Aston Martin transformation 'on track' despite heavy losses
Aston Martin DBX
New chairman Lawrence Stroll admits coronavirus disruption has been "challenging" but says Aston can become a "great" luxury brand
Aston Martin Lagonda is on track to transform the firm into "one of the great global luxury car brands" says new chairman Lawrence Stroll, despite it posting a a pre-tax loss of £227.4 million in the first half of 2020 due to the impact of Covid-19.
The British firm sold 1770 cars worldwide between January and June, down 41% year on year. Sales were hit by the closure of virtually all its dealerships due to lockdown measures to tackle the spread of coronavirus in various countries. That led to the firm posting revenues of £146m in the first half of 2020, down 64% year on year - although that does show signs of recent improvement because Aston posted a loss of £118.9m in the first three months of the year.
Aston also had to suspend production at its factories in Gaydon, where its sports car models are produced, and the new St Athan plant, home to the new DBX SUV. Production has now resumed at St Athan, but Gaydon remains closed while the firm reduces its stock of sports cars. Production is now due to restart there at the end of August.
The Covid-19 pandemic came as Aston Martin was in the midst of a major restructuring, with Stroll's Yew Tree consortium leading a £688m investment. Stroll was appointed executive chairman in April, sparking a major revamp of the business.
Stroll's plan includes increasing profitability and cutting costs by reducing production of the firm's key sports car lines to reflect demand, along with a focus on the new DBX SUV. To achieve that, the company is cutting up to 500 jobs.
While announcing the Aston's latest financial results, Stroll noted that the firm has reduced its sports car stock by 869 models in the past three months. Stroll has also appointed former Mercedes-AMG boss Tobias Moers as Aston's new CEO, replacing Andy Palmer, with the Moers due to begin work next week.
Stroll acknowledged that "this has been a very intense and challenging six months" but added that despite having to deal with the impact of Covid-19, "we have been fully engaged in executing the initial reset in order to achieve our ambition to build Aston Martin into one of the great global luxury car brands.
"Our ambition for the company is significant, clear and only matched by our determination to succeed, to transform Aston Martin and capture the huge and exciting opportunity ahead of us."
Speaking about the progress made so far, Stroll said: "We are restoring exclusivity to our sports cars, rebalancing supply to demand, which, in the short term, means lower wholesale volumes but is necessary for future success.
"The new DBX is critical to our successful future and I am delighted that, after more than a month of closure, production restarted and initial deliveries have now been made. Also critical to our future is the ability to market and engage with our customers. From next year, we will have the great benefit of a highly competitive Aston Martin-branded Formula 1 team giving us a significant global marketing platform to further strengthen our brand and engage with our customers and partners across the world."
Stroll added that Moers is "the right leader for this business. He has a unique combination of being both a CEO and CTO. He has worked at our key partner and I am looking forward to him starting imminently."
Aston Martin bosses expect the pace of recovery from Covid-19 to vary by region but anticipate measures to reduce stock levels in its global dealer network would continue into 2021.
Showing the importance of its newest model to future profits, Aston also predicts that its 2020 sales will be evenly split between its sports car models and the new DBX, despite the first deliveries of the SUV having only just begun.
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