Aston Martin Issues Profit Warning Amid American Trade Pressures and Seeks Government Assistance
The automaker has attributed a profit warning to US-imposed trade duties, while simultaneously urging the UK government for more proactive support.
This manufacturer, which builds its vehicles in Warwickshire and south Wales, revised its profit outlook on Monday, representing the second such revision this year. It now anticipates deeper losses than the earlier estimated £110 million deficit.
Requesting Government Backing
Aston Martin voiced concerns with the UK government, informing investors that while it has engaged with officials on both sides, it had positive discussions with the American government but needed more proactive support from British officials.
The company called on UK officials to safeguard the interests of niche automakers like Aston Martin, which provide thousands of jobs and contribute to regional finances and the broader UK automotive supply chain.
Global Trade Impact
The US President has shaken the worldwide markets with a trade war this year, significantly affecting the automotive industry through the introduction of a 25% tariff on April 3, on top of an existing 2.5% levy.
During May, American and British leaders reached a agreement to limit duties on 100,000 British-made vehicles per year to 10 percent. This tariff level took effect on June 30, coinciding with the final day of Aston Martin's second financial quarter.
Trade Deal Criticism
Nonetheless, Aston Martin criticised the trade deal, arguing that the introduction of a US tariff quota mechanism introduces further complexity and limits the company's ability to precisely predict financial performance for this financial year end and possibly each quarter starting in 2026.
Other Factors
Aston Martin also cited weaker demand partially because of increased potential for supply chain pressures, particularly after a recent digital attack at a leading British car producer.
The British car industry has been rattled this year by a digital breach on the country's largest automotive employer, which led to a production freeze.
Market Response
Shares in Aston Martin, listed on the LSE, dropped by more than 11% as trading opened on Monday at the start of the week before partially rebounding to be 7 percent lower.
The group delivered 1,430 vehicles in its third quarter, missing earlier projections of being roughly equal to the 1,641 vehicles delivered in the same period the previous year.
Upcoming Plans
The wobble in sales coincides with Aston Martin prepares to launch its Valhalla, a mid-engine hypercar priced at around £743,000, which it hopes will boost earnings. Shipments of the car are scheduled to start in the last quarter of its financial year, although a forecast of about 150 units in those three months was below earlier estimates, reflecting technical setbacks.
The brand, famous for its appearances in the 007 movie series, has started a evaluation of its future cost and spending plans, which it said would probably result in reduced capital investment in engineering and development versus previous guidance of approximately £2 billion between its 2025 and 2029 fiscal years.
Aston Martin also told investors that it no longer expects to achieve positive free cash flow for the second half of its present fiscal year.
UK authorities was approached for a statement.
