Aston Martin Announces Profit Warning Amid US Tariff Pressures and Requests Official Assistance
The automaker has attributed an earnings downgrade to Donald Trump's tariffs, while simultaneously urging the British authorities for greater proactive support.
The company, which builds its cars in Warwickshire and south Wales, revised its earnings forecast on Monday, representing the second such revision in the current year. The firm expects a larger loss than the previously projected £110 million deficit.
Requesting Government Backing
The carmaker expressed frustration with the UK government, informing investors that despite having engaged with officials on both sides, it had positive discussions directly with the US administration but needed more proactive support from UK ministers.
It urged UK officials to safeguard the needs of small-volume manufacturers like Aston Martin, which provide thousands of jobs and contribute to regional finances and the wider British car industry network.
Global Trade Effects
Trump has shaken the global economy with a trade war this year, significantly affecting the automotive industry through the imposition of a 25% tariff on 3rd April, on top of an previous 2.5 percent charge.
In May, American and British leaders agreed to a deal to limit tariffs on 100,000 UK-built vehicles annually to 10 percent. This rate came into force on 30th June, aligning with the last day of the company's Q2.
Trade Deal Criticism
Nonetheless, Aston Martin expressed reservations about the trade deal, arguing that the implementation of a American duty quota system introduces further complexity and restricts the group's capacity to precisely predict financial performance for this financial year end and possibly each quarter starting in 2026.
Other Factors
The carmaker also cited weaker demand partially because of increased potential for logistical challenges, especially after a recent digital attack at a major UK automotive manufacturer.
UK automotive sector has been rattled this year by a digital breach on Jaguar Land Rover, which led to a production freeze.
Market Reaction
Stock in Aston Martin, traded on the LSE, dropped by over 11 percent as markets opened on Monday morning before partially rebounding to stand down 7%.
The group sold one thousand four hundred thirty cars in its third quarter, falling short of previous guidance of being broadly similar to the 1,641 vehicles sold in the same period last year.
Upcoming Plans
Decline in sales coincides with the manufacturer gears up to release its Valhalla, a mid-engine supercar priced at around $1 million, which it hopes will boost profits. Deliveries of the car are scheduled to begin in the final quarter of its fiscal year, though a projection of approximately one hundred fifty units in those final quarter was lower than previous expectations, due to engineering delays.
The brand, famous for its roles in the 007 movie series, has started a evaluation of its future cost and investment strategy, which it indicated would likely result in reduced spending in R&D compared with previous guidance of about £2bn between its 2025 and 2029 financial years.
Aston Martin also informed shareholders that it no longer expects to generate profitable cash generation for the second half of its current year.
The government was contacted for a statement.