Product Passion Pays off for Aston Martin
A fascinating interview with Aston Martin CEO Ulrich Bez in the Sunday Times (article only readable by subscribers) shed some light on how the supercar maker has managed to grow during the recession. The company's performance in impressive, with 2010 profits of £80million up 30% on revenues up from £309million to £433million.
The first thing that stuck me was Bez's passion for the product. "I wanted to position the car in a luxurious category, defined by craftsmanship and attention to detail," he says. "If Mercedes were to do the same thing as us, they will miss one little detail."
The 5,000 cars the company makes a year of assembled by hand. Each engine has the name of the craftsman who made the car engraved in it.
But the obsession with product quality is best illustrated by Aston Martin's leather sourcing. Get this (sorry animal lovers, look away now). The leather comes from Scandanavian cows reared in fields protected by electric fences so they don't cut their hides on barbed wire. Why Scandanavia? The cold climate means the cows are less likely to be bit by insects!
2. Stretching the brand – up and down the price curve
Bez has expanded the brand's sales from 700 cars a year when he joined in 2000 to 5,000 today. At the same time he been able to premiumise the brand even further, with the average price of an Aston Martin rising from £70,000 in 2007 to about £105,000 today. He has done this by launching:
– A smaller and cheaper "entry point" car, the Vantage, a snip at only £89,000 vs. the core DB9 at £130,000
– A 4-door car for Aston Martin owners with a family, called the Rapide: £150,000
– A super, super-car with even more performance, the DBS, which retails at £175,000
Each of the cars respects the brand essence of "power, beauty and soul", but meets a different set of needs.
Bez is a also a smart businessman who understand the "ecosystem" of suppliers, partners and dealers he operates in, not just an amazing product guy. For example, he secured £45million from the company's owners (Kuwaiti finance houses Investment Dar and Adeem Investments)to help provide credit insurance for the brand's dealers. This credit insurance, to protect dealers from customers defaulting on credit purchases, was drying up in the recession.
But even Bez is not perfect. I posted on here on Bez's bonkers bit of brand stretching: the Cygnet city car, based on a Toyota IQ bu selling for £40,000. You have to work really hard to launch an extension so bad it puts people off your core product, but this one could do just that. It comes out in May this year.
But overall, Aston Martin is a great example of driving growth through creating a fantastic product and selectively stretching the brand to both drive penetration and premiumisation.