Aston Martin Issues Profit Warning Due to American Trade Pressures and Requests Government Support
The automaker has blamed an earnings downgrade to Donald Trump's trade duties, while simultaneously urging the British authorities for more active assistance.
The company, producing its cars in Warwickshire and south Wales, revised its earnings forecast on Monday, marking the another downgrade this year. The firm expects a larger loss than the earlier estimated £110 million shortfall.
Requesting Official Backing
Aston Martin voiced concerns with the UK government, informing shareholders that while it has communicated with officials from both the UK and US, it had positive discussions with the American government but needed greater initiative from UK ministers.
The company called on British authorities to safeguard the needs of niche automakers such as itself, which create thousands of jobs and add value to regional finances and the broader UK automotive supply chain.
Global Trade Impact
Trump has disrupted the global economy with a tariff conflict this year, significantly affecting the automotive industry through the imposition of a 25 percent duty on April 3, in addition to an existing 2.5 percent charge.
In May, the US president and Keir Starmer agreed to a agreement to cap tariffs on one hundred thousand UK-built cars annually to 10 percent. This rate took effect on June 30, aligning with the final day of Aston Martin's second financial quarter.
Trade Deal Concerns
However, the manufacturer expressed reservations about the trade deal, arguing that the introduction of a American duty quota system introduces further complexity and limits the group's capacity to accurately forecast financial performance for this financial year end and possibly quarterly from 2026 onwards.
Additional Challenges
Aston Martin also cited reduced sales partly due to greater likelihood for logistical challenges, especially after a recent digital attack at a major UK automotive manufacturer.
UK automotive sector has been shaken this year by a cyber-attack on Jaguar Land Rover, which led to a manufacturing halt.
Financial Response
Shares in the company, traded on the London Stock Exchange, dropped by more than 11% as markets opened on Monday morning before partially rebounding to be 7 percent lower.
The group delivered 1,430 vehicles in its Q3, missing previous guidance of being broadly similar to the 1,641 vehicles delivered in the same period last year.
Future Initiatives
The wobble in sales coincides with Aston Martin prepares to launch its Valhalla, a rear-engine hypercar priced at approximately $1 million, which it hopes will boost profits. Deliveries of the vehicle are expected to start in the final quarter of its fiscal year, although a forecast of about 150 units in those final quarter was lower than previous expectations, due to engineering delays.
Aston Martin, well-known for its appearances in James Bond films, has initiated a review of its upcoming expenditure and investment strategy, which it indicated would probably lead to reduced spending in engineering and development compared with previous guidance of approximately £2 billion between its 2025 and 2029 financial years.
Aston Martin also informed shareholders that it does not anticipate to achieve positive free cash flow for the latter six months of its current year.
UK authorities was approached for a statement.
