Editor’s letter: Why does Aston Martin think it’s 'under-valued'?
"I’m not going anywhere soon,” Stroll said at the Financial Times’ Future of the Car Summit
Lawrence Stroll has yet to turn around the British marque's fortunes since arriving in 2020
Lawrence Stroll’s presence with Aston Martin is a hugely visible one for 23 weekends a year, wearing the British Racing Green colours of the Formula 1 team he owns. Yet as the owner of the Aston Martin road car brand, Stroll is somewhat less visible, his appearances typically limited to investor calls.
But this week we heard Stroll’s reflections on his three years at the helm of the road car business at the Financial Times’ Future of the Car Summit, his 20-minute appearance whetting the appetite to hear more from this most engaging of speakers and storytellers.
While Stroll remains a relative newcomer to the automotive industry, his experience working in the world of luxury goods is decades long and where he earned his billions. His desired positioning of Aston Martin as a luxury goods maker echoes that of how Rolls-Royce CEO Torsten Müller-Ötvös has successfully transformed his company.
“I inherited a company off the back of a colourful, troubled IPO with what could really be described as a wholesale push model rather than a retail pull one,” he said, talking of his arrival at the company in 2020. “Aston Martin didn’t operate in a ‘luxury’ way, despite what it said.”
Stroll speaks of Aston having an oversupply of cars when he arrived, supply outstripping demand and cars being sold wholesale to dealers at discounted prices. Covid had already stopped the production line at Gaydon, but Stroll didn’t restart it until he had sorted out the oversupply issue and built the demand for the cars again.
“We needed to match demand with supply. We stopped production at Gaydon for close to a year; you can imagine the cost of that with no margin coming in. But we needed to create consumer demand and I firmly believe we should manufacture a few percent less than demand requires.”
Since then, Aston has “stopped making cars with no orders”, cars now only built to customer order or for the likes of demonstrators. Stroll says the result has been the average sale price of Aston Martins increasing by 50%, what he calls “astonishing numbers in three years”. From oversupply, the brand has again sold out of production this year which “shows the true demand for this brand when treated appropriately”.
This success has been off the DBX and an ageing front-engined sports car model range Stroll inherited from the previous management and has set out to improve, the first model of which will be revealed next month. Mid-engined models are also in the works along with more SUV variants and an EV in 2025, all part of plans to grow the brand’s sales from 6000 cars a year to 9000 “over the next few years”.
There are also new flagship dealers planned in key locations around the world, starting in New York next month with Berkley Square in London set to follow. These will “show the world how you will be treated as an Aston Martin customer and be nothing like other OEMs’ [dealers]... they will blow your mind”.
Yet despite all of this, the Aston share price refuses to budge upwards, having dropped sharply since the initial IPO in October 2018 at £19 per share down to around £2 today, a level it dropped to with Covid and has never really recovered from.
“I think shares are significantly undervalued for reasons I don’t understand,” said Stroll, “probably due to hangover issues from before me.”
Stroll is anything but perturbed, and senses a chance to simply be paid back (and then some) for the £1.5 billion he has raised and invested in Aston so far. “I have a large shareholding that I feel extremely comfortable with, and I’m here to reap the rewards of the past three years. I’m not going anywhere soon.”
And anyway, turning round the road car business isn’t even the toughest assignment for a Stroll-owned company called Aston Martin. “That’s F1,” he says. “It’s the hardest business I’ve ever dealt with in my life...”