car (more along lines of original E-type, or modern MX-5/S2000). Small, light, fast, relatively simple, and affordable without damaging Jag brand. Jags were originally spartan sportsters with bare metal interiors for petrolheads, not liberally leather’n’walnuted palaces for fat-arsed plutocrats.

    Possible? This option was posited by Senior Jag Exec late last year. That, or an SUV to take on X5/ML/Cayenne.

    God forbid.

  • avatar
    jurisb

    dear ford, if you can`t manage your own children( mercury, lincoln), what makes you think you could manage something else from your neighborhood? mercury actually doesn`t exist anymore, there is only smell of memories in air, that are reminded through emblems on your mazda rebadges.ford is making business, less in making cars.and be blessed any company, that gets rid of american car manufacturers, because their squid -like tentacles are destined only for sucking.remember how angry was subaru, when gm wanted to slap saab badge on impreza. fuji pressed to quit.now mazda, make a move! if i was president of car manufacturing association of the world ( just imagining), i would prohibit putting ford emblems on anything that has less than 70% domestic engineered content.then you would see the real japanese presence in car industry. but aston martin itself needs more than one model- db9. sitting on one model- is sitting on a legend. but legends die with generations….

  • avatar
    jerry weber

    It will matter little about aston, for the first one hundred years ford didn’t have a premier auto group and their lincoln divivsion was an also ran to cadillac. However, they were renown for making solid reliable low priced cars. In fact they invented the segement. It’s the loss of that title which controls their fate. Either the new taurus, milan, focus, etc take back market share and make a profit or it’s all over for ford. Their loss of focus on bread and butter transportation is the sin, not owning volvo,jaguar and aston. But if this ownership took their eye off the ball then it is time for it to go.

  • avatar
    SherbornSean

    jurisb,
    Not sure what you meant in your post, but if you are criticizing Ford’s managment of Aston, you should look at what they paid for it vs. what it sold for.

    Ford created huge value at AM. Can you say the same for Fiat’s management of Alfa? GM’s managment of Lotus? Or Proton’s? BMW’s management of Rover? Benz’s managment of Chrysler? Renault’s management of AMC?

  • avatar

    Things are looking good for AM in my opinion. The current designs are so gorgeous they can probably be milked for many many years a la Porsche.

  • avatar
    jurisb

    ford is bying and selling companies like some desperate teenager before school exams. if they needed a luxury brand, what stopped them from making luxury lincoln or mercury a la messenger coupes? why they have to buy something? if they are a car company, and they need a product, they CREATE it, not buy. ford shows inability to put POWER together with fit anf finish and domestic. the golden rule of american car manufacturing- quality, domestic, and sophisticated never come together in one car. ford can`t have luxury brand if it is bought, no matter how much volvo you buy it is still a swedish company.we don`t call coke that is distilled in Estonia, an estonian coke. aston martin is british heritage,i americans want heritage, you have to earn it, not buy.some hollywood rappers can buy maybe vector cars, but it doesn`t make them car makers.elbowgrease is the road to kingdom, not the wide open…..wallets.

  • avatar
    Gottleib

    Jurisb I think you forget that in today’s world and by that I mean the world of brand identity, and demand for items from the “me too” generation then it is quite necessary to purchase the “brand” in demand. Creation of a brand is next to impossible when all of the consumers are fixated on the brands they can see now. It would take a consumer some thoughtful research to discover a new product without a historcial brand connection and no one is willing or able to that in todays world.

  • avatar
    BostonTeaParty

    jurisb, i thought the golden rule of american manufacturing, and car manufacturing was get it built as quickly, cheaply and out the door as fast as possible?! when did sophistication come into it…and quality for that matter? Isn’t that the problem the domestics are trying to get over?

  • avatar
    SherbornSean

    How many teenagers buy and sell car companies before exams?

    I must be out of touch.

  • avatar
    jthorner

    Jaguar in it’s prime fielded a small sedan, a large sedan and a sports car all at the same time. All were bargain priced compared to the competition. An original E-type was priced about the same as a contemporary Corvette, and way under anything similar from Germany or Italy. The problem with the X-type isn’t that Jaguar tried to compete in that segment. The problem is that they did a horrid job of it! Starting with a FWD chassis from a down market Ford and trying to graft Jaguarness onto it makes as much sense as turning a Cavalier into a Cadillac did. Jaguar pulled a Cimarron. Again there was nothing wrong with the idea of a small Cadillac for the 1970s, the problem was the car they built.

  • avatar
    jurisb

    what kind of historical brand identitiy does Scion have. none. just an alien name from Andromeda nebula. or it might be a name of some slime overtaken liopleurodon.but they sell. they sell cars. not brands. like harley leather jackets.what identity did lexus or infiniti have? none.there is no better advertisement than gossip from your neighbours about an outstanding vehicle that has rolled off some assembly plant in Nagoya. people usually sniff out like your retrievers at backyard, and taking off their gloves and depending on brail they touch out with the sixth sense if the car might be good or not.and gossip of chatterboxes is that makes explosions or dryouts at your dealers lots. and by the way ,what cuts wallets, cuts hearts.
    lunatics@inbox.lv

  • avatar
    powerglide

    Top Gear — that’s the BBC’s answer to Britain’s _Car_ magazine, no ?

    Yet the Beeb is like, Her Majesty’s Government.

    So the same Government that blankets Blighty with GATSO speed cameras wants to sell we enthusiasts a car magazine ? No, thanks.

  • avatar
    dkulmacz

    Uhhhh . . . scion is an English word that means ‘heir to the throne’ (Aragorn was the scion of Gondor, for all of the LOTR nerds out there).


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