Aston Martin Issues Earnings Alert Due to US Tariff Pressures and Seeks Official Support
Aston Martin has attributed an earnings downgrade to US-imposed tariffs, while simultaneously calling on the British authorities for greater proactive support.
This manufacturer, producing its cars in Warwickshire and south Wales, revised its earnings forecast on Monday, marking the second such downgrade this year. The firm expects deeper losses than the previously projected £110 million deficit.
Requesting Government Support
The carmaker expressed frustration with the UK government, informing investors that despite having engaged with representatives from both the UK and US, it had positive discussions directly with the US administration but required greater initiative from UK ministers.
It urged UK officials to protect the interests of small-volume manufacturers such as itself, which provide thousands of jobs and contribute to regional finances and the broader UK automotive supply chain.
Global Trade Effects
Trump has shaken the global economy with a trade war this year, significantly affecting the car sector through the imposition of a 25% tariff on 3rd April, on top of an existing 2.5% levy.
During May, the US president and Keir Starmer agreed to a deal to limit duties on one hundred thousand UK-built cars annually to 10 percent. This rate came into force on 30th June, coinciding with the last day of Aston Martin's Q2.
Agreement Concerns
Nonetheless, the manufacturer criticised the trade deal, arguing that the implementation of a US tariff quota mechanism introduces further complexity and restricts the group's capacity to precisely predict earnings for the current fiscal year-end and possibly each quarter starting in 2026.
Other Factors
The carmaker also pointed to weaker demand partly due to greater likelihood for supply chain pressures, especially after a recent cyber incident at a leading British car producer.
The British car industry has been shaken this year by a cyber-attack on Jaguar Land Rover, which prompted a production freeze.
Market Response
Shares in Aston Martin, listed on the LSE, dropped by over 11 percent as markets opened on Monday morning before recovering some ground to be 7 percent lower.
The group delivered one thousand four hundred thirty 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 last year.
Future Plans
The wobble in demand coincides with Aston Martin prepares to launch its flagship hypercar, a mid-engine hypercar costing approximately £743,000, which it expects will increase earnings. Deliveries of the car are expected to begin in the last quarter of its financial year, although a projection of approximately one hundred fifty deliveries in those final quarter was lower than earlier estimates, due to technical setbacks.
The brand, well-known for its appearances in the 007 movie series, has initiated a review of its upcoming expenditure and investment strategy, which it said would probably result in lower capital investment in engineering and development compared with earlier forecasts of approximately £2 billion between its 2025 to 2029 fiscal years.
The company also told shareholders that it no longer expects to generate positive free cash flow for the second half of its present fiscal year.
UK authorities was approached for a statement.
