Aston Martin Releases Profit Warning Amid American Trade Pressures and Seeks Official Assistance
The automaker has attributed a profit warning to Donald Trump's trade duties, while simultaneously urging the UK government for greater active assistance.
The company, producing its vehicles in factories across England and Wales, lowered its earnings forecast on Monday, marking the second such revision this year. The firm expects deeper losses than the earlier estimated £110m deficit.
Requesting Government Backing
Aston Martin expressed frustration with the British leadership, telling investors that while it has communicated with officials on both sides, it had productive talks with the US administration but required more proactive support from British officials.
The company called on British authorities to safeguard the interests of niche automakers such as itself, which provide thousands of jobs and contribute to regional finances and the wider British car industry network.
International Commerce 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 existing 2.5 percent charge.
During May, American and British leaders reached a deal to limit tariffs on 100,000 UK-built vehicles annually to 10%. This tariff level took effect on June 30, coinciding with the last day of the company's second financial quarter.
Trade Deal Concerns
Nonetheless, Aston Martin criticised the trade deal, arguing that the introduction of a US tariff quota mechanism introduces additional complications and restricts the group's capacity to accurately forecast financial performance for the current fiscal year-end and possibly quarterly from 2026 onwards.
Other Factors
Aston Martin also cited reduced sales partially because of increased potential for supply chain pressures, especially after a recent digital attack at a major UK automotive manufacturer.
UK automotive sector has been shaken this year by a digital breach on Jaguar Land Rover, which led to a manufacturing halt.
Market Response
Shares in Aston Martin, listed on the LSE, dropped by more than 11% as markets opened on Monday morning before recovering some ground to be down 7%.
The group sold 1,430 cars in its third quarter, missing earlier projections of being broadly similar to the one thousand six hundred forty-one vehicles delivered in the same period last year.
Upcoming Initiatives
The wobble in demand comes as Aston Martin prepares to launch its Valhalla, a mid-engine hypercar costing approximately $1 million, which it expects will increase earnings. Shipments of the car are expected to begin in the final quarter of its fiscal year, though a forecast of about 150 units in those final quarter was below earlier estimates, reflecting technical setbacks.
Aston Martin, famous for its appearances in the 007 movie series, has initiated a review of its upcoming expenditure and spending plans, which it said would likely result in lower capital investment in R&D compared with previous guidance of approximately £2 billion between its 2025 and 2029 fiscal years.
Aston Martin also told shareholders that it does not anticipate to generate profitable cash generation for the second half of its present fiscal year.
UK authorities was approached for comment.