Monday 21 October 2013

Aston Martin follows Bentley with SUV

Aston Martin’s Lagonda’s sport utility vehicle (SUV) has moved a step closer to reality and will be a joint development with Mercedes AMG.

The idea, first mooted with the Lagonda concept vehicle launched at the Geneva Motor Show in 2009, must have been hastened with the news last March that Bentley would develop an SUV, taking that marquee into unchartered waters.

Volkswagen AG has set the pace in developing SUVs in Europe, not only through its own brands but through links with Porsche.
When Aston Martin and Mercedes AMG revealed their joint development project on 25 July 2013, it could be seen as the last major executive decision of Ulrich Bez, Aston’s chief executive prior to his retirement. It was certainly another major link-up in the pattern of developments that have charted the company’s history in recent times.

Major shareholders will be hoping the Anglo-German mix of Aston Martin and Mercedes AMG will lead to a more successful outcome than that which involved Aston Martin, Magna Steyr of Austria and the Lagonda Rapide.

The first Lagonda Rapide four-door Rapide GT appeared between 1961 and 1964. But the latest Rapide first appeared as a concept at Detroit in 2006. It entered production in May 2010 at a dedicated plant in Austria with a planned annual production of 2,000. Production was later relocated to the UK when sales did not meet their expected target. This proved to be a costly error of judgement.

Now Betz has set the dice rolling in another direction and one has to assume that when and where it comes to rest it will to some extent be governed by Mercedes AMG but with the vehicle still distinctly badged Lagonda.

However, aware perhaps too of their own ‘mistake’ with the Maybach premium brand, Mercedes-Benz executives may be mindful that discarded large cars can come to bite.

So both teams in Britain and Germany will be anxious to ‘come good’ with the Lagonda SUV, assuming it has a market.

Whoever replaces Bez will find the wheels of the 4x4 SUV spinning, and he or she will be required to run with it and bring it to fruition. Certainly when he departs, Bez will leave behind a hole that will prove quite difficult to fill, such has been the measure of his success.

On another front, but still closely linked to the project, is the element of uncertainty that hangs over any business which is owned by one of more private equity companies.

Millbrook Proving Ground, a facility well used by Aston Martin Lagonda, is about to be acquired by private equity company Rutland Partners. The immediate future for Millbrook and its staff looks rosy. But, at the end of the day, private equity companies like to sell at a profit the businesses they have bought. Otherwise, why be in business?

And so it is with Aston Martin with its private equity owners – Investment Dar of Kuwait and Investindustrial of Italy. It remains to be seen when, and to whom they will divest their holding.

It is in the interest of all concerned that Aston Martin and Mercedes AMG certainly do ‘come good’ with their new baby, and so help reverse the British company’s financial fortunes.      

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