Aston Martin Issues Earnings Alert Amid US Tariff Pressures and Requests Official Support
The automaker has attributed a profit warning to Donald Trump's tariffs, while simultaneously urging the UK government for greater active assistance.
The company, producing its vehicles in factories across England and Wales, revised its profit outlook on Monday, marking the second such revision in the current year. It now anticipates a larger loss than the previously projected £110m shortfall.
Requesting Government Support
Aston Martin expressed frustration with the UK government, informing shareholders that despite having engaged with officials on both sides, it had positive discussions directly with the American government but needed more proactive support from UK ministers.
It urged British authorities to protect the needs of small-volume manufacturers like Aston Martin, which create numerous employment opportunities and add value to local economies and the broader UK automotive supply chain.
Global Trade Effects
Trump has disrupted the global economy with a trade war this year, significantly affecting the car sector through the imposition of a 25% tariff on April 3, on top of an previous 2.5 percent charge.
During May, American and British leaders reached a deal to cap tariffs on 100,000 British-made cars per year to 10%. This rate took effect on 30th June, aligning with the final day of Aston Martin's Q2.
Trade Deal Criticism
However, Aston Martin criticised the bilateral agreement, stating that the introduction of a American duty quota system adds further complexity and limits the group's capacity to accurately forecast financial performance for this financial year end and potentially quarterly from 2026 onwards.
Other Factors
The carmaker also cited reduced sales partly due to greater likelihood for logistical challenges, particularly following a recent digital attack at a leading British car producer.
UK automotive sector has been rattled this year by a digital breach on the country's largest automotive employer, which led to a manufacturing halt.
Financial Response
Shares in Aston Martin, listed on the London Stock Exchange, dropped by more than 11% as trading opened on Monday at the start of the week before partially rebounding to be down 7%.
Aston Martin delivered 1,430 vehicles in its Q3, missing earlier projections of being broadly similar to the one thousand six hundred forty-one vehicles delivered in the equivalent quarter last year.
Upcoming Initiatives
Decline in sales comes as the manufacturer prepares to launch its Valhalla, a rear-engine hypercar costing approximately £743,000, which it expects will boost earnings. Shipments of the car are expected to start in the final quarter of its fiscal year, though a forecast of approximately one hundred fifty deliveries in those three months was below previous expectations, reflecting technical setbacks.
Aston Martin, well-known for its appearances in the 007 movie series, has initiated a evaluation of its future cost and spending plans, which it indicated would likely lead to reduced capital investment in R&D compared with earlier forecasts of approximately £2 billion between its 2025 to 2029 fiscal years.
Aston Martin also informed investors that it no longer expects to generate positive free cash flow for the latter six months of its current year.
The government was contacted for comment.