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UVA-S-DRAFT For internal use only - July 2017 Aston Martin – The Crossover Conundrum In crisis periods, such as the one we survived in 2008 and 2009, first and foremost you need strong leadership and judgement. -Ulrich Bez, CEO & Chairman, Aston Martin In March 2009, Ulrich Bez, CEO of legendary British carmaker Aston Martin Lagonda Limited (Aston Martin), found himself grappling with some tough news he received from Switzerland. The company had just debuted a novel car concept, its first crossover1 model under its rarely used historic “Lagonda” brand, at the Geneva Motor Show, but the negative press criticizing the four-wheel drive, four-seater car’s design and concept were troubling and unexpected for Bez. One popular industry blog went so far as to mock the model car’s visual identity: “These first images of the Lagonda caused a collective sigh from [us] here in Geneva, perhaps largely because it takes the form of a crossover – something we weren't really expecting (and something we don't typically associate with either Lagonda or Aston)… Aston wanted an outlet to expand beyond sports car and GTs2…and the Lagonda's designers took that mandate and ran with it – some might say into a bluff-faced wall.”3 Before the Motor Show’s reveal, Bez was highly optimistic about the future of the crossover model. In fact, he was projecting “a strong presence in 100 territories, vastly increasing the global brand reach of the company and extending to new customers”4 in Russia, the Middle East, South America, India and China, while 1 A crossover, or CUV, is a vehicle that combines features of both a Sport Utility Vehicle (SUV) with a passenger vehicle. 2 A GT, or grand tourer, is an automobile in the style of a coupe, usually with two seats but occasionally four, designed for comfort and high speed. 3 Damon Lavrinc, “Geneva 2009: Aston Martin Revives Lagonda to Questionable Effect,” Autoblog, March 4, 2009, http://www.autoblog.com/2009/03/04/geneva-2009-aston-martin-revives-lagonda-to-questionable-affect/ (accessed Jun.20, 2017). 4 Aston Martin (2009). “Lagonda: Revival of a Luxury Brand” [Press Release]. Retrieved from: https://www.astonmartin.com/en/archived-content/media-centre/press-releases/2009/03/25/lagonda-revival-of-a- luxury-brand. This field-based case was prepared by Jenny Craddock, Senior Case Writer, under the supervision of Professors L.J. Bourgeois, Yiorgos Allayannis, Morela Hernandez and Luca Cian, with contributions from Dr. Ulrich Bez. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2016 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to [email protected]. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. Page 2 UVA-S-Draft also catering to customers in Europe and North America. He even went so far as to describe the Lagonda crossover as the “the car of the future.”5 In the backlash of the negative press, however, those lofty visions suddenly felt unrealistic. This was not the first time Bez found himself facing a critical decision for the boutique carmaker since he assumed the role of CEO in 2000, but the stakes for this decision felt particularly high. Not only were the automotive press and Aston Martin’s competitors around the world eagerly awaiting the company’s next move, but Bez would also have to convince the company’s shareholders that the crossover was worth a projected investment of approximately £339 million, £220 of which was needed before a single sale could take place. Was it strategic to push forward with Bez’s visions for the industry’s first luxury crossover vehicle or time to cut his losses and pull the plug altogether? Aston Martin – A History6 Aston Martin’s roots trace back to 1913, when engineer Robert Bamford and entrepreneur Lionel Martin founded a business then called Bamford and Martin Limited in the exclusive London neighborhood of South Kensington, thus beginning a long history of the company being controlled by hobbyists as opposed to profit- seekers. The first car was assembled the following year in a small garage-turned-workshop on an unassuming mews street not far from the prestigious Kings Road, and Martin decided to christen it an Aston Martin, including references to both his last name and his favorite automobile race, the Aston Hill Climb in Buckinghamshire, which he had previously won. Production halted and the partnership fell apart during the First World War, and in 1919 Bamford withdrew from the partnership. Tumultuous years and financial problems for the company followed, and in 1926 Martin departed, leaving the company to a group investors led by engineer Bill Renwick. Under Renwick, production