Why it's so hard for Aston Martin, McLaren and Lotus to make money #289

Welcome back to the Intercooler podcast

everybody. The podcast powered by car

finance specialist JBR Capital. This is

episode 289 with me Dan Proser and him

Andrew Frankle. Andrew, we wanted to

dedicate an entire episode to the

British sports car industry.

>> Yeah.

>> And also the sort of the emerging resto

modding industry that's really thriving

in this country at the moment. We wanted

to do this with some authority.

>> Are you saying that is something that we

lack? No, but our guest today, Simon

Lane, knows

>> a great deal about this world. A great

deal more about this world than we do.

>> Well, he's actually getting his hands

involved.

>> And he's he's been part of this scene

for well, decades, I suppose. Simon, now

do you you've worked at a very, very

senior level for two of the most famous

British sports car manufacturers. Can

you tell us which ones they are, or

would you rather not say?

>> No, I don't think I can keep that a

secret. Um okay so most recently Lotus

uh so I was an executive director at

Lotus um uh responsible for a department

called

>> Lotus Advanced Performance which I guess

you could think of as the equivalent of

MSO [clears throat] at McLaren similar

and then prior to that um I was the

director of Q and special vehicle

programs at Aston Martin.

>> Yeah.

>> So uh yeah in total 30 years in the

industry actually most of it on the

retail side. um Lati with Porsche Retail

Group and Jardine Motors Group. So I ran

um Aston Martin Cambridge and Latly

Porsche Center Cambridge as dealer

principal and then Aston Martin offered

me a role um in the factory. So I made

the unusual leap I suppose from retail

into OEM at quite senior level.

>> So what sort of Aston were you working

on then?

Um, so Q was responsible for everything

from uh a customer that wants a

different colored stitch or a particular

stripe.

>> Um, through to all of the limited

edition models that Aston delivered on

the core uh product line through to all

the commercial aspects of Valkyrie,

Valhalla, DB5 Goldfinger, basically

anything that was away from the main

production line kind of fell under uh my

team's responsibility. um right from

conceiving a business case um through to

launch and um uh delivery of the cars

out to customers and specing and all

that sort of thing.

>> Cool.

>> So you you you you've worked at board

level at Aston Martin at Lotus. So

you're you're very familiar with the ins

and outs of companies like that. Um

you're now working on a a resto modding

company of your own that we will come on

to. So you're becoming increasingly

familiar with that world as well. And I

know you work with at least one other.

Um, and so the idea here is that you

have this view of the British sports car

scene and rest modding scene that few

have. Um, we wanted to talk to you about

what makes that world, the Brit the

British sports car scene what it is,

what its huge advantages are, what it's

very very good at, but also drill down

into some of the challenges that it

faces. And goodness knows it's no secret

that the likes of McLaren Aston Martin

Lotus plenty of others

they have a really difficult time Andrew

staying afloat sometimes don't they just

keeping heads above water and it's

almost it's an ongoing cycle with some

of them isn't it

>> and it's interesting you know you take a

company like Aston Martin um you know we

know that they have ongoing difficulties

and they you know that company's been

going up and down for well ever since it

was originally founded in 1930 13. But

we often say there's there seems to be

very little wrong with a product.

>> And it just seems to be an incredibly

difficult world to make progress in

because it's not like you know LVM8

selling Gucci handbags for margins of

thousands of percent. margins are always

very very tight and you are so these

cars are so complex and particularly if

they're not owned by you know a massive

OEM like Volkswagen um you know if you

get a problem in your supply chain or

whatever that can trip the whole apple

cart so Simon I just could you just sort

of talk us through generally speaking if

you are a low volume by by which I mean

I guess sort of you know fewer than

certainly 10,000 cars a year maybe five

type of manufacturer a Lotus or an Aston

Martin um just how difficult is life out

there at the moment?

>> It's very difficult. Um and even more so

if you are out on your own as in you

don't have a benevolent parent. So Aston

Martin going back, you know, a couple of

decades had Ford uh as a as a parent

company to lean on and um

>> yeah, it's it's it's very difficult when

you're a small manufacturer asking for

5,000 widgets when you're you know that

supplier may well be dealing with

Volkswagen Group who are going to order

a million widgets.

>> Yeah. uh and uh so there's an an

inevitable economy of scale attached to

that and that affects the bill of

materials which is the effectively the

cost price per unit of a car

>> but also presumably your ability to get

the widget in the first place. I mean, I

can remember, and I think I've mentioned

this before, um, Bentley went to Bosch

and said they wanted some engine

management um, in the late 1990s, and

the bloke just laughed. And then he rang

back and had the same conversation a

year later, but Bentley now owned by

Volkswagen. And funnily enough, the

Bosch bloke went, "Yes, how can I help?"

>> Yeah. Mhm.

>> Yeah. So, Bentley have that advantage

um, as D Lambo and their other brands.

But um really there's two there's two

elements really to to the to the cost to

a manufacturer. The actual initial cost

is the is the upfront investment.

>> Yes.

>> So a decade ago you could do a global

sports car for say 250 million. Today

that's twice that amount of investment.

You know you you would be looking at

£500 million today to develop a car like

the DB11 DB12 those kinds of cars.

>> And that's inflation adjusted. That's in

real terms. So why is it so much more

expensive?

>> So uh one of the reasons is type

approval.

>> Yeah.

>> So type approval has just become so

complex now. And uh the OEMs that I

worked with and the same in every other

OEM, they'll have a department dedicated

to that and they're having to map out

constantly all the rules and regs

changes that are coming down by market.

