News that Aston Martin Lagonda Global Holdings PLC (LSE:AML) has swapped out its German boss, who had been poached from Mercedes, in favour of 75-year old former Ferrari (NYSE:RACE) chief may lead some investors to wonder if leading the sports car company is an impossible job.
Having famously gone bust seven times since it was founded almost 110 years ago, this is perhaps no great surprise to longtime followers of the Warwickshire-based outfit.
New man Amedeo Felisa, and his sidekick in the form of new chief technical officer Roberto Fedeli, have a bootful of issues to address if they are to stop the carmakers shares from extending the 90%-plus losses since floating in late 2018.
Canadian billionaire Lawrence Stroll led a bailout in 2020 with talk of a turnaround, but the company has continued to lose money and is reportedly being dogged by low workplace morale.
Tobias Moers was hired by Stroll less than two years ago to great fanfare, perhaps due to his connections with Daimler (ETR:DAI), with which he struck a deal for the German company to boost its stake in Aston Martin and provide access to Mercedes-Benz hybrid and electric drive systems.
Moers, 56, has stepped down immediately, with his replacement Felisa already well acquainted to the board from his role as non-executive director.
Aston Martin had suffered a “collapse in morale”, according to reports in the Financial Times, with the “robust management style” of the German geschäftsführer linked to dozens of senior employees departing during his tenure.
Stroll, a fashion tycoon and Formula One racing team owner, characterised the Moers era as having added “significant discipline” to the group’s operations, with an improved operating performance and “great new product launches”.
He said the appointment of Felisa and Fedeli, both with 26 years’ experience at Ferrari (NYSE:RACE), was because the business needed “to enter a new phase of growth with a new leadership team and structure to ensure we deliver on our goals”, with an organisational framework to “foster greater collaboration, a more cohesive way of working, both internally and externally”.
Operational improvements are hard to perceive from the outside, with the most recent annual numbers showing a worse-than-expected £214mln loss due to delays in delivering its special edition £2.5mln-a-pop Valkyrie, while Stroll and Moers slashing 500 job cuts last year left Aston Martin understaffed at its new plant in south Wales, delaying production of its best-selling DBX.
What’s more, net debt grew by a fifth to £891.6mln as the company continues to lose money, with growth headwinds and cost challenges ahead this year, with its annual interest bill expected to go up a gear.
What’s more, the company’s top car models, including the DBX and DB11 are losing fans, and it will be difficult to play catch up with bigger-name rivals, according to analysts.
“Aston Martin is falling behind Ferrari and Lamborgini as their key models age in a premium sector where fresh design is especially valued,” said Harry Barnick, senior analyst at Third Bridge.
He said the DBX “has aged” and Third Bridge’s auto specialists suggest the DBX 707 “lacks the necessary upgrades to improve volumes”, with the DB11 model “also in need of replacement”.
On the company’s side, Stroll is confident about the four new sportscars due in 2023, its plug-in hybrid Valhalla coming in 2024, and a first all-electric vehicle in 2025, offers a “strong pipline”.
But with inflation soaring, margins are going to be under pressure this year and Barnick suggested Aston Martin could struggle to pass on these costs to the consumer due to its current “ageing line-up”.
One potential toe-rope does exist for the company if things do not improve, in the form of Daimler (ETR:DAI)’s large stake, but it is likely to have to crunch down into lower gears before that to becomes a talked about more seriously.