Costly Cars, Big Losses

Perplexing this: the market for very costly cars has been booming and Aston Martin have only racked up losses.

2015 Aston Martin DBX: source
2015 Aston Martin DBX: source

Automotive News report that ” a pre-tax loss of £127.9 million ($172.03 million) in 2015, the fifth consecutive year the company has failed to make a profit, as the number of cars it sold fell and as it invests in expansion”. It seems everyone likes Aston Martin but not enough people want to buy them. Hasn’t it always been like this? The AN article is quite short so I’ll dump it entirely here. This is a free DTW service:

” In 2014, the company reported a pre-tax loss of 71.8 million pounds. The automaker said today that it had sold 3,615 cars last year, down from 3,661 in 2014. CEO Andy Palmer told Reuters in October that he expected volumes would be “slightly above” 2014 levels. The company said today it expects sales this year to broadly match those of 2015, but sees a rise of about 20 percent in core earnings as it begins sales of its new DB11. The company is also investing heavily to build a new DBX crossover model at a new facility in Wales as part of plans to widen its appeal beyond traditional sports cars”.

I doubt this development will appeal to certain of our contributors here. Aston Martin will probably go the whole hog and do an SUV. Gavin Green in Car argued in June that Jaguar will be making SUV’s so as to fund their sports cars and saloons. Porsche probably keep afloat thanks to their SUV and CUV. This does suggest that perhaps they ought to pare back the loss-makers entirely. This isn’t what aficionados want but most customers aren’t aficionados. A better idea might be to concentrate on one core model that keeps a link to the brand’s core values and if that market expands, then add another car. The point of car company is to make money. As it happened nice sports cars once served that aim and these days that isn’t the case so much. Nissan abandoned most of the traditional categories and did rather well out of it. It could be that Aston Martin might not survive long enough to get a proper SUV to the market. How much patience can its shareholders have? Who will buy it when that patience evaporates entirely?

Author: richard herriott

I like anchovies. I dislike post-war town planning.

2 thoughts on “Costly Cars, Big Losses”

  1. The point I think is that the sportcars establish the image and the SUV make the money. If Porsche had canned the 911 and Boxster, few people would buy their SUVs instead of cheaper ones from VW. People like the idea of sportscars but, more and more today, realise that they seldom go anywhere where they can use them as intended. Unfortunately Aston Martin seem to have convinced themselves that if evolutionary design works for Porsche, it can work for them, but it doesn’t seem to.

    1. Yes, just like Armani makes a tinfoil and satin nightgown for €120,000 and sells millions of Armani-branded t-shirts for €75. I think they should insist on the individual models making money. Nobody believes an Armani suit sold in Prestwick Airport is the same thing as the haut-couture item that lends the cachet. Really rich people have clothes with labels not brands. Kiton, for example.

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