The chairman of Aston Martin tells Arabian Business why the future is global for Britain's most iconic car.
As an ex-rally driver and trained pilot, David Richards has always lived life in the fast lane. The chairman of Aston Martin tells Arabian Business why the future is global for Britain's most iconic car.
Mixing business with pleasure has proved a lucrative combination for David Richards.
From ex-rally driver to head of one of the car industry's most iconic brands, the Aston Martin chairman has turned a passion for cars into a career profitable enough to see him feted the ‘Richard Branson of motorsports'.
In America some people don't actually know what an Aston Martin car is.
His love affair with the sport started from a young age when he competed as a co-driver in World rally championships during the 1980s.
He later founded his own rally group before taking charge of Formula One team BAR Honda, and launching the motorsports company Prodrive. But it's his latest venture that keeps him most busy.
In June 2007, Richards and a consortium involving Kuwaiti financier Investment Dar acquired Aston Martin from Ford for $924m. With several contacts in the car industry, Richards was alerted to Ford's plans to offload Aston Martin in 2006.
He spoke with friends and colleagues, some of whom were keen to form a takeover consortium, and eventually persuaded Investment Dar to help finance the deal. In total, the takeover took 18 months to complete.
Getting Investment Dar on board was a coup, according to Richards. "It's proven to be very good partnership," he says. "As opposed to other potential investors that had more short-terms views on how to run the company, Investment Dar shared our ideas about managing Aston Martin."
Since the takeover, the middle-aged businessman and his management team, led by CEO Dr Ulrich Bez, have earmarked several objectives to further develop the business.
Raising Aston Martin's international profile by establishing dealerships in untapped markets, such as the Far East and South America, is one. Astoundingly, the luxury car manufacturer is still largely unknown in some countries.
"In America some people don't actually know what an Aston Martin car is," Richards admits. "We have a big task ahead of us when you consider how few dealerships we have around the world.
"In some areas we've had modest representation, but there are opportunities in China and Russia and somewhere even as close as Greece," he adds.
"The first job is to fill in the network and make sure we have a good global reach, which in itself will increase awareness and volume sales quite significantly."
Aside from targeting additional territories, management has also unveiled new and revamped car models, such as the One-77 and Lagonda Marque. In addition, the company has opened a new studio, located next to Aston Martin's headquarters in Warwickshire, England, for engineering and car design specialists.
"We've announced a number of new models, as well as the opening of a new design centre and you're going to see significant expansion in the next five years," Richards says.Listening to Richards talk about Aston Martin's relatively low global profile is surprising. James Bond fans will instantly recognise the brand, immortalised in the 22 movies dedicated to the British spy's world-saving escapades.
"Can you imagine James Bond not driving an Aston Martin?" Richards jokingly asks. A new DBS is waiting for him in the UK, because, like Bond, he couldn't drive anything else."
The company's chairman likens the brand to Britain's late Queen Mother, describing both as iconic symbols steeped in heritage. But while Aston Martin stirs passion and pride among the British, the cars haven't ignited the same strength of feeling abroad.
I care about Aston Martin and want to see in the right hands so it can develop in a way I feel is appropriate.
"It's not that surprising really," Richards admits. "When you look at the history of the company it's been owned by a range of extraordinary entrepreneurial characters, but with modest means when it comes to developing a car company.
"It's only since Ford took over 10 years ago that we've seen real investment in new models and global expansion."
Such development couldn't continue, however, with Ford experiencing financial difficulties in recent years. The US car manufacturer's woes raised concerns about Aston Martin's future, prompting Richards to take the reins.
"I care about Aston Martin and want to see it in the right hands so it can develop in a way I feel is appropriate for the long-term," Richards says.
Richards' plan to maintain Aston Martin's heritage while rolling out the brand internationally explains his one-day appearance in the Middle East. He and his PR team are showcasing Aston Martin's Le Mans racing car and Vantage GT4 at various race tracks, including Dubai's Autodrome.
The car manufacturer's chairman believes the roadshow is also a good opportunity to highlight the company's sleek history.
"We're here to promote our motor racing heritage and let people know that next year will be 50 years since Aston Martin won Le Mans. It's about reminding everyone of this incredible heritage and introducing more modern products."
The fleeting visit gives Richards and his team little time to promote Aston Martin. With dealerships in the UAE, Kuwait, Saudi Arabia, Qatar and Bahrain selling some 300 cars across the region, the firm already has a presence here, but Richards is keen to see it increase.
It is, in part, a defensive strategy for the company, which is facing turbulent times in its home market. Earlier this month, Aston Martin announced plans to cut up to 600 jobs from its British workforce, while figures from the Society of Motor Manufacturers and Traders show UK sales - which account for a third of the company's trade - fell 25 percent in October when compared to the same period in 2007.
Investment Dar dealt the luxury car maker another blow three weeks ago, when its executive vice president, Amr Abou El-Seoud, revealed plans to sell up to 20 percent of its stake in the company.El-Seoud told newswire Reuters there was a "60 to 70 percent" chance the firm would reach a value-added deal with an undisclosed partner; part of a bid to raise $1bn to refinance its debt.
The news has further troubled the waters around Aston Martin, which - like all car brands - is feeling the pinch of the credit squeeze.
Unsurprisingly, the firm is now looking abroad to help shore up business. Marketing the brand and possibly introducing new dealerships across the region are obvious aims for increasing sales and enhancing the company's profile. Whether these plans provide profitable returns, however, is another matter.
Everyone has to have an exit plan for everything... it's the same for Investment Dar, which needs to see a return for its investors.
Richards, however, remains bullish; claiming demand for Aston Martin models - particularly the DBS, which has a nine-month waiting list - remains comparatively high when pitched against global car figures.
The firm reported sales of just over 7,000 in 2007 (the Aston Martin is an exclusive car in every sense of the word) but this year's numbers are almost certain to be lower.
Richards is reluctant to elaborate, insisting Aston Martin doesn't disclose its figures. But he does admit the board isn't expecting a big profit increase.
"There are some economies that are still strong where our sales have significantly increased compared with previous years, such as the Middle East," Richards says before stopping abruptly.
He's more forthcoming about Aston Martin's IPO plans, a topic that attracted significant media attention earlier this year when market talk suggested the firm was preparing to launch on the London Stock Exchange. Richards admits going public is on the agenda, but not for at least three to five years.
"It's premature at the moment to say we'll be launching, but clearly at some point in time there will be aspects of the business that we will be involved in an IPO," Richards states.
"For the time being, we're concentrating on building the business and making it more stable, but we're still three to five years away from that."
The move could be brought forward in light of Investment Dar's refinancing plan, as a stock market float would allow the financier to exit the business gracefully.
"[An IPO] is certainly a long-time option as an exit plan," Richards admits.
"Everyone has to have an exit plan for everything; it doesn't have to be a total exit but there needs to be a plan in process and these things are never kept on a shelf forever. It's the same for Investment Dar, which needs to see a return for its investors."
It's unclear whether Richards himself is keen to follow suit and leave the business once it goes public. He offers a vague response when asked about his long-term plans with Aston Martin, although it's likely he'll still be involved following the company's stock market launch.
But Richards admits he hasn't ruled out retirement. "One day I'll have to, won't I?" he asks unconvincingly.
"I'm not getting any younger that's for sure and I must say there are occasions where I think ‘wouldn't it be nice to have a few spare days and do things with the family' but not just for the time being - I still have a few years left in me yet."