Aston Martin Announces Profit Warning Amid American Trade Challenges and Seeks Official Assistance
The automaker has blamed an earnings downgrade to Donald Trump's trade duties, while simultaneously calling on the British authorities for more proactive support.
This manufacturer, producing its cars in Warwickshire and south Wales, lowered its earnings forecast on Monday, marking the second such downgrade in the current year. The firm expects a larger loss than the previously projected £110m deficit.
Seeking Official Support
The carmaker expressed frustration with the British leadership, telling shareholders that while it has engaged with representatives on both sides, it had positive discussions directly with the American government but required greater initiative from British officials.
The company called on British authorities to protect the needs of small-volume manufacturers such as itself, which provide thousands of jobs and contribute to regional finances and the wider British car industry network.
International Commerce Effects
Trump has disrupted the global economy with a tariff conflict this year, significantly affecting the car sector through the introduction of a 25% tariff on 3rd April, in addition to an existing 2.5 percent charge.
In May, American and British leaders agreed to a deal to limit duties on 100,000 UK-built vehicles annually to 10%. This rate took effect on 30th June, coinciding with the last day of Aston Martin's Q2.
Trade Deal Criticism
Nonetheless, Aston Martin criticised the bilateral agreement, arguing that the introduction of a US tariff quota mechanism adds further complexity and limits the company's ability to accurately forecast earnings for this financial year end and possibly each quarter starting in 2026.
Other Factors
The carmaker also cited reduced sales partly due to greater likelihood for logistical challenges, particularly following a recent cyber incident at a major UK automotive manufacturer.
UK automotive sector has been rattled this year by a digital breach on Jaguar Land Rover, which prompted a production freeze.
Market Response
Stock in the company, traded on the LSE, fell by more than 11% as trading opened on Monday at the start of the week before partially rebounding to be down 7%.
Aston Martin sold 1,430 vehicles in its third quarter, falling short of previous guidance of being broadly similar to the 1,641 cars delivered in the same period the previous year.
Upcoming Initiatives
The wobble in sales coincides with the manufacturer prepares to launch its flagship hypercar, a mid-engine supercar priced at approximately £743,000, which it expects will increase earnings. Deliveries of the car are expected to start in the last quarter of its financial year, although a forecast of approximately one hundred fifty deliveries in those final quarter was below previous expectations, due to technical setbacks.
The brand, famous for its roles in the 007 movie series, has started a review of its future cost and investment strategy, which it said would likely result in reduced capital investment in engineering and development compared with previous guidance of about £2bn between its 2025 to 2029 fiscal years.
Aston Martin also told shareholders that it no longer expects to achieve profitable cash generation for the latter six months of its current year.
UK authorities was approached for comment.
