Mises Wire

How Entrepreneurs Wouldn’t Let a Beloved Car Brand Die

Aston Martin, “the noble company that’s been at death’s door more times in its long history than most”, in the words of one elegant British sporting journal, is going through one of the very best periods of its storied 105-year history, with a public offering being organized to crown a profitable run that has saved the day—yet again. In 2016, the carmaker, now based at sleek new Warwickshire digs a far cry from the leaky-roof “cottage” where it was camped out most of its life, hit record profits when just a year prior the company had reported close to $100 million in losses. Following an astute game plan to launch a new car every nine months for the next five years, the strategy led to the creation of DB11, its first all-new model for a decade and called the most powerful production car the company has ever built. It won the Car Design Award for 2016 and helped double revenues in the first quarter of 2017. Enigmatic Aston Martin, it appears, is finally back on track.

The turnaround is the latest episode in the Great Entrepreneurial Saga that is the course of Aston Martin’s wild ride through seven bankruptcies between 1924 and 2017. More entertainingly, it is the story of the derring-do businessmen-adventure hunters who swooped in with deus ex machina timing to save the sexy company at each crisis milestone armed with more panache than the dapper spy associated with the car’s alluring mystique. “Maybe we should wait for more data points”, opined the New York Bureau Chief of The Automobile, one the UK’s best written reading pleasures. “But as far as I’m concerned, the car is the most important data point. This one makes me think it is saved.”

Those beautiful cars: once upon a time hand-made (requiring 1200 hours of labor each); the seven coats of paint (requiring 40 hours each), the long wheelbases, the fine Italian bone structure…It’s been a costly venture and the company’s victory lap is deserved. Yet none of it would have happened had a handful of risk-taking romantics decided to abandon or debase what to them was the gold standard of engineering.

Born in 1913 by Mssrs. Bamford and Martin on a borrowed English engine (Coventry-Simplex) and a borrowed Italian chassis (Isotta Franschini), Aston (the name of a racing hill) Martin was steered over the course of its luxuriously bumpy ride by three principal visionaries. Sir David Brown, who led the company during its magic era of the 60s (hence the “DB” model initials); Victor Gauntlett, the pinstriped patriot who saw saving the company as a matter of British honor, and Ulrich Bez, the BMW and Porsche engineering icon--each man as distinctly maverick as the troubled cars that held them in awe.

In the case of Brown, born into a successful tractor manufacturing family, it was merely a matter of answering a classified ad in The Times of London one day in 1947 that offered for sale a “High Class Motor Business”. The “business”, largely supported by a Polish count, had gone bankrupt already three times in 1924, 1925 and 1932. Going into the 1940s, the company only produced parts for the war effort.

Brown acquired Aston Martin and, a year later, Lagonda (a well-regarded British car marque founded in 1906 by an American former opera singer) for a total of less than £75,000. This was followed by his acquisition of coachbuilder Tickford in 1955. Sir David concentrated these all under the Aston Martin umbrella and spearheaded the gran tourismo style of design that would come to define the car’s image. The iconic DB series of Aston Martins soon came to grace the planet-—in particular, the whip-smart DB2 (1950-1953) favored by this author; the DB4 (1958-1963), considered the “quintessential” Aston Martin, and the DB5 (1963), the “James Bond” (Goldfinger) car;

Amateur racing driver and motorcyclist, Joint Master of the South Oxfordshire Hunt, a keen sailor, shooting aficionado, qualified pilot, polo and tennis player, racehorse owner, it was the handsome Sir David who gave birth to the British rival of Ferrari and the Aston Martin brand its “eternal” cachet. During the quarter century of his stewardship, with the win at Le Mans in 1959 and one “bloody marvelous” road car after another, DB’s influence on the company was immense.

However, in the early seventies the company was in trouble again—one factor being California emission standards requirements, which entirely halted all U.S. sales. Brown paid off all the company’s debts and sold it for £101 to an investment bank. The company went into receivership in 1974 and then was sold for around £1 million to an American semi-conductor magnate. New models, beautiful as they were, could not resuscitate the company. Then in stepped petroleum magnate Victor Gauntlett, who in April 1980, Gauntlett put £500,000 into Aston Martin Lagonda (representing a 10 percent stake). “Aston Martin’s reputation seemed to exceed its capacity for making profits”, as one publication noted. The company was cash-starved with a luxury product, and faced an uncertain future but none of this deterred Gauntlett who, in 1981, became executive chairman.

