There are a couple of items that have popped up in the news recently that I thought were worthy of a few quick comments.  They are:

Porsche AG: Blume Takes the First Shot

During my lengthy international business career, one of the major warning signs that a business was in trouble was when the local CEO/Managing Director (MD) announced he needed to fire some combination of the Finance/Sales/Marketing Director.  In most situations, the CEO/MD would get approval to make the staffing changes, and it would buy the CEO/MD another 12-18 months to get the business turned around.  Looking back though, in most circumstances, that did not happen.  The leadership that gets you into a mess, very rarely is the one that gets you back out, which brings us to Porsche AG.

In an article I posted in late January, I mentioned:

In 2024, Porsche’s unit sales to customers dropped 3% to 310k vehicles.  This is the first time Porsche has recorded an annual sales decline this decade.  The main causes: China & EVs. In 2023, China accounted for 25% of Porsche’s unit sales, in 2024 that number dropped to 18%.  Porsche has yet to provide numbers on total EV sales but sales of the EV only Taycan were down 49% in 2024 and EVs as a % of Porsche’s sales mix was down about 40% through Q3 2024.  Even the mighty 911 had a tough year, while unit sales were up 1.6% in 2024, this was the lowest level of growth the 911 has delivered in years.

And then on February 1, Porsche released the following announcement:

The Supervisory Board of Dr. Ing. h.c. F. Porsche Aktiengesellschaft (“Porsche”) authorized the Chairman of the Supervisory Board today to enter into discussions with Mr. Lutz Meschke, Deputy Chairman of the Executive Board and Executive Board member for Finance and IT, and Mr. Detlev von Platen, Executive Board member for Sales and Marketing, in relation to an amicable early termination of Mr. Meschke’s and Mr. von Platen’s appointment as members of the Executive Board of Porsche.

The Chairman of the Porsche Executive Board is Oliver Blume who is also the CEO of both Porsche AG and Volkswagen AG.  Simplistically Blume, as CEO, is firing the Finance, Sales, & Marketing Heads.  The more polite term is they are being packaged out.  I would guess that Blume is clearly feeling the heat from Porsche’s controlling shareholders.  He is now likely on the clock to get it turned around and if the 2025 results look like the 2024 results, he may be moving on to “pursue outside opportunities & spend more time with his family”.   

Aston Martin: More Specials!

In March 2024, Aston Martin hired Bentley’s long term CEO Adrian Hallmark to come in and turn around the business.  Hallmark started at Aston Martin in September after serving out his garden leave.  Hallmark claimed he took the Aston Martin role because: 

“This opportunity came along, and the chance to be the first person in 112 years to make it sustainably profitable, when I believe there is a way to do so, was irresistible.”

He recently gave a series of roundtable interviews in which he laid out his vision and plans for Aston Martin going forward.  Shockingly, I wasn’t invited to participate in the interview sessions, but I have gone through a number of the resulting articles. Here are a few key quotes & takeaways:

Core Portfolio

“product offensive over the last 18 months (with the launch of the DB12, Vantage, Vanquish, Valkyrie, Valhalla and several specials).  It almost worked, but not every car was perfect day one, and there's been delays.”

The challenges Aston Martin has had with the portfolio transition have been a constant topic in earnings call for the last couple of years.  This trend appears to be continuing and I expect there will be a few questions around the Vanquish engine issues in the upcoming earnings call in a few weeks.  Having admitted that Aston Martin has had a tough time managing complexity Hallmark then indicated:

“plans to increase the number of variants for each model in Aston's lineup, including the goal of once again offering manual transmissions.”

In one of the articles, he specifically referenced that the Porsche 911 has 15 derivatives in a five-year period.  What he failed to mention is Porsche sells 50k 911s a year while Aston Martin sells about 3.5k Sports and GT cars annually.  The two companies’ capabilities for handling complexity are in slightly different leagues. 

