Few companies are as steeped in tradition and history as Aston Martin. Following the post-World War II buyout of Aston by Sir David Brown (of DB designation), the company opened a factory, Newport Pagnell, in 1954.

The facility has seen the almost all modern Astons pass through it’s door, but as of July 19, all Astons will be built at the new facility opened in 2003 in Gaydon, Warwickshire, England.

With the recent consortium buyout of Aston Martin, coupled with the upcoming sale of Land Rover/Jaguar, the factory’s future is uncertain. From a strategic perspective, Aston will be well served by their current factory, which produces DB9s and V8 Vantages. In the future it will produce the DBS, the successor to the now retiring Vanquish line.

Jaguar and Land Rover will likely also have to move their product elsewhere, but Jaguar could probably stand to cut some production as demand has waned in recent years, in part due to a very aged product line. Both the S-type and X-type are due for major overhauls, though the lack of success in the X-type may prompt its demise from the company altogether.

While reading an article from LeftLane News, we got quite a laugh after learning that many of America’s youth (the young-ish looking people with tattoos and iPods stuck to their ears) don’t recognize the Land Rover brand as British, nor do they recogize a competing brand, Lexus, as Japanese!

The article follows:

“58.4 percent of U.S. college students surveyed by Anderson Analytics believe Land Rover is an American brand. Only 18.5 percent of respondents correctly identified the marque as British.

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British motor companies have had their good years and their bad years. Most will agree that the competitive automotive industry of the 21st century has negatively impacted Ford’s Premier Automotive Group. PAG includes Volvo, Jaguar, and Land Rover, having recently sold Aston Martin.

Milestones are therefore something to be treasured in this pressure-filled environment and today’s milestone is no different. Land Rover announced that they had produced four million Land Rovers. Number 4,000,000 was donated to the Born Free Foundation – represented publicly in part by British Actress Joanna Lumley. Ironically, in this age of green cars, this 4 millionth gas-guzzling SUV is designated for a conservation society of all places. In fact, it will be used to save animals washed ashore during mating season along the British coastlines. It makes us wonder if these are the same people who criticized Top Gear’s Jeremy Clarkson for driving a Land Rover up a tall Scottish mountain – an impressive feat for any vehicle.

No matter, the lesson here is that Land Rovers are around and built to last. Despite changes in ownership over the years, Land Rovers are consistent and of reputable quality. The most surprising and impressive statistic is that over 80% of Land Rover Defenders ever produced, are STILL on the road. 25% of Land Rovers produced have been produced in the last 6 years. That’s a significant boost in production for a company that’s been around since 1948, yet another impressive feat for a British carmaker.

Source: Ford Motor Company.
Photo courtesy Ford Motor Company

On Monday, Ford announced that they sold their profitable brand Aston Martin to a consortium of buyers, including the owner of racing competitor Prodrive of the UK. This means that Aston now goes back to British ownership – at least partly. In addition, a well-known Aston Martin collector is investing in the buyout as well as two well-financed investment companies Adeem Investment Co. and Investment Dar, both of Kuwait. Ford will retain US$ 77 million (about 8.5% of the company). The whole deal is worth $925 in much needed cash for Ford Motor Company. Ford will still retain three brands in its Premier Auto Group: Volvo, Land Rover, and Jaguar. Ford has previously stated that Jaguar is losing money, and Land Rover (despite widespread quality problems) is said to be profitable. Both are known “British” companies.

As for Aston, we can expect to see some leverage on the buy-side of this deal. It is unclear if the two Kuwaiti investment companies are planning long-term investments, but a lot of leverage could mean a quick turn-around. Unlikely would be for David Richards, the chairman and founder of Prodrive, and John Sinders an Aston collector and racing backer, to resell the company in the short-term. Both seem to view this as a long-term investment.

Strategically, Ulrich Bez will remain the CEO of Aston Martin, and will continue to drive the product lineup in the future with the Rapide, a four-door Aston Martin, which will compete against the Maserati Quattroporte and the Porsche Panamera (due out in 2009). We should expect that plans for the Rapide will be accelerated to generate more revenue and better return on investment over the next few years.

On a final note, for those surprised by the Prodrive investment, we should note that Prodrive has considered investment in a production vehicle before. The well-known racing company commissioned a technologically advanced vehicle, the Prodrive P2. Prodrive couldn’t be bothered to put the sophisticated car into production, but we could view the purchase of Aston Martin as a foray into production sports cars. No doubt we could see Prodrive technology in future Aston Martins, thus giving Aston a specific product advantage.

Source:http://media.ford.com/newsroom/release_display.cfm?release=25635

The Financial Times first reported in early January that Ford was considering selling the Jaguar unit of the Ford Premier Auto Group, the Ford Company’s luxury division. Jaguar has been in the Ford stable since the 1980s, the same decade that Ford began to assemble the PAG.

Alan Mulally told the FT, “All good businesses continually review their portfolio, and we will continue to evaluate ours going forward.” Good plan Alan! With that statement Ford is on the right track. But then again this statement comes weeks after Ford announced that they were looking for buyers of the Aston Martin name, PAG’s ultra luxury supercar division. Oddly, Ford’ Don LeClair told the FT just days later that Jaguar was NOT for sale. Clearly, Ford needs to get the corporate message packaged cohesively.

And that leads use to wonder if Ford is really taking its own advice. In evaluating the reasons for the sale, it is of no doubt that Ford is looking to sell the now profitable Aston Martin because it needs cash flow. A sale would generate short-term cash flow. This much is true. Still, Ford needs to consider the long-term ramifications of this decision. Aston gives Ford some degree of legitimacy in international racing, and no doubt Aston Martin in far more profitable than it has been in the past.

Ford has done an excellent job of turning around Aston Martin, which made only 43 cars in 1993. 2006 resulted in over 5000 Aston Martin sales. This is much contrasted with Ford’s 1989 purchase of Jaguar. Jaguar has struggled since its inception, and has yet to make any money for the PAG. It does however represent a Ford’s prestige motorcar presence in the auto industry. It is the only luxury auto unit that Ford runs outside of the USA, and the only one which is known and respected worldwide.

Regardless of what happens to Aston Martin and Jaguar, you can bet that Ford’s PAG will attempt to keep Volvo and Land Rover, both of which are profitable, in its portfolio. As we have said before, a sale of Aston Martin is mistake, and as likely is a sale of Jaguar.