Wry and romantic—in reply to a journalist’s inquiry into how he would make a small fortune of the car company he stated: “start with a big one”—the heritage-obsessed Gauntlett saved the company twice in the 1980s, something he deemed a personal crusade. He bought a stake in Italian auto design house of Andrea Zagato, resurrecting a prior collaboration with that company from the 1950s, and instituted new high-ticket limited edition models. Bolstered by a reviving economy, sales began to climb. A limited-edition Vantage (dubbed “Britain’s first supercar”), and Volante Zagato (1989) coupes at £86,000 each brought in enough funds to complete the Aston Martin Virage, the first new Aston launched in 20 years, in 1988.

He promoted the brand tirelessly. He marketed the Lagonda as the fastest four-seater in the world, achieving impressive sales in countries like Oman, Kuwait and Qatar. In 1986, Gauntlett negotiated the return of fictional British secret agent James Bond to Aston Martin, with Gauntlett supplying his personal pre-production Vantage for use in the filming of The Living Daylights and selling a Volante to Bond producer for use at his home in America. (Sadly, Gauntlett turned down the role of a KGB colonel in the movie). Through Gauntlett’s stewardship, the car become a Royal Appointment to the Prince of Wales for the first time and production at Newport Pagnell, the famous “cottage” that housed the company, continued to improve, with the factory managing to build about four and a half luxury sports cars a week

The company was doing well, but Gauntlett knew it needed extra funds to survive long term. In May 1987, he met Walter Hayes, then vice-president of Ford Europe, who saw the potential of the brand and the meeting resulted in Ford taking a share holding in September 1987. Gauntlett stayed on until 1991.

Soon to follow was the Ulrich Bez era. Throughout the 1990s, Aston was launching cars though as models refitted from unused Jaguar prototypes, another Ford property. It was in 2000 at the age of fifty-seven, that the racing enthusiast, aeronautics PhD protégé of Ferdinand “Ferry” Porsche came on the scene to become of the company’s most colorful names in the company’s recent history.

“Ulrich Bez is a carmaker, and the last of a dying breed”, states Paolo Tumminelli, a noted automobile historian, forward to the book Making Aston Martin. For Bez, “the Professor” in his life was Ferdinand Porsche—the father of the 911, uncompromising, resourceful and idealistic—who was the mentor of Bez’s ten year apprentice-to-designer (the Porsche 993, 986, 928 GTS) career. When Bez was recruited by Ford to take over, he bluntly told the company to pull the plug on everything because “everything” was being done wrong. Disgusted by the cheapening of luxury sports cars for the mass market (with harsh words to say about Porsche), Bez explained to Ford that his aim was to “retain Aston Martin’s exclusivity while wanting its popularity and market share to grow exponentially”. Ford gave him the green light. “Bez understood that something as special as Aston Martin could not be successful—or profitable—if it was treated as just another cog in the machine of a large motor corporation”, writes Tumminelli.

And so began an era of a new production plant, new vehicle architecture, Italian chassis designers Andrea Zagaro and Girogetto Giugiaro, the latter called the “designer of the century”, were brought back to the company. The DB9, with its striking architecture, was introduced, as was the V12 Vanquish. The company started to make a profit for the first time since its founding in 1913. However, in 2006 Ford sold off its premium unit, including Aston Martin, to a consortium of investors led by David Richards, a Formula One name. Bez’s proudest accomplishment, he has said, was for Aston to be voted “coolest brand” in 2011, beating out Apple.

But they weren’t out of the woods just yet. Though the beautiful DB9 was a purely Aston product, unlike what had come before it that had been contracted out to Jaguar, critics were tough. “[It was] not without rough edges…more than seemed appropriate for the leather-lined cabin of a gentleman’s express”, sniffed a reviewer from Automobile, the UK publication. “It lacked the surprise and delight you’d want in something meant to be more special than mere Porsches and VW-era Bentleys.”

Still, under Bez’s leadership Aston Martin took on a new life, selling more than 50 000 cars in 13 years, more than three times the number sold from 1913 to 2000. Then, problems began to loom once more. Shiny, carbon fiber hyper-cars such as the hybrid electric Valkyrie and the Vulcan came out in 2015, yet these multimillion dollar wonders could not stave off an encroaching financial slump. Already in 2013, Dr. Bez stepped down as CEO staying on as executive chairman and Andy Palmer, formerly the American CEO of Nissan, took his place.

The company went back to the drawing board and soon followed the now famous DB11 of 2016, the first model Aston Martin has launched under a technology partnership with Daimler, its popularity sent sales soaring by 75%. Die-hard fans and would-be worshippers want this to be the last of the legendary car maker’s troubles. In the words of Andrew Palmer: “In the first century we went bankrupt seven times. The second century is all about making sure that is not the case”.

Image Source: Wikipedia, 1937 Aston Martin 2 litre Speed Model (DVLA) first registered January 1937, 1939 cc
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