Aston Martin losses quadruple as it clears out dealerships

Losses at Aston Martin quadrupled last year as the pandemic and a policy of destocking dealerships led to a sharp fall in sales for the luxury carmaker.

The group posted a pre-tax loss of £466m for the year compared with £120m in 2019 as revenues fell by more than a third from £980m to £612m.

However, shares rose 11 per cent to £22.14 by mid-morning in London as markets responded positively to the company’s expectation of profits this year.

The group came under new management in the year, with Canadian billionaire Lawrence Stroll leading a bailout and crafting a new strategy based on Formula One and restoring the brand’s luxury credentials.

This strategy involved Aston deliberately holding back its own sales to clear excess unsold cars that had piled up in dealerships.

“Even without the pandemic, we would not have been profitable,” chief executive Tobias Moers, who joined in August, told the Financial Times.

This year, Aston forecasts profits, with most of the earnings predicted for the second half due to delivery of its high-price special cars and a new variant of the DBX, its first sport utility vehicle.

Sales of the DBX, which is critical to Aston’s survival, began last year. The company delivered 1,500 during the year, with 1,200 in the final quarter.

The first variant of the model was due out in the third quarter, with the next update coming in the second quarter of 2022, Moers said.

Of the 6,000 cars Aston expected to sell this year, about half may be the SUV, though Moers added that sports car sales had performed better than he expected.

The company wrote off £98m from previous engine and technology developments that were canned by new management, and in October the group significantly expanded a deal with Mercedes-Benz to take parts and some technology.

Through the deal, Mercedes’ parent company Daimler, which has had a long relationship with Stroll, owns 20 per cent of Aston Martin.

Moers joined Aston from AMG, the high-performance engine arm of Mercedes.

The chief executive’s turnround plan, which he outlined in the FT in December, would leave “no corner untouched”, and aims to save £28m from the company.

“We want to be the most agile brand in the world of luxury automotive,” he said on Thursday.

The group will shed about 500 roles. “For sure, there is room for improvement, jobs are not secured,” he said.

Part of Aston’s new strategy involves running its own Formula 1 works team in collaboration with other financiers.

Moers said the costs of the racing project were less than Aston had previously been paying to sponsor Red Bull’s F1 team.