was moved to Middlesex County in England, but financial problems and ownership changes continued to be the norm over the next decade. Signs of growth finally emerged when production rose to 140 cars in 1937, but the Second World War forced the company to produce aircraft parts instead of cars, and a difficult transition back to peacetime production left the company on the verge of collapse. With bankruptcy nearly imminent, in 1947 English investor David Brown stepped in to buy the company for a bargain price of £20,500, and under his leadership, the prosperous years for the carmaker finally began. Several months before Brown’s Aston Martin purchase, the industrialist had bought fellow British luxury carmaker Lagonda, which, like Aston Martin, had passed through several owners’ hands since its founding by American Wilbur Gunn in 1906. With the two niche brands in his grasp, Brown renamed the merged company Aston Martin Lagonda Limited. Combining the strengths of the two original companies, Brown wasted no time in combining the internal frame of the Aston Martin with the engine of the Lagonda to create the first of many iconic cars to bear his initials, DB, out of the company’s new production facility at Hanworth Air Park, also in Middlesex. Even though only fifteen DB1 models were made, the initials and subsequent generations of the car would go on to leave a lasting mark as icons of the motoring company. As Bez put it, Brown deserved credit as “the creator of the brand’s cachet.” Aston Martin (2009). “Lagonda: Revival of a Luxury Brand” [Press Release]. Retrieved from: https://www.astonmartin.com/en/archived-content/media-centre/press-releases/2009/03/25/lagonda-revival-of-a- luxury-brand. 6Dinger, E. (2015) Aston Martin Lagonda, Ltd. In J.P. Pederson (Ed.), International Directory of Company Histories, Volume 169 (pp 49 – 52). Farmington Hills, Michigan: St. James Press. Page 3 UVA-S-Draft As car sales increased under Brown, the company pushed into competitive racing as a means of gaining broader recognition. After some racing success with the DB1 and DB2, Brown decided to build a purpose- built sports car, and the resulting DB3S made its debut at the annual race held near Le Mans, France, in 1952. The crowning achievement of Brown’s racing program came in 1959, when the Aston Martin DBR1 achieved a sweeping triumph at Le Mans, taking both 1st and 2nd place.7 1963 proved to be an especially seminal year for the company, when the acclaimed Aston Martin DB5 was introduced, a model that went on to become “the most famous car in the company’s history” 8 despite its limited run of 1,0599 cars only being sold for two years. (For images of the DB5 and subsequent models, see Exhibit 1). A large part of this fame derived from the global stage the DB5 was given in 1964, when a specially designed model with spy features (such as rotating license plates and an ejector seat) was selected to be James Bond’s car of choice in the film GoldFinger, the third movie in the popular series. The Bond films at the time starred debonair Scottish actor Sean Connery in the title role and achieved not only commercial success but also left a lasting impact on cinematic history and pop culture, even making the British spy’s preferred preparation of his martinis (“shaken, not stirred”) famous. As Bez later said of the relationship between Bond and Aston Martin, “It would be no exaggeration to say that it was one of the best examples of product placement of all time; no marketing specialist in the world could have done a better job.”10 With the increased visibility of the Aston Martin, sales boomed, and Brown was able to grow the company from one that had only produced 681 vehicles before he took over to achieving roughly 7,941 sales under his leadership.11 Brown moved global headquarters to Newport Pagnell in Buckinghamshire in the early 1960s, a site to which Aston Martin-lover HRH Queen Elizabeth II paid a visit several years later. Despite the brand’s growing visibility and prestige, however, the economic downturn of the early 1970s forced Brown to sell Aston Martin, and, after being briefly owned by Company Developments, a Midlands property company, the automaker was sold out of bankruptcy to North American businessmen Peter Sprague and George Minden in 1975. Under the new owners, the car line was modernized, and a four-door saloon, or sedan, under the Lagonda badge was introduced. After a brief resurgence, the company fell victim to poor global economy, and the company was sold again in 1981 to Victor Gauntlett, an Englishman who’d been successful in the petroleum industry.

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