Um and then to get your car into each

global market will require some form of

homologgation. So in the EU, we're very

familiar with EU certificates of

conformity, um, which is a defined set

of tests that every car has to go

through, which includes crash tests,

emissions tests, range tests. But if you

then want to put a car into South Korea,

for example, they have equally very

strict uh, homliggation now,

>> but completely different,

>> but completely different, and you have

to do it all again. You're into crashing

cars again. Um, and that's one example

of a market that very often when we were

talking about low volume runs of cars

would be pretty early on the chopping

block for we're not going to omllegate

for South Korea because if you're going

to sell

>> 19 of something Yes.

>> and you might sell one in that mark,

it's just pointless. You know, you're

never going to return that that that

that investment. Um and the same with

you know all the other markets that you

would think of as being you know pretty

good opportunities that obviously u the

USA, North America and Canada have

separate uh

>> and somewhere like the US I think is it

you are legally allowed to not wear a

seat belt aren't you?

>> I believe

>> um I don't know if you're allowed to

legally not wear a seat belt but

certainly my recollection is the airbag

has to be capable of uh

>> functioning for somebody who isn't

wearing a seat belt. Exactly. And that

that in itself is and that's not

homologation. That's an entire

engineering issue, isn't it?

>> Yes. Um and then you know a lot of the

the low volume hypercars are are are not

actively sold into the US. They're sold

from the UK and the customer then has to

import the car.

>> Yes.

>> And the manufacturer will then offer

what support that customer needs to get

that car in through something called

show or display which is currently a

>> a method that you can bring a low volume

specialist car in. you have to prove in

the application that the car is of

historical significance or technical

significance um in order to get uh

agreement in principle that the car

meets show or display requirements and

then it goes through uh a fairly

extensive set of tests similar to a

normal type approval but you don't have

to worry about things like I don't know

um rear view cameras for example which

are not federal type appro there's no

federal approval for rear view cameras

but you can get a car through with them,

>> show display with them on

>> and and also things like ride height. So

the US cars have to sit higher because

there's a rollover foot.

It's a test that's designed to make sure

the car doesn't impact your foot. Um so

the car has to sit a bit higher. So when

when we talk about type approval, it's

an incredibly complex topic. um which uh

was a constantly moving feast and u in

my previous life you know all OEMs

operate around monthly product

committees um so both LOS and Aston

Martin and every other OEM I'm aware of

um has a a monthly uh a monthly sort of

meeting um where the senior team

involved in product will meet and review

not only um the product plans but

they'll also start looking at at time

normally they open looking at type

approval

>> yes what's the latest news? Um, and uh,

and it's very challenging, Mark. Uh,

China, um, getting a CCC to get into

China, you not only do you need to get a

a CCC, which is a China certificate of

compliance, if you're then going to sell

parts in China, every part has to have a

CCC on it, which means that a lot of the

OEMs don't supply parts directly into

China because it takes too long because

they then get inspected at port. So, you

end up having to have a parts depot

specifically in China. So yeah, for for

OEMs certainly over the last decade, it

has become more and more uh complex

>> and that's a good reason behind the kind

of difficulties that they they're facing

at the moment.

>> Yes. Because if you're a manufacturer

that builds 5,000 cars a year, you've

got to immortalize that investment over

a relatively small run of cars.

>> Yes. And then you'll also

proportionately be billing be paying a

higher bill of materials cost because

you haven't got the negotiating power of

a big OEM going to buy lots and lots and

lots of something. Um and then

inevitably your labor cost is going to

be higher because it's a more manual

build process. It's not as automated in

all of these OEMs. So yeah, it's really

tough and a lot of the regulation that's

coming down the track, certainly at the

sort of sports car end of the market

that we're talking about is not

necessarily conducive with the things

that people want to see in a sports car.

>> Yeah.

>> Um and uh you know, I was actually

listening to your last episode on the

way up here and you were talking about

the drive by noise limit. I mean, that's

just one example of

>> Can you going to change?

>> Can you flesh that out a little bit for

us because I I heard that from you, so

you're clearly very familiar with it,

but it it does sound

>> like it's going to be trouble. Did do we

get it right on that? So, I think there

was this was actually I think that was

like three podcasts ago. Um, did we

actually get that right in terms of the

ramifications of what's going on?

>> Yes. I think you got the decibels right.

I think it's dropping from 72 is

currently the driveby noise limit and

it's dropping to 68

>> which is much more than it actually

sounds, isn't it?

>> Yes, it is. Yeah. So, on on your ear

that's a significant reduction and um

yeah, it comes in from from next year.

So all of the OEMs that want to supply

cars in in Europe and the UK will need

to comply with that new drive by noise

limit.

>> And is the the outcome there that cars

are just going to sound less good to the

ear as they drive by?

>> Um inside as well.

>> So as as Andrew mentioned, you know, I'm

sure that that there'll be there'll be

ways to make the car sound great inside.

I mean, going right back to my Porsche

days with the 991 when that was first

introduced, that had a diaphragm in the

in the rear of the car that when you hit

the sport button, it activated that

diaphragm that was then connected to the

induction system and gave you a whole

load of intake noise inside the car.

There'll be ways of there'll be ways of

doing it, but yeah, in having a having a

very loud exhaust system, um yeah, those

days are they're not they're not over

yet, but certainly it's it's starting to

change. And and does this apply? Are

there any exemptions for very low volume

manufacturers or is it everybody?

>> Uh it if so if you want an EU uh

certificate of conformity then you will

need to have

>> you'll need to you'll need to achieve

that uh that you know that that decibel

limit. Yeah. So

>> and how how are things going to become

harder or easier as the years go by as

we move towards electrification? Does it

just become tougher and tougher and

tougher?

