Ron Dennis was on confident form at the launch of McLaren Automotive Asia in Singapore today. Taking the stage with his local partner, entrepreneur Peter Lim, he said that his vision for McLaren is that within 10 years F1 will be only 10% of McLaren’s turnover and he will make it a company which measures its turnover in the billions of dollars.
Among confident predictions of how McLaren will press on into the Asian market, he also confirmed that the USA is going to be McLaren’s leading market at around 42% and that it is likely to start a racing programme in the USA to support its sales drive, “You will see some form of McLaren presence in some form of motorsport in America,” he said.
McLaren Automotive’s plan is for 42% of the cars to sell in the USA, 35% in Europe and the rest in Middle East and Asia. Although he didn’t speak at the event, Talal al Zain, the powerful CEO of Bahraini investment vehicle Mumtalakat, a key McLaren shareholder and partner in its push for growth, was sitting on the front row.
Dennis said that in five years time, McLaren will carefully examine the possibility of an IPO in the various markets. But he said that he will encourage shareholders not to seek an IPO, but rather to take money as dividends.
“My ambition for the group is that in 10 years F1 is bigger, but is only 10% of our business,” he said. “Growth is not just automotive but also Applied Technologies. Planning went in last week for two new factories. We intend to have turnover in the billions and we will achieve it,” he said confidently.
Asked how his plans might cope with the looming financial crisis Dennis said, “No company can say ‘I’m immune to what’s happening in the world’. But I am averse to debt. We have a model which is driven by an out of balance ratio of equity to debt. But any company which doesn’t react to the markets is foolish. Asia isn’t immune to a global slowdown, but it is pretty robust.”
McLaren’s analysis of the high end sports car market is that before the 2009 slowdown this sector was selling 140,000 cars a year and that when new cars come in the market grows. ‘It’s about creating more choice,” said Dennis. The slowdown took the market down to 80,000 cars a year and today it has climbed up to 100,000. McLaren aims to have a 4% market share of the high end sports car market, which Dennis described as “conservative”, while acknowledging that the market is dominated by Ferrari.
“Our ambitions are driven by the desire to be exclusive,” he said. “When we are fully mature we will be making 4,000 cars a year. There will be 3 models and variants of them, different segments of the price market.”
Dennis explained that it’s not good to have waiting lists in excess of 1 year because customer becomes frustrated. However if the waiting list is less than one year the value depreciates quickly. Value is held up by waiting lists. At the moment the waiting list is two years, which he described as “not good”.
Building a brand that people admire is one thing, building one that people love is quite another and its something very few companies achieve. It will be interesting to see how McLaren evolves in this area.