Sales of carmaker’s Vantage model have been weak but it has high hopes for DBX SUV
Aston Martin is counting on strong sales of its DBX SUV model to turn the company around.
Photograph: RVT3/Aston Martin
The luxury carmaker Aston Martin has issued its second profit warning in 12 months after flagging a “very disappointing” year of falling sales and higher costs.
James Bond’s favourite car marque is now predicting adjusted profits of between £130m and £140m for 2019 – almost half the £247m it made the previous year. Analysts had been forecasting profits of £196m. Over the first nine months of 2019, Aston Martin racked up a pretax loss of more than £92m.
Aston Martin blamed a 7% decline in wholesale volumes – cars sold through other dealers – to 5,809, alongside higher marketing costs and a fall in its average selling price, due to a shift towards the £120,900 Vantage two-seater sports car, its cheapest car.
Aston Martin’s stock market value has plummeted since it floated on the London Stock Exchange in October 2018, at £19 a share, which valued the company at £4.3bn. It is now valued at less than £1bn, after the shares fell more than 17% to 431.6p on Tuesday.
Russ Mould, the investment director at the stockbroker AJ Bell, said: “Aston Martin has been one of the biggest flops on the stock market in living memory. There is plenty of competition for luxury cars and it seems that Aston Martin is being left behind. For example, Rolls-Royce Motor Cars has just announced its highest annual sales in its 116-year history. Perhaps it is time to get someone new in the driving seat of Aston Martin?”
Rival Rolls-Royce enjoyed record annual sales, up 25% to 5,152 cars.
Andy Palmer, the Aston Martin chief executive, described 2019 as “a very disappointing year”. He told analysts and investors: “The challenging trading conditions that we highlighted in November continued through the peak delivery period of December, resulting in lower sales, higher selling costs and lower margins.”
He said Aston Martin was forced to discount more heavily than intended to sell its cars, and paid higher-volume bonuses to dealers in a big sales push in December.
The company is pinning its hopes on the new DBX sports utility vehicle, for which it has received 1,800 orders since the launch in late November. It hopes the £158,000 SUV will widen its appeal to wealthy women – nearly all its current customers are men. It will start delivering the DBX in the April to June quarter.
Palmer said the rapid rise in orders had been “significantly better than any other previous models”. Aston Martin will also launch an open-top Vantage Roadster in the spring.
The firm said it would borrow a further $100m (£76m) within the next four weeks, at a hefty interest rate of 15%, in addition to the $150m it raised in a bond sale in September. It is reviewing other funding options and remains in discussions with potential investors.
According to reports, Lawrence Stroll, the billionaire owner of a Formula One racing team, is leading a consortium that wants to bid for a stake in Aston Martin, which has gone bust seven times in its 106-year history.
Neil Wilson, the chief market analyst at trading platform Markets.com, expressed concern about the firm’s debt pile of £875m-£885m.
He said about the additional borrowing: “This is a drop in the ocean and for sure Aston needs to raise cash in some way. The bond market looks unpalatable but even an equity raise could prove tricky. The rationale to go private is impossible to resist.”