>> It just becomes different. So, you know,

I've been watching Longbow's activity

over the last week or so with with great

interest. Um because,

>> uh, you know, I was intimately involved

with an electric hypercar.

>> Yes.

>> As you might know, which had a huge

amount of power and incredible

performance. But, um, it doesn't matter

really what you do with electrification,

you're not going to have that emotive

sound that I've just touched on, and

you're not necessarily going to have the

interaction with the gearbox that we're

we're used to. It's it's different. Um,

so, you know, I I wish Longo all all the

success in the world, but they've still

got that issue to contend with and it

would appear that Porsche have delayed

or have slowed down the launch of the

Boxster during Cayman. And and I think

that's that's clearly part of the issue

is that when you look at um

social media and and forums can't be the

only uh benchmark that you go by, but

certainly I have yet to see anyone say

they want an electric box or an electric

Cam.

>> Yeah.

>> No one's told no one has said that that

I've seen. So

>> So is your point ultimately that the

demand for electric sports cars just

isn't there at the moment?

>> I just don't see it. I don't see it in

the marketplace. And um

>> you know in in my own business, we

looked early on at at having an

electrified version of the car and I

just

>> I just we we just couldn't do it because

I just felt it was just too high risk

and I just didn't see the the demand in

the market for that.

>> Can you take us into the boardroom of a

British sports car manufacturer? How how

difficult is it to get interesting ideas

off the ground and what kills those

interesting ideas ultimately?

I mean like any big corporate company uh

you know just just walking into a

meeting with I've got a great idea

>> is [laughter] not necessarily going to

fly. Um and and and you know I'll be

candid with you I had a pretty uh pretty

steep learning curve when I when I made

the leap into corporate around um a term

called nemaashi which is a Japanese term

uh that that is the art of

pre-negotiation

>> before you go into meetings. So, um, if

if you if you've got an idea for

something that you want to do, generally

in an OEM, it's a pretty good idea to go

and pre-align that with key players. Um,

there are very few people in in a big

company that can have an idea and just

make it happen other than the CEO. Yes.

>> Um, so, uh, so yeah, so that that

>> that there's that and inevitably there's

politics in every company and people

have different

>> agendas and and yeah, you've you've got

to sort of n navigate that that that

path. But

>> presum presumably what happens is you

walk in and you go I've got this great

idea guys and then a whole bunch of

people queue up to tell you why it could

never happen.

>> Yes. Um and then there's obviously a

limited pot for investment and different

conflicting uh needs for for every

business. Um there's ways around that

which is why you see so many deposit

funded programs.

>> Yeah. Yes.

>> Because you can then you know reach out

to a customer and say you give us

deposit but actually that's actually

funding the course the engineering and

development of the car. But if you're

actually asking the customer, the

company to invest its own cash in

something, yeah, it becomes becomes more

more tricky.

>> And um so that I think is a really good

explanation as to why building five or

up to 10,000 sports cars is such a

difficult business. Um

but what is what do these companies get

right? Is it true that the demand for

the cars is still there? Is it true that

the quality of the cars is still high?

Is it true that the brands are still

aspirational around the world? Is all

that stuff still true?

>> Yes. Yeah, I absolutely. And if they

build the right product, the customers

will come.

>> Yeah.

>> Um, so, you know, I've touched on the

fact that it's very it's very difficult

to make a one-sizefits-all car. You

know, you're having to design it from

the outset to go into lots of different

markets and comply with ADAS and all of

this stuff, which is massively expensive

for a small low volume manufacturer. But

um but is the demand there? Yeah,

absolutely. I mean the the Amira, I

think by the time I came into Lotus, we

had something like 10,000 orders for

that car.

>> Yeah.

>> When it was launched and yeah, there's

there's definitely um uh and

particularly markets like the US still

crave sports cars.

>> Um so

>> why do you think we make more of those

sorts of cars than anybody else? Are

there so I mean I'm talking all the way

from you know aerial making probably

fewer than 100 cars a year up to you

know to Aston Martin or Bentley or

whatever we just seem to do more of

those sorts of cars than anybody else

and yet if you look at our roads and you

look at our weather you wouldn't have

necessarily equated the two with each

other.

>> Goes back a long way though doesn't it?

I mean when you're thinking about the

brands that we're talking about whether

it's and you know Aston Lotus you know

they they both started really in

motorsport. Yes. um as did you know

Bentley had very early roots in in in

pre-war motorsport. Yeah.

>> Um and McLaren came from motorsport. Um

so we we've got an amazing grounding in

motorsport in the UK. Um and a lot of

the business I'm doing at the moment is

in and around Silverstone in that sort

of Northampton shear, Oxford shear, uh

Warikshire motorsport belt. Um and you

know going going back to if you think

about the end of the Second World War,

we had a huge amount of aerospace

engineers um who all of a sudden were

starting to find they had nothing

nothing to do.

>> Um and it's a pretty crude way of

looking at it, but turned the wings

upside down.

>> Um [laughter]

and you got down

>> um and uh so you know I don't think it's

any coincidence that we ended up with

most of the F1 teams in in the UK. And

uh and I think you know certainly a lot

of a lot of people that I speak to

outside the car industry don't realize

how many people we employ in the UK. You

know we got just under 900,000 people

working in the UK motor industry.

>> Goodness.

>> It is huge.

>> Wow. That's why it needs to be

protected, isn't it?

