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Automakers Aston Martin and Stellantis each separately warned on profits on Monday, following supply chain disruption and factors within the crucial Chinese economy.
Aston Martin said “external factors within the global automotive industry” meant full-year profits were likely to fall below last year’s result of £305.9 million and that it no longer expects to boast positive free cash flow. .
The FTSE 250 carmaker, which saw its losses widen in the first half of the year, announced a “strategic realignment” to address the problems, with a cut of 1,000 vehicles to wholesale volumes by 2024.
Aston Martin curbs profit expectations amid China slowdown
Chinese authorities have implemented monetary and fiscal stimulus in an effort to reverse a significant slowdown in the world’s second-largest economy, amid a severe slowdown in its property market.
The weakening strength of the Chinese consumer has weighed on Western luxury brands over the past year, with companies such as Burberry and Louis Vuitton reporting lower sales. It has also hit the world’s mining giants amid forecasts of weaker demand for copper and steel.
Global exporters have also faced supply chain disruptions, with significant issues facing the crucial Red Sea shipping routes particularly impactful.
Aston Martin boss Adrian Hallmark, who has been at the carmaker for a month, said: “It has become clear that we need to take decisive action to adjust our production volumes for 2024, given a combination of supplier disruption, the weak macroeconomic environment in China and a proactive decision to strategically realign our production plans to optimize efficiency and achieve a more balanced delivery cadence in the future.”
Aston Martin Stock fell 7.5 per cent at the open to 147.6p. They have fallen about 31 percent since the beginning of 2024 and almost 90 percent in the last five years.
Franco-Italian automaker Stellantis NV also cut its full-year guidance, citing deteriorating global industry dynamics and competition from Chinese electric vehicles.
“Competitive dynamics have intensified due to both increased industrial supply and increased Chinese competition,” Stellantis said in its guidance.
The profit warning also reflects Stellantis’ decisions to “significantly expand remediation actions for performance issues in North America,” the automaker said without elaborating.
Stellantis also announced in August that it would lay off up to 2,450 workers at its assembly plant outside Detroit as it ends production of its Ram 1500 Classic pickup truck.
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