Aston Martin Announces Profit Warning Amid US Tariff Pressures and Seeks Government Assistance
The automaker has blamed a profit warning to US-imposed tariffs, while simultaneously calling on the UK government for more active assistance.
The company, producing its cars in Warwickshire and south Wales, lowered its profit outlook on Monday, representing the second such downgrade this year. It now anticipates a larger loss than the earlier estimated £110 million shortfall.
Requesting Government Support
Aston Martin expressed frustration with the UK government, telling investors that while it has engaged with representatives on both sides, it had positive discussions directly with the American government but needed more proactive support from British officials.
The company called on UK officials to safeguard the interests 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
The US President has disrupted the global economy with a trade war this year, heavily impacting the car sector through the introduction of a 25 percent duty on April 3, on top of an previous 2.5% levy.
During May, American and British leaders reached a agreement to limit tariffs on one hundred thousand UK-built vehicles per year to 10%. This tariff level took effect on 30th June, coinciding with the last day of Aston Martin's second financial quarter.
Trade Deal Criticism
However, the manufacturer expressed reservations about the trade deal, arguing that the implementation of a American duty quota system introduces additional complications and restricts the company's ability to precisely predict earnings for the current fiscal year-end and possibly each quarter starting in 2026.
Additional Factors
The carmaker also pointed to reduced sales partially because of increased potential for supply chain pressures, particularly following a recent digital attack at a major UK automotive manufacturer.
UK automotive sector has been rattled this year by a digital breach on the country's largest automotive employer, which prompted a manufacturing halt.
Market Reaction
Shares in Aston Martin, listed on the LSE, fell by more than 11% as trading opened on Monday at the start of the week before recovering some ground to be 7 percent lower.
The group delivered one thousand four hundred thirty cars in its Q3, falling short of earlier projections of being broadly similar to the 1,641 vehicles delivered in the equivalent quarter last year.
Upcoming Initiatives
Decline in demand coincides with the manufacturer prepares to launch its Valhalla, a rear-engine hypercar costing around $1 million, which it hopes will increase profits. Shipments of the car are expected to start in the final quarter of its fiscal year, although a forecast of approximately one hundred fifty units in those final quarter was below previous expectations, due to engineering delays.
Aston Martin, famous for its appearances in James Bond films, has started a review of its upcoming expenditure and investment strategy, which it indicated would likely lead to lower capital investment in R&D versus earlier forecasts of approximately £2 billion between its 2025 to 2029 financial years.
Aston Martin also told shareholders that it does not anticipate to generate positive free cash flow for the latter six months of its present fiscal year.
UK authorities was contacted for a statement.