Aston Martin Announces Profit Warning Due to US Tariff Pressures and Seeks Government Assistance
The automaker has attributed a profit warning to US-imposed trade duties, as it urging the British authorities for greater proactive support.
This manufacturer, producing its vehicles in Warwickshire and south Wales, lowered its profit outlook on Monday, representing the second such revision in the current year. The firm expects deeper losses than the earlier estimated £110 million shortfall.
Requesting Government Backing
The carmaker voiced concerns with the British leadership, informing shareholders that despite having communicated with representatives on both sides, it had positive discussions directly with the American government but needed more proactive support from UK ministers.
The company called on UK officials to protect the interests of niche automakers such as itself, which provide thousands of jobs and add value to local economies and the wider British car industry network.
International Commerce Effects
The US President has disrupted the global economy with a trade war this year, significantly affecting the car sector through the introduction of a 25% tariff on 3rd April, on top of an existing 2.5% levy.
In May, the US president and Keir Starmer reached a agreement to cap tariffs on one hundred thousand UK-built cars per year to 10%. This tariff level took effect on June 30, aligning with the last day of Aston Martin's second financial quarter.
Trade Deal Concerns
Nonetheless, Aston Martin criticised the trade deal, stating that the implementation of a American duty quota system introduces further complexity and restricts the group's capacity to precisely predict earnings for the current fiscal year-end and possibly quarterly from 2026 onwards.
Other Factors
Aston Martin also cited weaker demand partly due to greater likelihood for logistical challenges, particularly following a recent digital attack at a major UK automotive manufacturer.
UK automotive sector has been rattled this year by a cyber-attack on the country's largest automotive employer, which led to a manufacturing halt.
Market Response
Shares in Aston Martin, traded on the London Stock Exchange, fell by over 11 percent as markets 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 Q3, falling short of previous guidance of being broadly similar to the 1,641 cars sold in the equivalent quarter the previous year.
Future Plans
Decline in sales comes as the manufacturer gears up to release its Valhalla, a mid-engine supercar costing around $1 million, which it expects will increase earnings. Deliveries of the car are expected to begin in the last quarter of its fiscal year, though a forecast of approximately one hundred fifty deliveries in those final quarter was below earlier estimates, reflecting technical setbacks.
Aston Martin, well-known for its appearances in James Bond films, has initiated a review of its upcoming expenditure and spending plans, which it indicated would likely result in lower spending in R&D compared with earlier forecasts of approximately £2 billion between its 2025 to 2029 financial years.
Aston Martin also told investors that it no longer expects to generate profitable cash generation for the latter six months of its current year.
The government was approached for comment.