MILLBROOK, England (Reuters) -- Money-losing Aston Martin expects to make a significant return to profitability after 2016. The company said it would start to see the benefits of a five-year 500 million pound ($843.57 million) investment program, having struggled to grow since the economic downturn.
"Once we finish the investment phase, we are very, very confident that it's going to take us to a very sustainable profitability," Chief Financial Officer Hanno Kirner said in an interview on Monday at Milbrook Proving Ground north of London. "We expect to return to significant profitability in the periods after 2016," he said.
The company posted an adjusted pretax loss of 24.6 million pounds in 2012, down from a 21.2 million pound loss a year earlier.
Aston Martin is owned by Kuwaiti and Italian private equity groups and is a rare ultra-luxury car brand that doesn’t belong to a larger manufacturing group. Its latest program to develop new models by 2017 is the biggest investment in the marque’s 101-year history, but it is small in comparison to the firepower at the disposal of rivals, which can spend more money in as little as three months.
BMW spent 993 million euros ($1.37 billion) on research and development in the first quarter alone, almost double Aston Martin’s four-year investment plan. BMW can spread those costs over annual sales of about 2 million vehicles.
By comparison, Aston Martin sold just 4,200 cars last year, and deliveries are forecast to fall to 3,700 in 2014, IHS Automotive estimates. When Aston Martin’s sales peaked at 6,700 vehicles in 2007, the brand was roughly the size of Fiat’s Maserati.
BMW’s volume gives the automaker leeway to take risks such as investing in its own carbon fiber factory to make vehicles lighter.
High-end performance models like the $111,500 M6 coupe compete with Aston Martin’s lineup, which consists of two-door sports coupes and convertibles, including the $116,700 Vantage, and the four-door Rapide.
"They’ve been stretching the technology they have as far as possible,” said Al Bedwell, an analyst at LMC Automotive in Oxford, England. "They keep pushing variations of the same theme, but the theme has to move on. They risk being massively left behind."
Neil King, an automotive analyst at Euromonitor International in London, said: "With increased competition from the likes of Maserati, Aston Martin cannot afford to stagnate."