AT 105 YEARS old, Aston Martin has just received one of the largest cash injections in its history, saving the iconic manufacturer from financial disaster following a torrid couple of years.
When the British brand was floated on the London Stock Exchange in 2018, it was to much fanfare and optimism. What followed was a cascade of woe, resulting in the company’s value dropping by as much as 80 percent.
Aston Martin was in a death spiral, and needed saving, desperately. A potential lifeline in the nearbottomless pockets of Chinese giant Geely soured, leaving the Brits high and dry with a new platform and a new factory to pay for.
Enter Lawrence Stroll, who leads a consortium of investors that has now plunged A$962 million into the brand to stave off an ignominious end. The investment is double the GDP of Tonga in 2019.
Stroll personally has splashed out A$355 million for a 16.7 percent stake in the luxury car builder, potentially rising to a 20 percent stake once the fundraising is complete. He has also become the executive chairman of the board. Andy Palmer, meanwhile, retains his position as CEO.
This all begs the question of how a Canadian fashion tycoon ended up being the saviour of Aston Martin, and what it means for the future.
Figuring out Stroll’s motivations is pretty simple. As the father of young racing driver Lance Stroll, he has become a prominent figure in the Formula 1 paddock. His stature rose significantly when the consortium he led paid A$173 million to buy the Force India Formula 1 team – including its debts, estimated to be in the region of A$55 million – when it went into administration in 2018. Stroll Jr now races for the team – which rose from the Force India ashes as Racing Point – making the purchase perhaps the most expensive act of nepotism in the world.
Many of the same people involved in the consortium that successfully bid for the ailing Force India are involved in this latest venture with Aston Martin. So, what do you do when you own both a Formula 1 team and a major stake in a luxury car manufacturer? Make one pay money to the other, naturally.
Aston Martin is currently the title sponsor for the Red Bull team – with the commercial arrangement estimated to be worth A$29.6 million. However, that deal will cease at the end of 2020, with a new five-year deal of similar value being started with Racing Point at the beginning of 2021, when that squad becomes the factory Aston Martin team. As part of a decade-long deal, Aston Martin will also receive equity in the Silverstonebased racing team.
Stroll personally has splashed out A$355m for a 16.7 percent stake in the luxury car builder
This new injection of cash also means Aston Martin’s electric push has been put on ice
Red Bull Racing is pleased with the situation, with advisor Helmut Marko proclaiming the deal as nothing but good news, helping simplify the team’s relationship with engine supplier Honda. Where things get muddy is surrounding Red Bull Advanced Technologies’ continued partnership with Aston Martin on the Valkyrie hypercar. Both parties have stated that the project is still on track, and deliveries of the 11,000rpm V12-powered weapon could occur as early as the end of this year.
This new injection of cash also means Aston Martin’s electric push has been put on ice. The plan, hatched when things were decidedly rosier financially for the company, included launching the all-electric Lagonda sub-brand in 2022 – this is now slated for 2025 – while the Rapid-E EV four-door program has been “paused pending a review”.
“The company is focusing on providing greater financial and operational stability and flexibility through controlling mediumterm investment, improving cash generation and rephasing product cadence,” Aston Martin said in a statement. “Investment in electric vehicles will be delayed beyond 2025; however, the mid-engined portfolio remains a key focus for the Company, starting with Valhalla in 2022.”
Valhalla is an all-new model, which would sit underneath the Valkyrie halo and be powered by a V6 hybrid system developed completely in-house by Aston Martin. CEO Andy Palmer says this project’s future was assured by Stroll’s investment, with a reveal expected in 2022.
“The company is better funded than it has ever been in the past, with a good product cadence in plan as per the second century plan and with a commitment to build our own V6 hybrid in the UK,” Palmer told Autocar. He said that if this deal hadn’t come to fruition, Aston Martin “would have had to take on more debt at nosebleed levels.
“US$100 million at 15 percent interest is pretty alarming and inevitably would have created problems down the road.”
Along with Valkyrie and Valhalla, a new V12 Speedster is expected to be revealed later this year for a 2021 launch. It should be noted, much of this relies on the freshly launched DBX SUV funnelling enough cash into the company’s coffers, but it is arriving late to the super-SUV party, and faces stiff competition.
Many of Aston Martin’s current issues stem from the revamped Vantage, which became a sales flop in Europe last year. Avoiding a repeat with DBX is crucial.
F1 2020: play on
Formula 1 is in a technical holding pattern for 2020, with new regulations not due until 2021. Mercedes- AMG is gunning for a record-breaking seventh-straight constructors’ championship, while star driver Lewis Hamilton is hoping to equal Michael Schumacher’s tally. Ferrari retains the pairing of Charles Leclerc and Sebastian Vettel, but have hopefully hired some new strategists.
Aussie Daniel Ricciardo will have a new teammate at Renault in the fast and feisty Esteban Ocon. The only grid rookie is Canadian youngster Nicholas Latifi at Williams.
WHO IS LAWRENCE STROLL?
TO MAKE A small fortune, they say you should start with a very large one, and then go racing. Well, to describe Lawrence Stroll’s fortune as large seems like a gross understatement. At the start of 2019, Forbes estimated him to be worth in the region of $4 billion.
The Canadian businessman made his money in the fashion industry, bringing brands such as Pierre Cardin and Ralph Lauren to the Canadian market. He then paired with Hong Kong investor Silas Chou to turn clothing designers like Tommy Hilfiger and Michael Kors into the global megabrands they are today. Asprey & Garrard, jewellers to the British royal family, were next on the acquisitions list.
Initially, Stroll spent his money as creatively as any rich guy – by amassing one of the world’s finest collections of modern classic Ferrari sports cars, including a 250 GTO, an F40 GTE and a 288 GTO Evoluzione. Then his son began motor racing, and he purchased the Circuit Mont-Tremblant facility, south of Quebec, before hitting the big time with his ownership of an F1 team, and now Aston Martin.