Aston Martin has struggled since launching on the share market. Photo / Getty Image
Aston Martin has struggled since launching on the share market. Photo / Getty Image
We don't make cars, we make dreams," Aston Martin boss Andy Palmer proclaimed when the luxury carmaker was preparing to motor onto the stock market last October.
It's the sort of waffle you might expect to hear from the young salesman at your local forecourt, not the chief executive of a soon-to-be public company.
Prospective shareholders were invited to hitch a ride on a lucrative one-way ticket to the FTSE-100 – at the £22.50 price that the company's private equity backers were seeking, the bluechip index beckoned.
Instead, the thousands of unfortunate investors that fell for Palmer's Del Boy Trotter sales pitch, have ended up stuck at the Wacky Races.
After posting annual losses of nearly £70m in March, the company has now torn up forecasts, wiping another 25pc off its share price in a day. Having been forced to pare back the listing to £19 a share, Aston Martin's stock has shrunk to less than £8 – a collapse of almost 60pc.
Those that have made money are Palmer and a band of hedge funds that have been shorting its stock in increasing numbers. The former Nissan executive cashed in nearly £26m of shares at the float, settling tax liabilities of just under £20m, and banking the proceeds from a further £6.6m.
He has a further 1.4m shares, worth roughly £11m at today's price, that will be released gradually over the coming three years, and was paid almost £3m in 2018 despite the carmaker plunging into the red.
Yet, throughout the whole sorry charade, Palmer has sought to blame external forces outside its control.
Aston Martin boss Andy Palmer. Photo / Getty Images
Brexit wouldn't be a problem, he claimed, as plans to go public were being finalised. Then in February, it admitted a £30m emergency war chest had been set aside due to the "annoyance" of continuing uncertainty around Britain's departure from the European Union.
A week later, its shares crashed to a fresh low after annual losses of £68.2m on the back of £136m in one-off costs from its float.
Now, apparently, "macroeconomic uncertainties" are the reason why guidance has been scrapped just one week before half-year results are due. Sales to dealers fell 22pc in the UK and by 28pc in Europe, the Middle East and Africa between April and June.
The carmaker now expects to sell between 6,300 and 6,500 models on the wholesale market instead of an estimate of between 7,100 and 7,300 made back in February.
Capital expenditure has also been reduced from between £320m and £340m to £300m. The promise of "immediate actions to improve efficiency" and reduce fixed costs sounds like a weak-kneed attempt to sneak out a job cuts announcement.
Meanwhile, a £19m charge for income it expected to receive from consultancy work, simply looks amateurish.
It would be unfair to blame Palmer entirely. An astonishing dozen investment banks helped to steer Aston Martin onto the stock market before walking off with tens of millions of pounds in fees.
Hedge funds began shorting the stock from the outset, and the car market is undoubtedly in the throes of an unforgiving downturn that has hit all the big names.
But Palmer was the unquestioning cheerleader for a share sale that was horribly oversold, touting a "dream" of a luxury lifestyle brand in the mould of Gucci or LVMH that would eventually do much more than just sell cars.
Yet, there was no talk of the "challenging external environment" when Burberry smashed forecasts last week. For good measure, analysts at Canaccord have reiterated their belief that Aston Martin will eventually have to raise further funds to shore up its balance sheet.
