Georg Kacher reported in Car yesterday that Ford will sell Aston Martin to one of two luxury goods’ companies.
   This makes total sense for either Richemont or LVMH, both in the running to acquire the Aston Martin brand and facilities.
   For starters, their corporate cultures are likely to be compatible with Aston Martin’s. There are already Bentley and Bugatti fashion accessories, so the luxury goods’ groups are not exactly extending themselves too far.
   Aston Martin itself has been moving toward a luxury goods’ marketing process over the last few years, rendering it more compatible with these companies. Little details such as the starter button on the cars—despite their naff typeface—are meant to appeal to those buyers who delight in the small touches which set help justify spending a great deal more on a product. The marketing method includes creating a sense of exclusivity and using legends to sell products—and Aston has plenty of yarns.
   The fact that it had not made a penny in its pre-Ford days is heroic—the sort of legend that actually makes a brand seem more exclusive. Ironically, this could ensure stronger financing. In the 21st century, such legends help create strong differentiation and, therefore, a stronger brand—particularly appealing to the likes of Richemont and LVMH. There is, too, the James Bond factor—which will contribute its share to enticing a buyer.
   Richemont says that its brands are about style, quality and craftsmanship, even if cars do not figure in its usual areas of jewellery, watches and writing instruments. LVMH is as diverse, but it has managed to show that fashion, beauty and alcohol can be very similar, when marketing to a comfortable, rich niche.
   The issues are twofold. I agree with Robin Capper that Ford is selling a golden goose, which makes little sense for a troubled company. Aston Martin was meant to be a testbed for its advanced technologies, so where will they go now? To Lincoln?
   Secondly, the new owner will need to retain some links with other automakers, maybe even Ford. While it is likely to be able to secure finance for Aston Martin, economies of scale are still important in the car business. Kacher writes that Aston Martins share few components with other Fords, but when it comes to R&D, not many companies can be totally independent. Before Ford came along, Aston Martin, under Peter Livanos and family, and Victor Gauntlett, could not even afford to develop its own airbag. Aston’s testing procedures could suffer without Ford.
   But this will not be a story like the one where Coca-Cola took over wineries in the 1980s. That failed, not because Coke’s FMCG management styles did not fit with wine-making, as the textbooks say. I argue that it was because the brands and cultures could never fit.
   Here, we are talking about luxury goods’ companies that have had huge success as brand stewards. The question is whether the brand will be a strong enough reason for Aston Martin’s fit to succeed in a group that has had little to do with cars. In the opening decade of the 21st century, which, in many industries, is more about consumerism than innovation, seeing Aston Martin alongside Louis Vuitton or Baume & Mercier might not be unrealistic.

Del.icio.us tags: Ford Aston Martin LVMH Richemont luxury luxury goods brand branding brands brand management corporate culture legends differentiation Posted by Jack Yan, 11:21  permalink

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