Aston Martin's Q2 Revenue Falls 34%, Lowers Full-Year Forecast

According to Bloomberg, British luxury car manufacturer Aston Martin Lagonda Global Holdings Plc has lowered its profit target for 2025 due to disruptions caused by increased tariffs in the United States. The company is urging the UK government to address a critical issue in the trade agreement with the US.

Image source: Aston Martin official website

On July 30, Aston Martin stated that its gross margin for this year will be roughly in line with 2024’s 37%, whereas the company had previously set a target of 40%. The company also added that its adjusted EBIT for 2025 may be negative, but it will work towards improving towards breakeven.

Despite lowering expectations again, Aston Martin remains committed to achieving a positive free cash flow target in the second half of this year. This is a crucial goal, especially since its net debt has risen to £1.38 billion as of the end of June.

In the second quarter of this year, Aston Martin's wholesale sales dropped from 1,053 units in the same period last year to 972 units; revenue fell by 34% to nearly £221 million, below analysts' expectations; gross profit plummeted 54% from £133 million to £61.4 million.

On February 1, 2020, Aston Martin reached an agreement with a consortium led by billionaire Lawrence Stroll, who acquired a 16.7% stake in Aston Martin for £182 million. Despite the consortium having injected over £600 million (approximately $801 million) into the brand since then, it remains challenging to revive the debt-laden luxury car manufacturer. Last year, the newly appointed CEO of Aston Martin, Adrian Hallmark, implemented a series of measures aimed at improving efficiency and reducing costs, but these efforts were hampered by Trump's tariff policies.

According to an agreement reached between the United States and the United Kingdom, British car manufacturers are required to pay a 10% tariff when exporting cars to the United States, significantly higher than the previous rate of 2.5%. It should be noted that the 10% tariff only applies to the first 100,000 British-made cars sold in the United States, and the policy is on a first-come, first-served basis. All vehicles exceeding this threshold will face a tariff of 27.5%.

Like other high-end sports car manufacturers, Aston Martin does not produce any models in the United States.In an interview, Hallmark stated that the current quota system carries risks and may give an advantage to Jaguar Land Rover, the largest car manufacturer in the UK, "while pushing all small businesses out of the market." The CEO called on the UK government to set different categories within the quota, such as reserving a portion of the quota for high-end sports cars, "so that we will not be overwhelmed."

Over the past 12 months, Aston Martin's stock price has halved. Due to the company's poor performance in the stock market, Executive Chairman Stroll has stated that he is willing to consider taking the company private.