Aston Martin Cautions About Lower Profit Due to Supply Chain Issues and Challenges in China, According to Reuters

Aston Martin has announced a revision to its annual core profit expectations, citing supply chain disruptions and declining demand in China, which has led to an 8% drop in its shares during early trading on Monday.

The luxury British carmaker is facing a challenging landscape similar to other European manufacturers grappling with difficulties in the world’s largest automotive market. Aston Martin has indicated that it no longer anticipates achieving positive free cash flow in the first half of the year and has reduced its 2024 wholesale volume target by approximately 1,000 vehicles in response to these issues.

The company reported an increase in late component arrivals due to disruptions among various suppliers, resulting in delayed completions and shipments of vehicles. Having halted production of older models, Aston Martin had hoped that ramping up new models would bolster revenue and profit growth in the latter half of the year.

New CEO Adrian Hallmark remarked on the ambitious nature of the 2024 plan, acknowledging the necessity for decisive adjustments in production volumes to align with current realities.

Aston Martin has projected that adjusted core profit and wholesale volumes for the third quarter will fall below market expectations. Additionally, gross profit margins for the year are now anticipated to be slightly below 40%, a decrease from the previously set target.

Sales in China have already been declining, prompting the company to announce plans in July to introduce its next-generation sports cars in hopes of revitalizing its performance in this crucial market.

Other automakers such as Stellantis and Volkswagen have also recently issued profit warnings, while Mercedes-Benz has lowered its full-year profit margin target for the second time within two months.