Aston Martin Lagonda’s shares plunged by more than a fifth after the luxury carmaker reported a near-£80m loss in the first half as demand from dealers slumped in the UK and across Europe.
Aston Martin floated at £19 a share last October but the latest drop in the price has taken the shares below the £5 mark, at 450p. The 106-year old company behind James Bond’s favourite car marque has lost almost 80% of its stock market value since flotation, plummeting from £4.3bn to £1bn.
Its chief executive, Andy Palmer, argued that the business had performed well in the first half, despite deteriorating economic conditions, and that the problem relates to demand from dealers. Sales to dealers in the UK and across Europe, the Middle East and Africa slumped by a fifth in the first half. However, strong demand in the markets including the US and China helped total wholesales to rise by 6% to 2.4m in the first half. Retail sales rose 26% in the first half.
“The trading environment worsened in the first half, although retail and wholesale [overall] increased,” he said. “We are keeping a profile where demand exceeds supply, which is key for a luxury company. In order to protect the position of the brand we thought it right and proper to cut wholesale [forecasts] and don’t end up making the mistakes of history and discounting cars to get them away.”
Aston Martin has slashed its annual sales forecast from a range of 7,100 to 7,300, saying it now expects to sell 6,500, reflecting low orders from car dealers concerned that they will not be able to sell them.
Palmer said that the company has so far only had to spend a “negligible” amount on Brexit preparations but did not want a no-deal exit from the European Union.
“In the case of a deal we are prepared and relatively well insulated but not immune,” he said. “Obviously, we do not want a no-deal Brexit because of the disruption that causes with issues at the border. We will live with it if that is what it is. The car industry is pretty resilient once it knows what it is dealing with. We need certainty.”
On Wednesday the UK’s car industry body, SMMT, said that investment in Britain’s car industry slumped to a “pitiful” £90m in the first half because of fears over Brexit. Over the last seven years average annual investment in research and development has been £2.5bn to £2.7bn.