By Rhys Jones and Kate Holton
LONDON Oct 8 Aston Martin has
abandoned its attempt to tap into the popularity of so-called
city cars after selling fewer than 150 of its "Cygnet" model, an
embarrassing blow to the struggling 100-year-old British luxury
sports car maker.
A source close to Aston Martin said its two-door Cygnet,
which started production in 2011 based on the Toyota
iQ but was marketed at three times the price, had been dropped
from the company's line-up after dismal sales of the 32,000
pound ($51,500) vehicle.
Aston had hoped to sell up to 4,000 Cygnets a year to
environmentally conscious city dwellers thought to be keen on a
small, easy to park, luxury vehicle. But buyers were put off by
the Cygnet's high price, particularly since it lacked the
characteristic performance of a brand that achieved fame with
the DB5 sports car featured in 1960s James Bond movies.
"The Cygnet was intended to catapult the brand into a new
market but at roughly double the price of many competing cars in
that segment, it was misjudged by Aston Martin," said Ian
Fletcher, an automotive analyst at research consultancy IHS.
"The premium supermini market is a good place to be at the
moment but Aston got it wrong in thinking putting a grill and a
fancy interior on what was basically a Toyota iQ would make
people buy it."
European carmakers have recently done well out of producing
high-end micro cars. Audi's upmarket A1 supermini is selling
well, while Mercedes is considering making a luxury supermini to
take on BMW's successful Mini. Research consultancy
IHS forecasts some 594,000 city cars will be sold across Europe
in 2013 and expects this to grow to around 803,000 by 2020.
However the popular BBC programme Top Gear and other car
websites suggested that Aston ventured into the city car market
to help it meet EU targets for fuel emissions and to justify the
development of V8 and V12 engines for its high powered cars such
as the DB9 and Vanquish models.
Aston Martin was not immediately available to comment.
The luxury car maker, owned by Kuwaiti and Italian private
equity groups, has struggled to grow since the economic downturn
in 2008. Failing to find success when the luxury sector is
growing rapidly does not bode well for Aston Martin, which also
lacks a luxury SUV model - excluding it from another market that
has defied Europe's recession.
Its weakness has been exacerbated by a lack of funds from
its private equity owners, which include Investment Dar - a
major Kuwaiti finance company which ran into trouble during the
financial crisis and had to restructure $3.7 billion worth of
debt. By comparison UK rival Jaguar Land Rover has enjoyed more
than 4 billion pounds of investment since being bought in 2008
by India' deep-pocketed Tata Motors.
As a result Aston Martin's sales and profits are on the
slide. It reported 2012 adjusted pretax losses of 24.6 million
pounds, down from the 21.2 million pound loss it posted a year
earlier. It also took an 8.5 million pounds charge related to
Retail volumes fell to 3,800 units in 2012, from 4,200 a
year earlier, but Aston is aiming to double sales by 2016,
helped by new V8-engine versions of the Vantage and DB9 models.
Those numbers stand in stark contrast to Bentley, which
reported a 30 percent rise in 2012 sales, helped by new
showrooms and growth in the United States and particularly
China, with its large number of super-rich consumers as well as
a fast-growing middle class eager for luxury western items.
Aston's withdrawal from the supermini market is particularly
disappointing after Italian private equity fund Investindustrial
agreed to buy 37.5 percent in the carmaker last year and raised
hopes that its promise to invest $1 billion in new products and
technology would boost Aston Martin's fortunes.
The Gaydon, Warwickshire-based company also teamed up with
Daimler's high-performance Mercedes-AMG GmbH division
to develop a new generation of bespoke V8 engines. That move,
taken earlier this year, aimed to help it better compete with
the likes of Volkswagen's Bentley and Porsche units,
as well as Jaguar Land Rover, which has achieved strong sales
growth, especially in China, since 2008.
Both of those deals should help Aston Martin overcome its
latest blow, analysts said.
"Investindustrial turned around motorcycle maker Ducati who
were in trouble and have a similar history to Aston so their
involvement is a huge positive, while the Daimler relationship
can only help develop the technology under the skin, which is
key," said IHS's Fletcher.
Meanwhile the British brand's next challenge may be just
around the corner. Media reports suggest its charismatic CEO
Ulrich Bez is set to step down at the end of the year after 13
years at the helm and with no clear successor.