Howard Mustoe
Tue, 27 June 2023
Aston Martin chairman Lawrence Stroll is working with Saudi partners towards electrifying more of the company's models - Mark Thompson/Getty Images
Luxury car maker Aston Martin is aiming to quadruple its profits within the next five years, as it pushes ahead with plans to sell more electric vehicles and limited edition models.
The company has set a target of doubling its sales to £2.5bn by its 2028 financial year and increasing adjusted profits to £800m in the same timeframe.
Under executive chairman Lawrence Stroll’s stewardship, the business has limited the number of cars it sells to dealers to keep demand and therefore prices high. It said this trend would help to push margins on its cars to 40pc.
As well as its popular SUVs, the company is planning to sell more limited edition cars, including one which is launching for its 110th anniversary this year. These cars typically cost more than £1m.
The one-off Victor model, a manual V12 which was launched in 2021, was said to have been sold for between £4m and £5m.
Its Valhalla hybrid model will take the company into a new market with its mid-engine arrangement and is expected to sell for about £700,000, plus tax, with deliveries starting next year.
The business revealed on Monday that it was aiming to adopt the comfort of a Rolls-Royce and the performance of a McLaren or Ferrari for its next round of models, as part of the plan to squeeze higher prices from its customers.
Mr Stroll said: “I am extremely proud of the major industrial turnaround we have completed in the last three years, which has completely rebuilt this iconic company.”
Chief financial officer Doug Lafferty said the focus for Aston would be “on making sure that the balance sheet is robust”. The company has said it is aiming to become “sustainably” free cash positive.
Mr Laffety said: “I think the actions taken over the last 12 months mean that we’ve made good progress in that.”
The sales target comes as Aston plots a path towards electrification of its fleet. It is looking to launch its first core all-electric car by 2025. Earlier this week, it unveiled a £182m deal with US luxury electric car company Lucid.
Under the agreement, Aston will buy battery systems from Lucid, a company which is backed by Saudi Arabia. Lucid will also be taking a 3.7pc stake in Aston.
Mr Lafferty said the deal meant Aston would be able to secure a supply of what it needs to end its reliance on petrol for a fraction of the price.
He said rivals had “spent billions”. “We’re spending a couple of hundred million dollars to access that”, likening the deal to a “library card” to give the business as many parts as required.
The tie-up comes in the wake of the collapse of Britishvolt, an independent British gigafactory start-up, with which Aston had an early stage agreement. No firm orders were ultimately agreed with Britishvolt.
Aston has already received backing from the Saudis, with the Saudi Arabia’s Public Investment Fund (PIF) last year taking part in its £575m rights issue to help the car maker pay off its debts.
PIF is now Aston’s second-largest investor, after chairman Mr Stroll’s consortium.
Mr Stroll’s Yewtree Consortium holds a 20.3pc stake in Aston, while PIF owns 17.2pc.
Chinese car maker Geely owns 17pc and Mercedes, which supplies the company with some of its engineering technology for combustion engine cars, owns 9pc.
The deal, which draws Aston close to PIF, comes at a time when Saudi Arabia is aiming to diversify itself away from petrol and plough part of its oil wealth into new technology before the fuel is banned.
Until recently, PIF also had shares in McLaren – only selling them to Bahrain’s state investment fund in recent days.
Other Saudi companies have also been firmly backing electrification, including Abdul Latif Jameel investment company, founded by the late sheikh of the same name, which was an early investor in Rivian, the US electric truck maker, and remains among its largest investors.
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