Specials

"There’s a couple of things we’ve been able to do quickly, but they are more decorative than substantive." limited-production models such as the Valour and Valiant”.

I’m sure current owners of both the Valour & Valiant were delighted with the “decorative” comment, but it does happen to be accurate.  Hallmark neglected to mention the V12 Speedster and DBR22.  Both should be included in the recent “decorative” specials list.  That brings the “Specials” total to four in 4 years and doesn’t include the three variants of the Valkyrie hypercar. 

Hallmark also discussed the future direction:

“both the Valhalla and front-engined Vanquish will be used “as the basis to do a couple of specials”, but he added: “We're not going to go specials crazy in terms of overdoing it”

Which is interesting given Aston Martin has yet to get the Valhalla out the door.  I’ve heard a bit of chatter which would indicate it’s still a ways away from being production ready.  As per Aston’s last earnings report, the Valhalla still wasn’t sold out six years post launch which does raise the question of if a “special” based off it is even viable. As for the “overdoing things”, I would venture, that they have certainly pushed the limits on that over the last several years.  It’s in the secondary market that the verdict on “Specials” is delivered.  Out of the four Aston Martin has done recently, it’s only the first, the V12 Speedster, has shown up at auction so far.  It will likely be another year or two before the others start to make their way across the auction block.  Of the two V12 Speedsters that have appeared at auction, both were no sales with a high bid well below the low estimate. If this trend continues across the other “specials” it will make customer acquisition for future millions dollar plus models even more challenging.

The SUV

“we can and will make the SUV work – because it’s a brilliant car.”

In his comments, Hallmark seemed very confident that he can turn the DBX SUV into a success despite its rather spotty track record to date.  He called the initial launch “strange” I believe in at least one of the interviews. I would venture that he was being polite.  If there is one area in which I certainly wouldn’t bet against Hallmark, it’s on the DBX given his rather sterling track record at Bentley with the Bentayga.

EVs

The discussions on EVs seemed a bit nebulous which I believe was very deliberate.  While he did confirm Aston Martin would launch an EV before the end of the decade, I will be surprised if it appears before 2030 now.  Strategically for Aston, it’s probably the right call.  However, it does bring into question the Executive Chairman’s decision in June 2023, to sign strategic supplier agreement with Lucid Group for the supply of EV powertrains.  As part of the agreement Aston Martin made a £27 million payment to Lucid Group in Q4 2023 and issued shares to Lucid giving it a 3.44% shareholding in the Company. 

Luxury Position

Hallmark repeatedly referred to Aston Martin as a “Luxury Carmaker” repeatedly in the interviews and the Executive Chairman, Lawrence Stroll, has used the term “ultra-luxury performance brand” for multiple years. How this squares with the recently announced partnership with Timex (see: Aston Martin - Timex Announcement) escapes me.  Will James Bond now be forced to switch from an Omega to a Timex?

 Summary

Regarding Porsche, being a member of the C-Suite or Executive Board in any major corporation is a bit akin to living in Machiavelli’s kitchen.  You are very highly valued until the day you become expendable.  The name of the game is survival, and Blume is likely under intense pressure, and he is playing to win.

On Aston Martin, I am quite fond of the saying: “the definition of insanity is doing the same thing over and over again and expecting different results”.  When I step back and look at the bundle of tactics Hallmark laid out, I can’t say I see much that’s different vs. what Aston Martin has been doing over the past several years.  On a more positive note, from what I have heard the current portfolio of cars is an improvement and do drive well.  Where Hallmark can make a difference is in dramatically improving Aston Martin’s execution.  If he can fix the DBX marketing, perhaps simplify the front engine sport/GT portfolio (does Aston really need a Vantage, DB12, & Vanquish given the volume is roughly 3,500 units across all three), and get the cost structure right, he has a decent chance of at least reducing the cash burn.  As for making it “sustainably profitable”, history is not on his side but if he can (as per the Timex tagline) “take a licking and keep on ticking”, he might just have a chance.