Year 2020 will mark the end of the second decade of the 21st century. For Gaydon, UK-headquartered 106-year-old Aston Martin the year will mark the beginning of a new chapter with the start of sale of its first-ever SUV, the DBX. With the automobile industry, engulfed in an SUV wave, the DBX will be crucial to power Aston Martin's business sustainability.
Speaking to Autocar Professional after the global unveil of the DBX in Shanghai, Aston Martin's President and CEO Dr Andy Palmer says, "Very clearly, as it plays out, the SUV segment is becoming very important," while highlighting the fact that SUV models are driving sales of most other sports /exclusive car brands.
The DBX, priced at US$ 189,000 (Rs 1.35 crore) will go on sale during the April-June 2020 period. It will see a commercial launch "almost simultaneously" around the world, except in China where the homologation process takes a little longer. Bookings for the DBX opened in India too on Wednesday, the day of its unveil. Dr Palmer is "optimistic" about the DBX's prospects in India and its role in fueling Aston Martin's presence here. Currently, an estimated 15-20 Aston Martin cars are sold in India annually. It sold over 6,000 cars globally last year.
With the launch of the DBX next year, Aston Martin plans to expand its footprint in India. It will start with "more dealerships". India is part of Aston Martin's Asia Pacific business, headquartered in Singapore. Opening of the Singapore office, and a limited company in Japan, both in 2015, reflects the OEM's growing focus in this region. Aston Martin sees the high import duty of around 140 percent on fully built imports as a major hurdle to tap what is "potentially a big market". However, efforts are on. "I've specifically assigned some people to look at exploring how we can do better in the Indian sub-continent," says Dr Palmer.
India as a component sourcing base
India may not be a significant market for Aston Martin cars yet, but it has already become a growing base for sourcing at least some components that make them. A couple of forged and castings components also help these cars to be robust and perform at scorching paces. "I am actually pleased with the way our supply chain has embraced India," says Dr Palmer.
Hinduja Tech, earlier known as Defiance Technologies, a product engineering and digital technologies company of the Hinduja Group, is helping Aston Martin to identify suppliers and also helping suppliers wherever needed, to meet the OEM's stringent standards. The rise in sourcing components from India by global OEMs is also a reflection of the growth of Indian suppliers' competence in terms of quality and technological capabilities too. Some of these suppliers are also winners of the prestigious Deming Prize, considered an Oscar in TQM.
The DBX could possibly lead Aston Martin's sales in India but it definitely is expected to globally. Palmer expects the DBX to find around 4,000 customers a year in international markets. That's two-third of its current annual sales volume. The DBX can potentially drive up Aston Martin's share price too, which fell by three-fourths since the company got listed at the London Stock Exchange in October 2018. It has responded positively in the first two days after the SUV's unveil.
Aston Martin posted a GBP 13.5 million pre-tax loss during the July-September quarter as compared to a profit of GBP 3.1 million during the same period last year. During Q3 of this calendar year, Aston Martin's sales reportedly fell by 16 percent. "It's mainly global uncertainty," cites Dr Palmer as a challenge Aston Martin, like other OEMs, is facing.
Aston Martin's sales volume grew 13 percent year-to-date. "If you look at where we struggle a little bit, it's on Vantage. And it's mainly in UK and Europe," says Dr Palmer. Germany, where the economic climate is "close to a recession" and uncertainty over Brexit, are key factors affecting the industry. Results of the UK elections, slated for December 12, can possibly bring some positivity in the industry. "If it brings certainty on Brexit, I think that will stimulate the car market a lot," says DrPalmer. If that happens, Aston Martin and other industry players can look forward to a good festive season in the UK.
As for the DBX in India, Aston Martin may taste success with it like some of its peers have, with their SUVs. However, Dr Palmer would undoubtedly try to sell the SUV to his Indian colleagues in the Board of Ashok Leyland, where he sits as an Independent Director!
Also read: Interview with Marek Reichman, Executive Vice-President and Chief Creative Officer, Aston Martin