This Advice Should Be Taken Seriously

Aston Martin CEO fears for mass-market auto brands

TURIN -- The increasing commoditization of cars will force mass-market manufacturers to change their business models or face extinction, Aston Martin CEO Andy Palmer told the Automotive News Europe Congress.

“I do believe we are at the beginning of end of the traditional automotive industry,” he said.

“For a long time, the business model has been stack 'em high and sell 'em cheap,” he said. “But profitless volume is no way to build a sustainable company. It makes no sense to spend 1 billion [euros] on a new car and discount it almost at launch.”

“We risk moving toward commoditization of a pod,” he said, drawing a comparison with the aerospace industry as a possible scenario for car manufacturers. “The world does not need dozens of nameplates making the same objects. There are more than 75 automotive nameplates in Europe, but just four plane makers,” he said.

Palmer said there was need for “a different business model” that capitalized on customers' desire to own beautiful, exciting cars built by a company with a strong brand.

“People are still looking for emotion in their motion and that's where the luxury manufacturers sit, and where Aston Martin is flourishing,” he said.

Aston Martin has proved that car companies don't need to be part of a wider giant group to survive and generate good profit margins, Palmer argued. “Having worked in mass market and volume, I know now that small is beautiful. You have the agility to respond to market and customer needs, and as long as you have friends to share technology there is the ability to improve margins,” he said.

(AutoNews.com)