Aston Martin's $50,000 Compact for the Masses

Aston Martin, the maker of sports cars favored by Prince Charles, not to mention James Bond, isn't a brand you'd expect to court drivers looking to squeeze into tight parking spaces. Yet in an effort to broaden its appeal, the English automaker is betting that the Aston Marton logo on the grill and plenty of hand-stitched leather gracing the interior will persuade buyers to pay £30,995 ($50,500) for its Cygnet urban subcompact that debuts this month. That's more than double the price of Toyota Motor's (TM) iQ, which shares the same engine, transmission, and frame with the Cygnet. Still, the price is a pittance compared with the $285,000 DBS, 007's latest Aston.

"This car is a luxury city car," says chief designer Marek Reichman. "Prior to Cygnet, your choice was, you open the door and it smells of plastic; now you open the door, and you'll be hit by this wonderful smell of leather."

Aston Martin relied on a component supply deal with Toyota to cut the cost and production time for the Cygnet. The ultra-luxury carmaker, which Ford Motor (F) sold to private investors in 2007, developed the model in about 12 months, far less than the three years typical for most car projects. Aston Martin needed the quick turnaround to boost demand as its owners seek new funding. Investment Dar, the Kuwaiti financial services company that owns half of Aston Martin, has challenges of its own. In May 2009, Investment Dar missed a scheduled $100 million payment on an Islamic bond and in March reached a plan with its creditors to repay that debt.

Aston Martin, which doesn't disclose financial results, aims to sell 1,500 Cygnets a year, which would make it the company's second-best seller after the V8 Vantage, which sells about 2,000 vehicles a year. Overall, Aston Martin's sales in 2010 gained about 6 percent, to 4,250 cars, according to the company.

Environmental pressure and growing city populations have prompted luxury carmakers to tailor cars for urban drivers. Volkswagen's Audi rolled out the A1 subcompact last year. BMW, the luxury leader, will introduce an electric-powered city car in 2013. Daimler's (DAI) Mercedes-Benz later this year will start selling a revamped B-Class compact, the first in a line of four new small cars.

Not everyone is thrilled with the Cygnet. "I have no idea who would buy an Aston iQ or why they would even want one—it looks just daft," says Simon Empson, managing director of U.K. discount car website "Extending the brand is all well and good—fitted luggage and sunglasses I get—but city cars I just don't," says Empson, who previously owned the Aston Martin DB5 featured in the film The Italian Job.

Cygnet buyers will get a leather interior made from seven cowhides, the same number used in the $205,387 DB9 sports car, Reichman says. Aston Martin will offer six types of alloy wheels and as many as 3 million possible combinations of trim and color options. A navigation system, six-speaker stereo, and leather-clad steering wheel and gear shift are standard.

Beneath the hood, however, the Cygnet's 97-horsepower engine is essentially unchanged from the one in the $20,500 Toyota iQ. The Cygnet accelerates to 100 kilometers (62 miles) per hour in about 11.6 seconds, the slowest of any Aston Martin. That's an eternity next to the 3.7 seconds for the carmaker's 750-horsepower One-77 sports coupe. "It's not about naught to 60 speeds, or road holding or handling, or great racing capabilities," explains Reichman. "In the city, space is far more at a premium. You've got fewer chances to park, far more congestion, so it makes sense that our customers have a small luxurious product."

The Cygnet also gives Aston Martin a more eco-friendly product, providing buyers with a "green halo," says Peter Schmidt, editor of Automotive Industry Data. The compact emits about 120 grams of carbon dioxide per kilometer, compared with 572 grams for the One-77. "The attitude of the super-rich has changed," Schmidt says. "They really do want to be seen to be green. People can turn up at their golf club in this car, and it will be a talking point, and Aston Martin owners love talking about their cars."

The bottom line: Aston Martin is betting there's a market for luxe urban compacts. It already has orders for 400 of its $50,000 Cygnets, debuting this month.

    Before it's here, it's on the Bloomberg Terminal.