>> Absolutely. And uh I I am I am as I know

a lot of my colleagues are constantly

frustrated by our lack of joined up

Yeah.

>> government strategy

>> to support our industry. Um there's a

there's an awful lot of stick at the

moment around all the things that we

can't do.

>> Um but I don't see a huge amount of

support and encouragement. Um I think

the SMMT have been doing a great job in

trying to engage with government.

>> That's the Society of Motor

Manufacturers and Traders, which is the

trade body for the car industry in this

country.

>> Yes. But inevitably they're very focused

on um volume car manufacturing. Um they

did do uh a forum very recently for for

small for smaller manufacturers but

we've got this fantastic cottage

industry with really gifted designers

engineers in the UK that most other

countries don't have. M you know when I

think about what what I'm doing now with

uh with my own business you know could I

go and set that up in Canada or you know

there are other countries look at

countries around the world it's not many

places that have the kind of resource

that we have

>> and so much that is just it's the

expertise isn't it? Yes. Yes.

>> It's the it's the knowledge, the

experience to be able to do. But we will

come on to what you're up to at the

moment in a minute, won't we?

>> Um, and just to go back to this point

about the the power, the brand power of

an Aston Martin, of a Lotus. In other

parts of the world, are they still

aspirational brands? Do people still

desire those cars?

>> They are. In both brands, um, there was

an issue overseas with brand

recognition. So, you know, Lotus, for

example, is a very, very loyal following

in the States. Um, people do know the

brand, but it's not anywhere near as

established as Porsche. Um, uh, and

Aston had the same problem, which is why

you've seen so many manufacturers switch

away from having a small badge that you

can't read on the back of the car to

Aston Martin written across the back.

And the same with Lotus have done it. mo

a lot of OEMs. You'll drive around now

and you'll see they've got their brand

actually spelt out across the tailgate.

>> Well, that's not to do with this market.

It's it's markets overseas where they're

trying to they're trying to make sure

that people understand who they are.

>> So, it's not a given then, is it? That

because you're a Lotus or Aston Martin

that you're known around the world. It's

there's still work to be done there all

the time.

>> That's interesting.

>> There's that story, isn't there, about

the director of Ford and Dearbornne who

thought they bought a company called

Austin Martin.

>> Yeah.

>> Yeah. [laughter]

>> Yeah. Yeah. And and he was in the

business.

>> It's um it's often said that the likes

of a a Bentley, an Aston Martin, a

Lotus, a McLaren, they're better off um

as part of a bigger family, a bigger

OEM. Uh Bentley, as you mentioned, is

part of the Volkswagen group.

Are they better off? And if they are,

what are the challenges that come with

being part of a bigger group?

Well, there's the inevitable distance

between um the people that are designing

engineering and building the cars and

the and the very upper echelons of the

of the management in a big group like

that. And uh I mean I know a number of

people that have worked within the VAG

group for those brands that have told me

that you know inevitably there's some

tricky politics between the UK and

Germany.

>> Yes.

But um the conversely they've got a a

benevolent parent which in the case of

Bentley I think has been very patient

over [snorts] the years. Um uh and and

and that company now is now doing

fantastically well.

>> Yes.

>> Um but they've got they've got uh a

global uh supply chain to tap into which

>> the the smaller companies don't have and

and I do know what a difference that

makes especially when it comes to things

like infotainment systems.

>> Yeah. you know, they cost a fortune to

develop now and um and you know, you're

you're able to pick and choose

off-the-shelf kit that you can bring

into your into your into your product.

That makes a massive difference. Even

things like switches and

>> all the stuff that just costs money to

develop um bespoke examples. And of

course, with things like the

infotainment systems, it's so easy to

just reflash them and rebrand them. You

have no idea where those screen whether

it's the same screen as another product.

It doesn't matter. um it's the software

that you can you can change. So yes,

they definitely have an advantage being

part of a bigger family.

>> So in summary then it's it's not that

the cars are not good enough. It's not

that they don't look good enough. It's

not that the brands aren't strong

enough. It's not that there's no demand.

The product generally is pretty good

although not flawless as we all know.

It's the harsh realities of

manufacturing cars

on the global stage that makes these

businesses so difficult and it's so hard

to make them consistently profitable

year after year after year, isn't it? Is

that fair?

>> It is. Um because uh you know I talked

about the upfront investment. Um Porsche

over the years have been so disciplined,

haven't they? I mean certainly when I

worked for them you you knew that when a

car was launched exactly at 3 and a half

years there would be a dot 2 there would

be a facelift and then exactly at 7

years there would be the new model

>> and so customers became educated with

that they understood that you know once

we got a GTS we were coming towards the

end and you you could either buy the the

car that's about to leave us which has

got everything on it and has a great

value proposition or wait for the very

first of the new Carrera which is going

to have nothing and you're going to have

to spec it up and you won't get a 4S

straight away cuz that's coming year two

blah blah blah. Um so you know they've

been they've been fantastic over the

years for for a small OEM to keep up

with that

>> level of change cycle is really even

Porsche um we were talking about this

off air earlier have had to completely

rip up their plans even the most you

know objectively you know most in terms

of you know profit per unit one of the

most profitable successful car

manufacturers in the world did you say

down their profits are down 98%.

>> Yeah.

um as they've had to just completely

rethink everything because of the

challenges of electrification. And

that's Porsche who are so good at that

sort of thing and have such an amazingly

strong brand. It must be unimaginably

difficult for someone without that kind

of clout, without a group like

Volkswagen behind them um confronting

the headwinds and frankly ever changing

winds um that they face in the modern

car industry today.

