Andy Palmer was never going to be the chief executive of Nissan in Japan. He once sat in the court of Carlos Ghosn, the powerful boss of the Renault-Nissan alliance, and gained a reputation as something of an auto-industry polymath, able to craft both widgets and marketing strategies.
He ran the Infiniti luxury marque and, for the Nissan brand, developed mass-market vehicles that carved new niches in a crowded market. But Palmer — like others in a growing band of middle-aged auto executives — hit what might be termed the “Ghosn ceiling”, destined never to replace the indefatigable French-Lebanese-Brazilian.
“I wanted to be the CEO of a car company — have wanted to be since I was 20-years-old,” he says. “I don’t think I would ever have succeeded Carlos Ghosn.”
So instead, Palmer found a carmaker five miles from where he went to school in the English Midlands — but not just any carmaker. The 51-year-old is now in the driving seat at Aston Martin, one of the most highly prized brands in the auto industry but which finds itself in a perilous financial position.
Sales collapsed from 7,300 in 2007 to an estimated 4,000 last year. It is perennially lossmaking and rating agencies have warned about its debt load.
“It is a great, phenomenal brand with a huge amount of opportunity, but on the other hand, it’s got a huge amount of intrinsic problems as it stands today,” says Palmer, sitting in his corner office at Aston’s Warwickshire headquarters. “The company has been feast and famine throughout its history.”
He was billed to take the stand at the Geneva motor show last Tuesday to unveil the future of a 102-year-old manufacturer. That future calls for a new plan fit for the car industry in the 21st century.
Regulators are clamping down on emissions like never before. Smartphone-wielding customers are calling for more connectivity and the latest in autonomous technology — though many young people are agnostic about driving.
Meanwhile, new rivals are moving into the rear-view mirror: Tesla with its premium electric vehicles; Google with its self-driving car; and even Apple, with something secret but surely significant.
Palmer’s new plan — approved by the private-equity owners, Investment Dar of Kuwait and Investindustrial of Italy — sees Aston building the “best, purest” sports cars, but as so-called halo products to draw customers to two new lines. These will be luxury chauffeur-style saloons — partly under the revived Lagonda brand — and a new product, perhaps a “softroader” sport utility vehicle, aimed at wealthy mothers in emerging markets and younger buyers.
“Sports cars are really, really interesting, a key part of what the company is,” says Palmer, a low-key straight shooter despite his flamboyant pink shirt and lilac tie. “However, you need to stretch that when you talk about Chinese customers, or Far Eastern customers, or, most importantly, female customers or Gen-Y, Gen-Z customers, who don’t necessarily see the sports car the same way that my generation does.”
Those big thoughts stand at odds with the realities of operating a small, independent car company. Aston, part of Ford’s Premier Automotive Group until 2007, is today a relative minnow. It has been battling just to renew its product line-up and maintain customer interest in a world where developing new technologies costs billions and rivals are backed by rich benefactors.
Bentley, for instance, which was expected to unveil a two-seater “Aston killer” in Geneva, is owned by Volkswagen. The German carmaker last year spent $13.5bn on research and development, more than any other company in the world — including Samsung, Google and Microsoft.
Rolls-Royce, Maserati, Lamborghini and Ferrari each have a rich industry benefactor. Aston, meanwhile, made a pre-tax loss of £25m in 2013 and was carrying adjusted debt of £424m at the end of September, according to Standard & Poor’s. The rating agency last month lowered its long-term credit rating on the company to B minus, citing the risk that the company “will not have sufficient liquidity” during the next year to fully fund its spending.
Palmer admits the magnitude of the challenge. But he says it is wrong to see Aston as a carmaker fighting a lone battle. “I do think of it as a standalone company, but with a benevolent sugar daddy,” he says.
Aston’s sugar daddy is Daimler, a 5 per cent shareholder. Under a deal struck in July 2013, the two will share the German carmaker’s AMG engines and its technical expertise in “electronic architecture” — offering Aston anything from heating controls to entertainment systems.
“We’ve tried to find a place which barely exists today where you can have the agility and the autonomy of an independent company but access to the technology that you get from having huge amounts of turnover and huge amounts of R&D.”
The collaboration has sparked speculation that Daimler might acquire the British marque, though chief executive Dieter Zetsche has publicly ruled out any imminent move.
“If we can make this work, and I think we can, we get the best of both worlds,” says Palmer. “We keep our expertise in sports car technology . . . but we can import the technologies that Gen Y and Gen Z find important.”
The Daimler deal was a big factor in Palmer’s decision to come to Aston, which had been without a chief executive for almost a year when he started the job in October.
It was a homecoming, a return to the area in which he became a 16-year-old apprentice at Automotive Products in the West Midlands. He went on to work for Austin Rover before beginning a 23-year stint at Nissan.
He rose to the role of chief planning officer at the Japanese carmaker, overseeing category-busting products such as the Qashqai compact SUV, the Juke — a beefed-up hatchback that appeals to younger drivers — and the Leaf, now the best-selling pure electric vehicle of all-time.
But like Carlos Tavares — now chief executive of PSA Peugeot Citroën — and Johan de Nysschen of Cadillac, Palmer found the path to the top blocked at Nissan. Ghosn, who has run Nissan for a decade and a half, wants his successor to be Japanese.
Enter Aston. Palmer’s return to the UK comes with the country’s car industry in rude health. A decade after the collapse of MG Rover, nationwide production has risen from less than 1m vehicles in 2009 to more than 1.5m last year, powered by the success of Nissan in Sunderland and Indian-owned Jaguar Land Rover. Analysts say the all-time record of 1.9m vehicles, set in 1972 before industrial rot set in, could be beaten in two years’ time.
Palmer is reminded of that success each morning as he races into Aston’s Gaydon headquarters. A hundred or more traffic cones line the road, placed there to stop the growing hordes of Jaguar Land Rover employees from its vehicle development base next door parking on Aston property.
“The management of all of these car companies ultimately is not British,” he says, partly referring to Aston’s noisy neighbour. “Is it a problem? Not necessarily from a jobs creation point of view because as long as we’re extremely efficient at manufacturing, it’s all good news. But fundamentally we don’t control the industry in the way that we used to, and that’s one of the drivers of me coming here: to have at least one successful great British company in the car industry.”
Second opinion: The racing team boss
Christian Horner, team principal of Infiniti Red Bull Racing, worked closely with Andy Palmer to cement the Nissan luxury marque’s sponsorship. In a motor industry crammed with oversized egos, he says Palmer is an exception.
“The good thing about Andy is . . . he’s the type of guy you could go down to the village pub with,” says Horner.
He also hails Palmer’s “enthusiasm” behind the wheel of a racing car. “Whether he’s got more enthusiasm than talent, I’m not sure.
Culled from FT
