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- [00:00]
IBM Narrator
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- [00:33]
Podcast Announcer
Bloomberg Audio Studios Podcasts, Radio news
- [00:38]
Interviewer
Luxury sports car manufacturer Aston Martin revving up its newest vehicle to Aston market Martin Valen from his V12 series. The company touting it as the most powerful front engine. Aston Martin and its 113 year history. And it's limiting production well to just 150 cars worldwide. Joining us right now is the chief executive officer of Aston Martin, Adrian Hallmark. Adrian, great to have you here. I mean I am curious. Just talk to me about the specs real quick. When we talk about the most powerful, I mean I remember the Vanquish. I mean what was that? Something like 135 horsepower. What are we talking about here for the new Valen?
- [01:18]
Adrian Hallmark
Okay, so thanks for having us on the show. And the Vail in is more powerful than a vanquish. It's 850ps and 1,000 Newton meters of talk. And I forget what those numbers are in imperial measurements, but a lot more than any car that we've done before. So it's the fastest 12 cylinder front engine car from us, but also from any other car companies. It's the world's fastest.
- [01:38]
Interviewer
Well, so give me a sense here though. I mean why, why did you feel the need to go from whatever that 835ps up to the 150 plus PS? I mean it's notable but did you need to do that?
- [01:56]
Adrian Hallmark
It's that segment of the marketplace. So the car is not all about the engine. The engine is absolutely the heart of the vehicle. But if you take the whole concept of the car, it uses our components from aluminium space frame technology and then a full carbon fiber body, it's way lighter than any of our 12 cylinder cars that we've ever built, apart from the Valkyrie hypercar of course. And combined with this engine, a GT motorsport gearbox, a different rear axle ratio, the whole driving experience is completely different to any road car that we offer. So it really is a specialist car. The top of our range for collectors and connoisseurs. That's the whole point of the car.
- [02:36]
Interviewer
Well, let's Talk about those collectors and connoisseurs. Only 150 of this. So that by default makes it a, a collector's item, roughly $2 million each. So definitely you have to be not only a connoisseur, but also have deep pockets here. What is the goal of releasing a product like this overall for your business model with Aston Martin, as it's a relatively new CEO,
- [03:03]
Adrian Hallmark
it's absolutely essential for our future success. We have a core range of cars that we're very proud of. We go from an SUV to a mid engine hypercar, to three amazing front engine GTs. But we're one of the few brands in the world that can and have successfully in the past offer cars in the 1 to 3 million dollar range at significant volumes. And the contribution we get from those cars is a real boost to the overall performance of the business. So we now have about a thousand customers worldwide that spend more than $1 million with us every year. And for those customers, we like to create every two years or so something extraordinary, very collectible, very special and at the leading edge of design, technology and our capabilities. Capabilities. And this is one such example.
- [03:53]
Interviewer
You know, it's funny, I thought V12 were dying out here. I mean, yeah, regulation, electrification, all the sort of pushback there. And I know that this is obviously a somewhat niche product here, but I am curious as to whether this maybe is sort of a Testament of the V12 maybe outliving all of those concerns and all of those forecasts about where it seemed like we were going a few couple of years ago.
- [04:20]
Adrian Hallmark
You're right. I mean, the change in policies in many countries around the world in the last 24, 36 months has been pretty dramatic. We're now in a situation where all of our future planning indicates that we can continue to sell the 12 cylinder versions of our cars through to 2035 in most countries and in most regions. We will of course make them compliant with the next level of emission standards that appear in 27, 28 calendar years. But we have a clear roadmap for the next nine years to still be able to offer 12 cylinder engines. And the reason we do it with this car is very clearly that for the real collectors and the car enthusiasts of which this is the biggest collection in the world at Quail and Pebble beach, they just love this kind of powertrain. It may be close to the end of this era of automotive history and they want to make the most of it. We help them to do so.
- [05:16]
Interviewer
You're coming up on your two year anniversary as Head of Aston and Martin Lugand. I am curious about the sense of how much sort of the path back to profitability for this company runs through cars like the new Valon versus, say, you know, the core that we all tend to think about with regards to the DB12, etcetera and vantage.