>> Yes. Um, and uh, you know, it's it's bit

frightening to be honest looking at

Porsche and and and what's going on with

uh, with their financials at the moment

and obviously they've now got a new CEO

coming in. But given I worked in Porsche

for five five plus years and I know what

a disciplined business it is. Uh, and so

for even them to have come unstuck with

this, it just shows you how difficult it

is for a sports car manufacturer,

>> which I'd argue Porsche still is. Yes.

>> 80 plus% of what they build has got four

doors now.

>> Yes.

>> But they've managed to do a very good

job of of maintaining that that image of

themselves as a sports car business. Um

but you know for them to have found it

this difficult to move towards

electrification just shows you what a

what a challenge it's going to be for

the others. Um and I watched with

interest when Ferrari made their

announcement a few weeks ago and

>> the uh the result on their share price

uh literally immediate wasn't it?

>> It just went boom.

>> Yeah. Um it's it's scary. uh but they

are all of the OEMs are going to be

pushed in that direction through

regulation and that's why I'm saying

it's not just the UK I think in Europe

there needs to be a really a joined up

>> strategy with industry and government on

how do we navigate this is this is the

biggest change to our industry since the

invention of the car

>> absolutely

>> not what we're going through right now

>> one of the things that sports car

manufacturers have done in recent times

to try to put themselves on a more

stable footing is diversify into SUVs,

bigger cars, five-door cars, led by

Porsche really, but they're all at it

now. Um, and in the case of Lotus, Aston

Martin, and we think McLaren soon as

well, amazingly,

>> is is it the right plan? Is it working

for them? Do you do you get the sense

that it's it's a good thing for them?

>> I think there's varying degrees of

success depending on which business you

look at. You know, Bentley have done

very well with the Bentega. It's been a

great car for them. Lamborghini have

done phenomenally well with the Urus.

Um, you know, that's now more than half

their volume.

>> Um, and some of the others maybe not

>> maybe haven't gone as well as those OEMs

had had hoped, but there's no ways about

it. There's a market for

>> a premium badged uh or luxury sports

brand badged SUV. Um, Porsche uh you

basically saved saved their business

with the Cayenne. Um so

>> so the point the point is it's the

synergistic relationship between the

sports cars and the SUVs in so far as

the SUVs provide the spit profits um

which pay for the sports cars and the

sports cars pro provide the image which

makes people want to buy the SUVs and

it's that relationship which

[clears throat] Porsche nailed with the

Cayenne

>> they did

>> which um has transformed their business

and provided the template for all the

others to try and follow.

>> Yes. Um and uh I mean I had a look at

the the Porsche figures for um for 2024

and it surprised me the Cayenne was the

number one selling Porsche still even

though they have the Macan which you

would think would be

>> yeah I think they have sort of like been

you know one year one year it's the

Cayenne but yes

>> but I think it was 96,000 KN's last year

just as mega isn't it? Huge numbers that

they're still turning out

>> you know and not just huge numbers but

big margins too and that's the and

that's the dream isn't it?

>> Yeah it is. Um, so you know, Porsche

have been very, very clever in their

marketing. You know, if you have a look

at their Instagram page, pretty much

everything that's on there, motorsport,

>> it's sports car derivatives, it's

classic heritage, and then the odd

picture of a lifestyle vehicle, whereas

in actual fact, their business is

>> the other way around.

>> Yeah. But they they've done a really

good job of that.

>> That's fascinating. Very smart. So

before we move on to the rest of modding

side, what what's your sort of level of

confidence in the likes of McLaren,

Aston Martin, Lotus that they can last

long into the future and keep building

great cars?

>> Well, firstly, no one can take away

those brands, can they? In the history

of those brands, there's immense value

>> in all of those uh in all of those

those.

>> So, you think they have some kind of

future, the names, nothing else?

>> They do. Um uh what what they look like

in 10 or 20 years time,

>> it's hard to predict. Um, you know, we

know McLaren are obviously going down

the route of of an electrified SUV. Um,

I just hope that they can balance that

with,

>> yeah, as I've just mentioned, Porsche

have done. Um, and I think that's the

key really. you know, they're going to

move more and more towards uh low volume

sports cars, keeping the brand credible

and still being able to tell that brand

story whilst building cars that they can

sell in volume or mortise the enormous

upfront investment costs that I

mentioned um and be a profitable

business,

>> which ultimately they all need to make a

profit.

>> Yeah.

>> Uh in order to survive and and give us

the cars we want.

>> Yeah.

>> It's a tough challenge, isn't it,

>> Limey? It really is. M [clears throat]

um so tell us what you're up to in the

rest of modding world.

>> So uh

>> and why

>> why um so I mean I've alluded to all the

things that sort of going on in the in

the wider industry and um

>> I think as you probably both know I'm

I'm a died in the wool petrol head at

heart.

>> Yeah.

>> And uh and I just wanted to get back to

building fun

>> sports cars that aren't necessarily

constrained by all the rules that I just

talked about.

>> Yes. So, um, I, you know, I teamed up

with, uh, the the designer at Lotus who

designed or led the design of the Amir,

um, Dan Durant, and, uh, we went out and

found some investment partners. Um, and

we launched our well, we we started our

company just over a year ago, Encore

Design, and we wanted to revisit the

Aspree. Um, we knew the Aspree was going

to be 50 years old uh, in October this

year. Yes. and uh just wanted to get

back to doing something lightweight um

and fun but address all of the

shortcomings of the original car. The

build quality, the reliability, all the

things that that uh I know you know and

I I owned an Aspree GT3, you know, I I

know all that car shortcomings. So,

>> um so that's what we've done and we've

we've we've

>> we've taken an Aspree V8 as a donor.

