Question. What happened to the action?
Answer. When we presented our third quarter results, we had fallen 16% since the IPO [oferta pública de venta de acciones]. Ferrari had fallen by 19% and the luxury market as a whole, by 14%. We have gone public in a difficult time, but our action is close to the market, and I think the really important thing is that it does not match the car market but the luxury market, which is where we want to be.
Q. And what is happening to the luxury market?
R. I do not like to speculate, but I imagine that the market expects the Brexit and the uncertainties of world trade, as the relationship between China and the US, will have an effect on luxury products. Nothing is further from reality, I think. We are doing extremely well in China and in the United States.
Q. Regarding Brexit, you said that the best thing is that there is an agreement but, if there is not, it is not so serious …
R. Europe represents 25% of our business and tariffs would make the price rise, but the United Kingdom is 33% of our market: the Ferraris, Lamborghini, etc., would also be more expensive. And, if there is no agreement, the pound would sink, which would benefit us as exporters. The negative point is friction at the border, because 60% of our components come from the EU. We have made plans for a hard Brexit. I'm sure we can pay the fees, but it is inevitable that there will be queues at customs; and there will be delays. We have expanded our stocks from three to five days, which may be more depending on how the situation evolves; In addition, we are not only studying the use of other ports in the United Kingdom, but also the use of air transport.
Q. The UK brand is an important part of the appeal of Aston Martin. Is Brexit and its crisis damaging it?
R. Yes. [Pausa] We may like it or not, but as a nation we tend to be tremendously predictable, fairly conservative, discreet, old-fashioned, somewhat bureaucratic, but very, very reliable: you knew exactly what to expect from us. And we live in an unstable world, and between the countries creating that instability are the two great Anglo-Saxon countries, the United States and the United Kingdom. And that damages our image.
Q. If the negotiations fail, what will happen?
R. The neutral solution would be to continue as we are. The Brexit starts from the premise that signing commercial treaties is easy, and it is not. However, there are reasons to think that it is easier for the United Kingdom to sign an agreement with China than for the EU, because there are two who have to sign, not 29. We have to reopen to find pragmatic free trade agreements. That is the positive side; the only one, practically. Almost everything else is negative, so if we want, we have to engage in that direction. It's something our diplomats have to work on.
Q. What happens if the business cycle changes?
R. That's exactly why I'm still in the luxury market. In case of an economic recession, the rich will remain rich, and will want a high-end car. It is a very well isolated market from economic fluctuations.
P. Aston Martin has worked hard to regain a reputation for reliability. Is not it a risk to take a new car out of a new factory?
R. I have been in the automobile market for 40 years. Only once did I have to take out a new car with a new engine from a new factory: it was with the DB11, and I do not want to do it anymore; Once it can go well, but never two. First, the Welsh factory has been built in an old hangar, an existing building; that avoids many of the problems with new buildings. We have started the factory a year earlier than necessary. It has not gone well for the cash flow, but we have had a year to make sure everything goes perfectly. We know how to build the structure of the car. The engine and the transmission, which are the most complicated part of a 4×4, come from Daimler. The electrical system, which is today the part where there are more reliability problems, too. What we have left is a body, which is not that complicated.
Q. What is your vision of the electric car?
R. I am in favor of electric cars, and when I was in Nissan I helped develop the Leaf. But it baffles me that politicians think that they can decide which are the winners and the technology losers. As an engineer, my advice is: "Tell us what you want and we will find a way to solve it". Twenty years ago, politicians in the United Kingdom decided that diesel was a good way to reduce carbon dioxide emissions. Diesel taxes were lowered and diesel cars became very popular; Now we are paying for these consequences. Now they are encouraging the switch to electric, which is not a perfect solution either.
P. The growth of the SUV is being detrimental to other body types, especially the saloon. She's dead?
R. The fact that the SUV is cannibalizing the saloon market is an undeniable fact. But there are certain consumer environments where the SUV does not fit. That is why, when we developed the Lagonda brand, we asked ourselves: do you need a sedan ?, and the answer was yes, because although the volumes are low it is a kind of product that we need.
P. Aston Martin is making engines for outboards and apartments. Is not there a risk of dilution of the brand?
R. I would prefer to say that we are making the most relevant brand. There are 17 million people with high purchasing power around the world, the fastest growing group, rationally, how many models of cars can we sell? I would say seven. We do not see ourselves as Hermès, Chanel, Jimmy Choo, brands that manufacture for a specific audience. We see ourselves as LVMH, Richemond or Kering, with a whole portfolio of products. We reject 80% of the offers that they make us. We do not make hats, t-shirts and fairground attractions.