Aston Martin CEO Says Consolidation Is The Future Of The Industry

Aston Martin chief executive Andy Palmer says consolidation across the automotive industry is inevitable as car manufacturers work on developing electric, connected and autonomous cars.

During an all-encompassing interview with Motor Trend, Palmer said that there is no way all car manufacturers can simply develop their own electric and self-driving vehicles and expect to make a return on their investments.

“The slightly extreme hypothesis — it builds on Sergio Marchionne’s “Confessions of a Capital Junkie” — is that it’s crazy that we’ve got 20 or 30 major car companies spending billions of dollars effectively creating the same thing. At a time when the emerging technology … it’s just amazing, around electric cars, connected cars, or autonomous cars,” Palmer said.

“Each of those companies individually can’t afford to spend that money. They’ll not get the return on it. The margins are becoming extremely tight, often negative, especially on electric cars. A new car, a billion dollars for no return. That story doesn’t go on very long before you start to get companies in distress.”

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Palmer believes that, in 10 years’ time, self-driving vehicles will be used for all manner of purposes other than driving. For example, they’ll be used for “sleeping, talking, meetings, video conferencing” and that this will inevitably result in the creation of pod-shaped vehicles. Before long, he claims, cars of this sort will become a commodity.

Nevertheless, Aston Martin doesn’t want to fall into this trap. Rather than catering to the masses and competing with the few companies who will build these pods successfully, the British car manufacturer will look to appeal to the lifestyle needs of the wealthy.

“My hypothesis, actually, the reason for not producing more than 15,000 cars is very much to stay in that luxury arena. I see that as the way for the company to exist for another 100 years,” Palmer said. “We become much more focused on the lifestyle of the individuals, the playtime of the individuals.”