Aston Martin Isn’t In Crisis Yet But Change Is Still In The Air

Aston Martin Isn’t In Crisis Yet But Change Is Still In The Air

Aston Martin opened a new plant in Wales today that will build the DBX, but what continued to steal the headlines was a story published yesterday claiming that the Canadian billionaire Lawrence Stroll was preparing to purchase a “major” stake in the company. Aston Martin has had a terrible year, but that might be the exact reason Stroll is reportedly interested.

Aston Martin CEO Andy Palmer did not deny the report on Friday.

“You know what we would have to do if there was an official approach. Beyond that, I can’t comment,” he said, according to Reuters, referring to stock market disclosure rules.

Palmer also said that the company’s shareholders were “certainly not actively soliciting any other participation,” but, “that’s not to say that it doesn’t come.”

None of which was terribly convincing. It also must have been slightly annoying for Palmer on a day that should have belonged to the brand’s best hope at saving itself, the DBX, at a time when a lot of luxury carmakers are turning to SUVs to save themselves.

In Aston Martin’s case, that bet amounts to almost everything. Since going public last October, shares have nosedived by 75 per cent, as losses have also piled up. Aston lost $US120 ($175) million in the first nine months of this year alone as sales were slower than expected. The company is now valued at around $US1.2 ($2) billion, or about a quarter of what it was valued at when it went public.

All of which might make you wonder why anyone would be interested in putting big money into the company until you consider that it’s comparatively low valuation now might be precisely the reason. Because if you think the DBX will, in fact, turn things around then you might also think that Aston is actually undervalued. Which reportedly is what Stroll is thinking, per Autocar.

Both his business interests and car collection are reported to have given him the contacts to head a consortium looking to take control of Aston Martin, in the belief they can take advantage of its current low stock value and lower than expected sales prior to building the brand’s equity up again in future years, most notably by taking advantage of anticipated sales for the recently launched Aston Martin DBX SUV.

I have no idea whether the DBX will save anything but that sounds like an almost reasonable bet. Aston Martin did get a little less cheap based apparently on the Autocar report alone. Shares are trading today at around $US8 ($12), up from around $US6.50 ($10) earlier this week.