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Aston Martin CEO: Autonomous future could impact luxury auto brands

The head of Aston Martin Lagonda Global Holdings PLC said the luxury car industry could see brands exiting into the premium segment in 10 years.

While the auto industry as a whole transforms in a "tech revolution" that includes autonomous vehicles, luxury brands are working with a "broken business model," Aston Martin President and CEO Andy Palmer said during the Automotive News World Congress in Detroit on Jan. 15.

Palmer said automakers are spending billions of dollars to produce luxury brand vehicles, but then sell the cars at discounted prices.

"This broken business model is being exasperated as technology ... further disrupts our industry," the CEO said.

"They're stacking high and selling cheap," Palmer said. "It doesn't make sense."

As automakers work toward cars that can drive themselves, it could mean consumers will care less about which brands they are riding in.

"The brand simply becomes a nameplate on the hood of a commodity," Palmer said, adding that the changing industry is turning personal vehicles into mere commodities and not also as a reflection of personal choice and expression.

"My simple proposition today is this: We shouldn't consider the future of automobiles only through the eyes of mass manufacturers," Palmer said. "Sadly, they risk moving toward commoditization."

Palmer said in this change, there is still an opportunity for distinctions to emerge. Brand power still allows for an advantage, if the automakers can produce the vehicles consumers want, the CEO said.

"We'll never trade beauty for functionality," Palmer said.

Aston Martin's new sub-brand, Lagonda, is planning to launch an electric SUV in 2021.

"I'll make a bold prediction that 10 years from now, we will not see any new luxury brands" establishing a presence in the market, Palmer said.

Under pressure to see greater profit from more volume, Palmer said the industry "might see at least one of the established luxury brands exiting into the premium segment" in pursuit of selling more cars for its parent company.