Aston Martin presses accelerator on IPO

You might not be able to afford an Aston Martin, but maybe you can buy the company, a small slice of it anyway — as the company reveals plans to IPO. But is this an Aston Martin fit for the digital age?

Article updated: 29 August 2018 10:00am Author: Michael Baxter

There is talk that Elon Musk may be forced to sit on the ejector seat at Tesla. He has certainly put his foot in it over a tweet that the company was going private, when it seems this was more an idea in his head, rather than one of those cold hard facts that seem to be going out of fashion these days.

But while Tesla hints and then denies, it still leaves the idea of taking the company off the stock market floating in the air, like a drone weaving in and out of shadows. Aston Martin, on the other hand, says it is floating.

Let’s face it, it is one of the coolest cars in the world — so cool, in fact, that if I had a Ferrari I might get a sign fitted to the back saying ‘my other car is an Aston Martin’.

It is such a British name too — British like the Queen or, err, like James Bond.

According to the Express, it is a victory for Brexit. I don’t quite follow the logic there, but I guess if you are a trying to hammer the case for Brexit home, everything seems like a nail that needs hammering.

Andy Palmer, the CEO told the Financial Times: “When I started in 1979 there were lots of British car companies. Over the course of my career those have disappeared. Car making in the UK is in a healthy state, but companies are foreign owned. Now we will have an independent British car company again.”

I guess the Brexit nail is lurking in that above sentence.

Nailed it

It is just that as a rough rule of thumb, I would say the car industry is screwed.

I have been saying this for a few years now, initially to a chorus of disbelief, but the idea is getting wider support.

You see, it matters not whether you are driving an Aston Martin or a Robin Reliant, it still takes forever to get around the M25. And it is getting longer. When I moved from Brighton to Milton Keynes 25 years ago, I expected to do the journey in two hours. Now, if I do it in less than three, I celebrate.

And the appalling traffic congestion is just one reason why we may be approaching something called ‘peak car’.

There is empirical evidence and a good reason to believe in peak car.

For the empirical evidence, I quote from Wikipedia: "The peak car theory was proposed following reductions, [in motor vehicle distance traveled per capita] which have now been observed in Australia, Belgium, France, Germany, Iceland, Japan (early 1990s), New Zealand, Sweden, the United Kingdom (many cities from about 1994) and the United States. Traffic into London fell by 28 per cent between 1994 and 2003 — prior to the introduction of the London congestion charge.” 

There’s another point: the rise of autonomous cars and convergence with the Uber economy. There is something almost subliminal and a tad irrational about our attraction to the motor car — people love their cars. But I think this love affair will wane, replaced by something akin to indifference, when we no longer drive the thing. That subliminal force at play will vanish in a cloud of carbon free emissions.

Then as we start sharing cars — who will care what the car we are driven in will look like — it could be a red Ferrari or a yellow Rolls Royce, does it matter if it is not ours?

The sharing of cars will also mean less cars required to meet demand, so we will see less cars made, and those that are made will be less varied.

The rise of emerging markets may save the car industry, but since the wealth generated in emerging markets will be in the cities, I suspect cars will be as popular as avocado bathroom suites.

The car industry has problems.

Where might there be opportunity?

The money in the car industry will accrue to companies that master AI, lithium ion manufacturers, makers of flying cars, and maybe niche car makers that are so profoundly cool that a tiny proportion of the population may want one. I am the least confident about that last category.

Tesla is interesting because it has a lead in AI and lithium ion, but who knows, it may go bust, or its shares may crash first, it does seem that Elon Musk needs to take a holiday, or something.

Talking of going bust, Aston Martin has done that seven times — not the most promising of backgrounds.

But it is embracing electric cars and is targeting itself at those who have owned a Tesla and are ready to go up-market.

Can it work? I must say it is quite tempting, but only because I am ever so slightly in love with the idea of owning, in some shape or form, an Aston Martin, but don’t get seduced by this one.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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