>> Um but we're going back and it has to be

a V8.

>> It has to be a V8 because we wanted that

powertrain.

>> Yes. And also over the 30-year

development of the Aspree, by the end,

they were the best cars.

>> Yes.

>> So, uh, we're taking the most recent of

them, keeping the essential bits that we

wanted to keep, which is the backbone

chassis, the engine block, the gearbox

casing, and a few ancillary bits.

>> Yeah.

>> And building a new car.

>> So, we've engineered a completely new

carbon body shell to sit on that

>> steel backbone chassis. Um, and the

advantage of doing that means that

everything we then hang off it, uh, will

fit together in a way that no Aspree

you've seen before. So, we've got

consistent 3M panel gaps on our on our

body.

>> Um, it's also, uh, the structure of that

body shell is also far more rigid than

the original car.

>> Um, and it's lighter. So, we're going

from I think the Aspree V8 was just over

1300 kgs wet. We're under,200.

>> Wow.

>> So, we're lighter. um our engine. Uh

we're going right back to the block and

then rebuilding the engine with all new

components. So, we've got new pistons.

We've got a beautiful I've I've just

asked our uh photography uh uh team to

take a take pictures of the throttle

body cuz we've got a machined from solid

casing for this throttle body which has

been made completely just for us. Yeah.

>> Um and unlike the original Aspree V8

which had a cable throttle, we've got an

electronic throttle um with its own

special uh specially made um engine

management um computer. So we're getting

a much more even throttle, a much more

even idle uh when we're on tick over,

but then much better engine control. And

we've turned the power up. So we've gone

from not gone crazy. We've gone from 350

to 400 horsepower.

>> Yeah,

>> that engine was actually originally de

developed to put out up to 600

horsepower.

>> So you could go there. Would you need to

put intercoolers on it or

>> need to put intercoolers on it? So,

>> but you could do that.

>> Ultimately, you could. We haven't done

that. Um,

>> we feel 400 horsepower of,200 kgs for a

road car is absolutely perfect. And it

means you're going to be able to have a

lot of fun on it on the road.

>> It's right in what we would think of as

being the sweet spot, wouldn't it? Isn't

it?

>> And there really isn't anything else on

the market right now that's

mid-engineed, manual gearbox, V8 in the

back. Um,

>> is it the same? You said is it you said

it's the same gearbox casing?

>> Yes. Everything in it is new. Yeah.

>> Um so

>> was it a Renault gearbox that you Yeah,

it was a Renault 25.

>> Yeah.

>> Um I think somebody said to me they used

it in the traffic van as well. It was a

it was a a pretty bad gearbox. Um

>> so we've had to revisit that. So we've

got completely new first and second

gear. Um third, fourth, and fifth we

replace.

>> Um and then we've strengthened all of

the internals in the gearbox. We've got

new um new uh bushes, new synchro mesh

rings. You know, we we've changed

everything inside it to make it a more

precise gearbox to use and more robust.

>> Um so changing it for another gearbox

was something we looked at doing, but

didn't matter what we did, we were going

to end up having to cut into that Colin

Chapman era chassis frame, which we just

didn't want to do,

>> of course. So uh we have made that

gearbox significantly better

>> and same um suspension design.

>> Uh it's the same um suspension geometry

but we have changed um the shocks and

the springs have both been replaced with

the sport 350 spec

>> which was the last 50 V8 spre. So it's a

bit stiffer um than the than the V8. Uh

so they're um they're Billstein shocks

and IBback uh springs. Um, we've got new

suspension arms that are machined from

solid um, beautiful new all new brakes.

So, significantly increase the the the

size and the power of the brakes. So,

we've gone up to an AP Racing six pot on

the front and a fourp on the rear.

>> So, you've had to up the wheel size as

well presumably.

>> No. Okay.

>> So, we stuck with the wheel geometry.

So, we've we've we've let me just say

we've taken advice from uh someone who's

been very helpful that was involved very

closely involved in the development of

the Sport 350.

>> Right. I can't name him because he's

working for another OEM, but he's been

helping us with ride and handling. And

his advice was very much um stay with

the original tire wall because it was

part of the suspension.

>> And actually when we tried increasing

the the the wheel size on the Aspree um

up to an 18 in on the front, the car

just looked wrong. Um so it left us with

a challenge with tires because

>> yeah, of course. Um, the Aspree V8. I

think the most recent tire that you can

buy for an Aspree V8 on its existing

wheel size is a Michelin Pilot Sport 3,

>> which is, you know, it's a new tire, but

it's 20-y old tire technology.

>> Yes.

>> Um, so we found Bridgestone Patenza, the

very latest Bridgestone Patenza, which

we we've put on our car, um, which will,

you know, significantly improve grip.

Yeah.

>> So, we're we're going to we will turn

better, we'll stop better, we'll go

better. Um, and then inside the car

there's everything that you would want

in a modern car, but nothing that you

don't need. So, you know, we're we're

not putting uh uh the ability for you to

sit in the passenger seat and watch

YouTube. Um, but but it does have

CarPlay. It does have a 360°ree parking

camera system um which is built into the

car.

>> Air conditioning, cruise control,

>> proper air conditioning, no cruise

control. Um, but we do have heated

seats. Um, you know, yeah, it's it's

it's going to be an easy car to live

with.

>> I'm saying this because I'm 6' 3. Is the

interior package, have you found any

more room in it?

>> No.

