By Joseph B. White
British supercar maker Aston Martin is getting another shot of positive buzz from the latest James Bond thriller, but in real life the company’s in a very tight spot indeed.
Moody’s Investors Service today said it has put the ratings for Aston Martin Holdings Ltd. on review in light of a “significant deterioration” in the company’s liquidity and the uncertainty over when, and how, Aston’s search for fresh capital will yield results.
The WSJ’s Kiel Porter reported Wednesday that Aston, in a call with debt holders, confirmed that its owner, Kuwait’s The Investment Dar, is Aston’s new Vanquish model is a beauty.
It’s also late to the market. Originally expected in late 2012, the company says now it will go on sale in the U.S. in early 2013 at a price of $279,995 . Whichever bidder wins – assuming one does – they will face challenges that would try even the resourceful Mr. Bond.
The delays to the Vanquish launch have come amid a collapse in the brand’s sales overall as the European auto market fell off a cliff. Aston Martin’s sales volumes are down 19.5% for the first nine months of the year compared to a year ago, Moody’s reports.
What’s more, more expensive V12 models have slid to 56% of total sales, while less costly V8 models have risen to nearly 37% of sales from just under 30% in the same period a year ago. This shift in what industry executives call the brand’s “mix” reflects broader trends in the luxury car business toward cars with smaller, more efficient engines – or no engine at all.
Aston Martins are gorgeous, supremely refined examples of the auto industry’s past – when power and prestige were achieved with large eight and twelve cylinder engines that sucked in huge quantities air and gasoline to generate power. The sensual thrill of a big engine roaring at wide open throttle is one for which affluent consumers have been willing to pay handsomely over the years.
Now, regulation and changes in cultural attitudes are compelling prestige car makers to try new and very expensive alternatives.
BMW AG, for instance, is using this week’s Los Angeles Auto Show to promote two new electric car models – the i8 and the i3 – to ultra-rich Californians who think burning petroleum to ride around in a metal box is déclassé.
BMW is fast-following Tesla Motors which is ramping up production of its all-electric Model S sedans after a close call of its own with a cash squeeze in October. Electric cars for middle class customers may be slow sellers so far. But Tesla has demonstrated there is robust interest in electric ultra-luxury cars among the techno-riche elites.
Read more in Corporate Intelligence.