- [05:39]
Adrian Hallmark
Yeah, I think first of all, we need to be more profitable with our core products. So you probably recognize that over the past year and a half or so, we made major strides to basically bring down the cost structure of the company so that we can be profitable and cash generative at a much lower volume than we previously planned. This isn't a retreat from growth, it's a different way of getting there. It's to create a solid foundation of a business with the core models. So the Valhalla, of which this year will probably sell 500 cars at 1.4, $1.5 million. These cars then really give us a turbocharge, if you pardon the P, the financial performance of the company. So in the second half of this year and certainly into next year, we should be in a position where we can demonstrate we've turned the corner. We can generate positive cash rather than burning cash. We can generate positive instead of negative ebit. And we're on that path with a volume per year of about 6,000 sales with a credible mix of these specials at the top end. And that's the basis for the new business model, at least for the next three years, four years, as we transition to the next generation of cars.
- [06:51]
Interviewer
Yes, we've definitely seen the revenue up, the volume up. Obviously the loss is still there. But as you sort of work your way back to cash positive, I am curious about how you view the valuation of the stock, particularly given one of your main competitors in this luxury space. Ferrari trades at a luxury multiple, certainly compared to where Aston has been trading, which is, let's just be blunt, kind of like a distressed carmaker.
- [07:19]
Adrian Hallmark
Yeah, there's no question that the performance of the shares has been pretty dramatic over the past four or five years. Actually. I think as soon as we demonstrate that we can deliver consistently from a financial point of view, the fundamentals are there. We have restructured the the cost structure. We have got the product portfolio that can generate credible contributions. And with that cost structure and those contributions, we have a clear business plan and a roadmap to get to profitability and a much stronger business model. That's been the work of most of my last two years to get us a clearer strategy, a winning strategy that's not driven by Achieving super high volumes, but instead getting a much more value based growth strategy rather than volume based. That's been the change over the past 18, 24 months.
- [08:11]
Interviewer
Talk to me though, about the people you need to do that because as you were sort of trying to get costs under control, you did cut several hundred jobs and then you're launching these ambitious products, a product that is, you know, if not bespoke, certainly very close to it. And that requires a lot of human beings. I mean, it can all be automated, it can all be done by machines. There's obviously a lot of thought, a lot of design, etc. That goes into that. So how do you maintain the craft and quality of a $2 million car, say, or even the more pedestrian, you know, three or $400,000 car, while cutting back such a huge amount of your workforce?
- [08:47]
Adrian Hallmark
Yeah, it's the same conundrum that most businesses face in our situation. But the good news is actually as you improve quality, you need less people. I'll give you a simple example and we've used these numbers regularly in the past. When I first joined a couple of years ago, about 25% of the cars that we built came off the production line and then had to be reworked post production. We've got that figured down to about 1%. Which means instead of spending extra hours at the end of production, the cars run straight through. They also then run straight through to dealers and there's virtually no activity required in the dealer network. So in many aspects of the business process, improving quality is a key to releasing workforce and people. It's not the only thing, of course, losing people in any organisation is not a strategy, it's not something that we want to do. But we had to become more efficient. We had to bring the cost structure down to meet the revenue and contribution profile that we could predict and rely upon over the next two, three, four years. And that's what we've done. Not the expense of quality, in fact, quite the opposite.
- [09:56]
Commercial Narrator
It.
- [09:56]
Adrian Hallmark
So that hasn't hampered us at all. Quite the reverse.
- [09:59]
Interviewer
Do you think you're going to need to raise more capital, go back to capital markets?
- [10:07]
Adrian Hallmark
No, I think the last financing that we did a few weeks ago has now given us more flexibility than we have before, sufficient flexibility to allow us to deliver on this new business plan and deliver both the current products and all of these, the innovations that we have in derivatives, these tactical products like the S versions, but also get us ready to deliver the next generation of cars with brand new technologies compliant engines for the next level of emission standards, etc. Etc. And of course the newest level of electronic architectures, connectivity, autonomous capability where necessary. So now we're well now set up to deliver on the strategic plan that we we breathe with the shareholders and we're all systems go.
- [10:51]
Interviewer
All right Adrian, I'll let you get back to it. Obviously a very busy behind you and I would love to hear how that car sounds one day. Adrian Hallmark, the CEO of Aston Martin, unveiling the most powerful front engine supercar out there at the Quail at the Peninsula in Carmel, California.
- [11:08]
Commercial Narrator
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- [12:09]
Podcast Announcer
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