>> Okay, fair enough. [laughter]

>> No. Um although um I I actually was

talking to uh a let me let me say a very

tall supermodel who's well known on TV

recently and uh she said to me that

she's never had a problem driving around

in an Aspree and she's way you know way

over six feet tall. So good. Um, you

know, yes, it's not it's not any better.

We did look at putting a thinner seat

in, but

it was it just wasn't going to be

comfortable enough for touring in. So,

we've we've uh we've we've stopped.

>> Are there enough donor vehicles out

there for you to do whatever it is you

need to do?

>> Yeah. Uh, so over 1,600 V8s were built

>> um of which we think around 1,200 still

exist.

>> Yes.

>> Um, so, you know,

>> one of which is still in Argentina

presumably.

>> Yeah. Very very possibly. I actually had

a a call um a couple of weeks ago from a

chap looking at buying one who's in

Taiwan and he said he's got one of three

aspreviates in the whole country um in

in Taiwan. So you know they are spread

far and wide but we know the bulk of

them went to the US.

>> Yeah.

>> Um the UK and and Europe but the the UK

and the US actually took the line share

of the of of the production. So, those

are probably our two key markets just

because there are so many cars

available.

>> Yeah.

>> But, you know, I I I've read some of the

comments online about, I can't believe

you're cutting up a spree V8s to to do

this. I mean,

>> the cars that we are using, um,

certainly the first cars that we've

built as our prototypes and the first

donors that we've we've brought in are

not garage queens.

>> They are cars that were literally on

their last legs, if not

>> dead.

>> You don't want them to be, do you? No.

>> It's just unnecessary experience. Just

giving them another life really, isn't

it?

>> Yeah. Our our first prototype was anote

failure. Um, and and probably was never

going to go back on the road again, but

but the important bits that we needed,

the the chassis, the block

>> you can see how much more animated Simon

has become in the latter part of this

conversation because it's clearly so

much more fun [laughter] to be involved

in this world.

>> It is. Um, it is. You know, it's not

that we're, you know, we're engineering

this car so it's far better than it ever

was when it was new. It's stronger. It's

safer. We we discovered the original

Aspree actually had no rollover

protection in the in the roof. Right. So

in our new carbon body shell, we've got

proper rollover protection built in. So

um it's not that we're not paying any

attention to regulation at all. We we

are and the car will be engineered to a

very high standard, but we're not having

to contend with all the stuff that I we

were talking about earlier earlier in

>> Can can you just give us a few of the

headlines? How many you going to make,

what it's going to cost, and when people

going to get to see it or drive it or

own it?

>> Yep. Um so from from the outset I wanted

to come to market with a car not with

renders which I was forced to do so many

times in my previous life. So um we

actually announced the brand on the 2nd

of October. Um and we were already way

into the build of our first and second

prototypes at that stage.

>> So our first prototype we finished at

the end of this month. Um we'll studio

shoot it and then we're going to do some

press previews in the first week of

December um and put all the imagery out.

our website will go live, our

configurator will go live um online. Um

and then the first time we're going to

show it to anybody is at the um SEC

private members winter ball as a private

preview for 200 supercar owners um which

is happening at Red Bull Formula 1 um on

Saturday the 6th of December. Um but it

will then start to appear in public. We

are doing our media drives uh in

Portugal in the second week of March.

Um, and we're going to use some of the

some of the roads that Evo have used in

the past for doing their car of the

year. Um, so, uh, you know, fantastic

roads for that car.

>> So, and then next summer, you know,

it'll be at all of the the key events

that you'd expect to see it at around

the world.

>> So, that's the sort of timing. In terms

of price, um, it's £430,000 plus VAT

>> plus donor car or not?

>> Plus a donor car.

>> Plus a donor car. And what would

somebody do? Do they source the donor

car or do you source the donor car?

>> We can help.

And and what sort of money are you

paying for a ratty V8, the Spree? Now,

>> I think the cheapest one, I checked

about 2 weeks ago, and I think the

cheapest car in the UK was for sale at

24K, which is what we paid for our first

prototype as a nonrunner. Um, a nice V8

starts at about 50.

>> Okay.

>> We don't need a nice one.

>> So, they're bizarrely they're more

expensive overseas. So, in Europe, the

going rate for a V8 sort of 70 or

80,000,

>> but you But so you're all in for half a

million effectively.

>> Yes.

>> Yeah. Yeah. Okay. Yeah. Yeah. Um and uh

in terms of volume, um we've got our two

prototypes, but in addition to that, we

will build 50 production cars.

>> So, um there's there's obviously a

significance to the 50.

>> Well, yeah, of course.

>> And and and is the idea that this then

becomes I presume you're not just going

to stop there. By then, by that stage,

you're going to do something else after

that.

>> Yes. Um we have got future plans. Uh

like any OEM, I can't dul.

>> No. No. I would I wouldn't [laughter]

ask, but but would they be uh given your

background and given what the first car

is, would they be on the basis of doing

another Lotus base car or or or could

you go anywhere?

>> We we think we've got quite a bit of

mileage on Lotus. Yeah. Um uh uh so yeah

we we've got other things that we want

to do there and and yes I'd love to

touch some of the the the things that I

did elsewhere in my career in the past

at some point but it

>> is really important that we try not you

know we had this conversation amongst

ourselves as founders you can't get too

carried away with that at this stage we

have to focus on car one and and uh you

know I think we

>> we we went out last year and brought our

investors on board and um at the

beginning I said to them, you know, I

want enough investment to to do all the

engineering, all the design,

engineering, development work on this

car and bring it to market without us

having sold, which means we have to keep

it a secret. Even though, you know, a

year ago I could have gone out with

renders and said, "This is what we're

going to do. Give us a deposit and help

fund my company." We haven't done that.

