Aston Martin Issues Earnings Alert Due to US Tariff Pressures and Seeks Official Assistance
Aston Martin has blamed a profit warning to US-imposed tariffs, while simultaneously calling on the UK government for more active assistance.
The company, which builds its vehicles in Warwickshire and south Wales, lowered its profit outlook on Monday, marking the second such downgrade in the current year. The firm expects a larger loss than the earlier estimated £110m shortfall.
Seeking Official Support
The carmaker expressed frustration with the British leadership, telling investors that while it has engaged with officials on both sides, it had positive discussions directly with the American government but required greater initiative from British officials.
It urged UK officials to protect the needs of small-volume manufacturers such as itself, which create thousands of jobs and add value to regional finances and the wider British car industry network.
Global Trade Impact
Trump has disrupted the global economy with a trade war this year, significantly affecting the automotive industry through the introduction of a 25 percent duty on 3rd April, on top of an existing 2.5% levy.
During May, the US president and Keir Starmer agreed to a agreement to limit duties on 100,000 British-made cars per year to 10 percent. This rate took effect on 30th June, aligning with the last day of the company's Q2.
Agreement Criticism
Nonetheless, the manufacturer expressed reservations about the bilateral agreement, arguing that the introduction of a US tariff quota mechanism adds further complexity and limits the group's ability to precisely predict earnings for the current fiscal year-end and possibly quarterly from 2026 onwards.
Additional Factors
The carmaker also cited weaker demand partially because of increased potential for supply chain pressures, particularly after a recent cyber incident at a major UK automotive manufacturer.
The British car industry has been shaken this year by a digital breach on Jaguar Land Rover, which prompted a production freeze.
Financial Response
Shares in Aston Martin, traded on the London Stock Exchange, fell by over 11 percent as markets opened on Monday morning before partially rebounding to stand 7 percent lower.
The group delivered 1,430 vehicles in its Q3, falling short of previous guidance of being broadly similar to the one thousand six hundred forty-one vehicles sold in the same period the previous year.
Future Initiatives
The wobble in demand comes as the manufacturer gears up to release its flagship hypercar, a rear-engine hypercar priced at around $1 million, which it hopes will boost profits. Shipments of the vehicle are scheduled to start in the last quarter of its financial year, though a forecast of about 150 deliveries in those three months was below earlier estimates, reflecting engineering delays.
The brand, famous for its roles in James Bond films, has started a review of its upcoming expenditure and spending plans, which it said would probably result in reduced capital investment in R&D compared with previous guidance of about £2bn between its 2025 to 2029 financial years.
Aston Martin also told investors that it does not anticipate to generate positive free cash flow for the latter six months of its present fiscal year.
The government was approached for a statement.
