Aston Martin’s $3.5 Million Supercar Embroiled in Swiss Spat
(Bloomberg) -- Aston Martin Lagonda Global Holdings Plc said it’s suing a company affiliated with one of its dealers in Switzerland, alleging that it withheld customer deposits collected for the 2.5 million-pound ($3.5 million) Valkyrie supercar.
The automaker accused Nebula Project AG of failing to pass some deposits taken from customers along to Aston Martin and said it has terminated an unconventional commercial arrangement its previous management team entered in 2016. Under the now-dissolved deal, Nebula had agreed to fund development of the Valkyrie and other mid-engine cars in exchange for royalty payments.
A spokeswoman for the cantonal prosecutor’s office in St. Gallen said they are expecting a lawsuit to be filed but hadn’t received it as of noon Tuesday.
As a result of terminating the agreement with Nebula, Aston Martin is no longer liable for any potential royalty payments, which could have been “significant” over time, the carmaker said in a statement Tuesday. The company also cut off its dealer arrangements with AF Racing Holding AG, the company that operates Aston Martin St. Gallen in Switzerland, whose board members manage Nebula.
“Aston Martin’s allegations against us in connection with the Aston Martin mid-engine programs are wholly unfounded,” AF Racing said in an emailed statement. “On the contrary, we and our customers have been severely affected by Aston Martin’s behavior as a partner in the project, including delaying Valkyrie customer deliveries by more than two years due to the late start of production.”
The unilateral cancellation of the contract is unlawful and unjustified, AF Racing said, adding that it is ready to take the necessary steps to protect its contractual rights.
The canton of St. Gallen in eastern Switzerland is home to just 510,000 people but generates gross domestic product of almost 39 billion Swiss francs ($42 billion), making it a natural fit for wealthy fans of supercars. The Valkyrie, which Aston Martin expects to start shipping in the second half of the year, is intended to compete with mid-engine models made by the likes of Ferrari NV and McLaren Automotive Ltd.
While Aston Martin believes the net impact of its actions against Nebula will be positive over time, it’s expected to reduce cash flow and earnings before interest, taxes, depreciation and amortization by as much as 15 million pounds this year. The automaker’s shares traded down 1.5% as of 3:33 p.m. in London, paring an earlier decline of as much as 4.9%.
Valkyrie customers will still receive their cars as scheduled, Aston Martin said, despite the company not having received all the deposited funds. The company said it will take deposits for special vehicles directly from customers going forward instead of through dealers.
Aston Martin racked up significant losses after going public in 2018 and has spent the last year restructuring itself after a rescue by Canadian billionaire Lawrence Stroll, who took over as chairman. The 61-year-old fashion mogul has injected much-needed cash and forged closer ties with Daimler AG’s Mercedes-Benz to ensure the company survives tumultuous times for the auto industry.
(Adds comment from AF Racing in fifth paragraph)
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