Um, but obviously the industry is

>> rife with that, isn't there? There's a

lot of that that goes on. Um, and that's

why I really dislike the term restood

because it's such a broad church.

>> I know. I know. If someone comes up with

a better one, I'll happily use it.

>> Yeah, I haven't come across one.

>> I think it's just a really ugly word,

but we need to get into the whole

phenomenon of it. And as somebody who is

absolutely at the coldface,

>> why has it come up? I mean, I know that

people have been doing these things for

a very long time, but it has become such

a thing recently. Uh, and there are so

many different ones out there, uh, now

obviously including yourselves. Why have

people suddenly decided to go down this

route? I mean, I kind of think that I

know the answer. It' just be interesting

to hear the take of someone who is

actually doing it rather than a couple

of idiots sitting in a studio gassing

about it.

>> So I think I there's there's lots of

reasons and probably talk all day about

this but you know if we start with the

customers

want to have something that other people

don't have. Um which means buying

something low volume and that's becoming

increasingly difficult to do as an OEM.

Um so us doing a run of 50 cars we can

do it because I'm not having to smash 70

cars into walls and roll them over. Yes.

>> Or or all the stuff that I would have to

do to to to put cars in all over the

world. Um so there's that, you know,

super low volume exclusivity. Um and

then also being able to deliver the

things that customers want or that they

love. So in the case of our car, we've

got pop-up headlights. Well, when was

the last time uh there's a bit of

trivia. Who was the last manufacturer to

make a car with pop-up headlamps?

Corvette C5 started in 2004.

>> So, you know,

>> there hasn't been a pop-up for 21 years.

>> Um, so, and we have the pop-up

headlights. They're completely new.

They're new by LED units. And, uh, they

they they open at a much lower angle

than the original Aspree, which has it

had a sort of eyelid, didn't it? The way

they open.

>> Mine used Mine used to wink at passers

by.

>> I had an S3, a 1981 S3. Um, and you'd be

driving along, one of them would just go

up and go back down again.

I had a TVR Tasmin 25 years ago and uh I

remember getting to a petrol station

switching the headlamps on and one came

up and the other one didn't and I put I

then switched the headlamps off and the

other one came up. [laughter]

>> So on a vacuum car won't do that.

>> No, they'll both come up at the same

time and when you want them to.

>> That's progress.

>> So So yeah, we could we can make we can

make the cars that with with with

features in that the customers want. So

>> including the fundamentals, manual

transmission, lightness, naturally

aspirated combustion engine.

>> Yeah. Yeah. So you know I'm working with

a number of other companies uh as you

mentioned at the moment and and one of

them is Theon Design who are based in

Oxford doing a 911. Beautiful car

similar thing 400 horsepower, 1200 kilos

or less than,200. I think the most

recent one was 1150. you know, just

they're just perfect for a road car and

you for an OEM to deliver that now is

really tough, especially with an

internal combustion engine and a manual

gearbox. It just not going to happen.

>> Is it going to be called the Encore or

Spree?

>> Encore series 1?

>> Series one. You're not going to use the

word a spree.

>> Um, and have your chums at Lotus been in

touch about it?

>> No, not yet.

>> Not yet.

>> Um, you know, I really hope that they

see this as being supportive of Lotus.

you know, none of us have got anything

against um Lotus or want to see Lotus be

a successful brand, you know, and uh

still have great affection for it as a

business. So, um no, I I I I think what

we're doing effectively is a very heavy

restoration of an old car.

>> Yeah.

>> Um

>> and visually, is it going to look more

like a Jarro car or a Peter Stevens car?

>> It's going to look like a Jarro.

So, when we say series one, we have

revisited we have revisited the purity

of the original design. Yeah.

>> Um, but nothing in the body or in the

body shell is carry over. So you you'll

recognize the silhouette of a series 1

spree.

>> Yes.

>> But every part of that body is new um

and has been been changed by Dan. Um and

so he calls it a nip and a tuck.

>> It just looks a bit more a little bit

more muscular um and just more modern.

Um I mean some of the very early um

customers that have come in and seen the

car um in the last couple of weeks have

said you know if you hadn't told me that

this had a connection to a 1975

>> Aspree in terms of its in influence of

of design I would have just thought it

looked like a fresh

it does look really fresh um as as a

body shape which is amazing given that

we haven't seen wedges

I didn't actually think about what was

the last wedge. Good point.

>> But well, the Aspree V8 must have been

one of them. It was right at the end,

wasn't it? Um so yeah, it was an era.

[sighs]

[gasps]

>> We need to um wrap this one up. So,

thank you for coming in and telling us

about Encore. We look forward to seeing

the car. Look forward to having you go

in the car.

>> Not long.

>> Yeah. Yeah. Good.

>> March.

>> Can't wait.

>> And and thank you for talking us through

the British sports car scene as well.

It's been fascinating to hear an

insider's point of view on all this

stuff. We talk about it a lot, but um to

hear it from someone who's been there

and done that is

>> is really really cool. Um thank you

again for coming in. Um and we'll we'll

speak again soon, I'm sure. To everyone

watching, to everyone listening, please

just follow the show. If you're watching

on YouTube, just hit the follow button.

Um sorry, the subscribe button. If

you're listening on uh a podcast app,

just follow the show. It helps us find

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next week.

Why it's so hard for Aston Martin, McLaren and Lotus to make money #289

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Aston Martin Valkyrie

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