Automotive News Europe - December 2017 - Talk from the Top Supplement - 4

AUTOMOTIVE NEWS EUROPE

TALK FROM THE TOP

On the right track
Aston Martin boss seeks Brexit clarity; predicts further sales, profit gains

ston Martin is on a roll because of
strong demand for its new DB11
supercar. The positive momentum is expected to continue as the British brand
launches a revised version of its best-seller, the entry Vantage this year followed
by its first SUV in 2019. The cloud on the
horizon is the UK's pending split from the
EU. Aston Martin CEO Andy Palmer discussed these topics and more with Automotive News Europe Associate Publisher
and Editor Luca Ciferri and Correspondent Nick Gibbs.
You had the chance on your recent trip
to Japan with UK Prime Minister Theresa May to voice your concerns over
Brexit. What points did you make?
Our message to her was that the No. 1
concern is the non-tariff barrier. I can
hypothesize how I can cope with a tariff.
The thing that really hurts is the non-tariff
barrier. The car is stuck in a port in Germany or France because the administrator doesn't rush to sign through the paperwork. That has a much bigger impact
on the bottom line than dealing with a
10 percent tariff. We need import-export
to be as frictionless as possible.
Will Brexit force Aston Martin to boost
its local content?
That's my second-biggest preoccupation.
If we're part of the EU and we're exporting then we're at 95 percent local content. If you're exporting exclusively from
the UK, then we're somewhere between
30 and 40 percent. We're a long way from
60 percent, therefore your origin-ofsource under current regulations becomes an issue. Suddenly you've got to
start re-shoring big lumps of metal back
to the UK, but I can't see a scenario
where we bring engine production back.
The cost of capital for equipment on an
engine is huge.
That was your second-biggest concern. What's your next-biggest worry
with regard to Brexit?
Talent. I have a lot of European labor
inside the company. We're employing
people from the likes of Ferrari, and I
need to be able to give stability to those
people to say they're going to be able to

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stay after Brexit. As a global company,
and I've spent three years trying to make
it one, I need access to global talent. The
fourth preoccupation, which is the least of
my concerns, is tariffs. That's the one that
gets all the headlines, but there are three
levels above that.
Aston Martin vehicle sales were 3,687
last year. What will they be this year
and when will you break the firm's
2007 record of 7,200?
We should be at 5,000 cars this year,
but that's not the real story. In 2007,
EBITDA was 92 million pounds. Last year
we were at 101 million pounds. So, the
underlying efficiency of the company is
more than double what it was in 2007.
This year our guidance is 175 million
pounds of EBITDA based on 5,000 cars.
We shouldn't be getting excited about
this. This should be normal.
And 7,200?
In reality, 7,000 is the production capacity on two shifts in Gaydon. We can see
a clear line of sight to reaching that in 2019, when we
will have a full year of the
Meet the boss
Vantage and the Vanquish
❚ NAME: Andy Palmer
replacement.
❚ T
ITLE: Aston Martin
What if you added a shift?
President and CEO
You can stretch it to 10,000
❚ AGE: 54
on three shifts, but it's quite
inefficient.
❚ M
AIN CHALLENGE:

Overcoming Brexit
Why?
uncertainty.
Because of shift premiums
and the planning maintenance, when you have to
who the customer is so we will have distand down the plant. Usually, the extra rect communication with them. That almoney you put in and the extra produc- lows us to take that learning directly into
tion you get out are not linear. You can
the next development. Most of the cusdo it, but it's better to build a new factory.
tomers have been identified.
The electric RapidE sedan is due in
2019. Will that be built at your new fac- Will you lose money with the RapidE?
We won't be making a lot of money on
tory in St. Athan, Wales?
The final assembly may be in St Athan. them that's for sure, but that's not reWe're making it the center of electric de- ally the point. Each one will cost about
velopment. But with 155 cars in total it's 200,000 pounds.
wherever you can find space.
What volume will the DBX have?
What is the goal of the RapidE?
It's a learning experience. We will know

About the same as the Bentley Bentayga
[which topped 5,000 sales last year]. ANE

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2017

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