Aston Martin shares plunge 16% amid production challenges

Luxury car manufacturer Aston Martin Lagonda (LSE: AML) reported a significant reduction in its pretax losses for the first nine months of 2023, buoyed by increased demand for its high-end vehicles. Despite facing production challenges, the company managed to narrow its pretax loss to £259.8 million, down from £511.3 million in the same period last year, marking a notable improvement in its financial performance.

Rising orders and deliveries of Aston Martin’s luxury cars and SUVs contributed to the positive momentum, with revenue soaring by 21% to £1.04 billion from £857.2 million. The third quarter of 2023 saw a pretax loss reduction to £117.6 million, a stark improvement from the previous year’s £225.9 million.

Aston Martin attributed this success to its recently launched DB12 sports car, which attracted new customers to the brand. Additionally, the company’s ‘ultra-luxury’ sports utility vehicle, the DBX, captured a 25% market share in key markets, further enhancing its financial outlook.

Despite these gains, Aston Martin faced challenges in its production capabilities. The company lowered its guidance for 2023 vehicle production by approximately 4%, reducing the expected wholesale volumes to about 6,700 vehicles from 7,000. The decrease was a result of initial delays experienced during the ramp-up of the DB12 production in the third quarter. However, Aston Martin maintained its other 2023 guidance, including an adjusted Ebitda margin of around 20%.

As a result Aston Martin’s stock plummeted by 16% to 184.30 pence at the London open, a stark contrast to its impressive 74% rise over the past 12 months.

Executive Chair Laurence Stroll expressed confidence in the company’s future prospects, highlighting the forthcoming launch of its second next-generation sports car in the first quarter of the following year. Stroll remarked, “Commencing deliveries of our next generation of sports cars is a major milestone marking the beginning of a completely new line up of front engine sports cars that will reposition Aston Martin as an ultra-luxury high-performance brand, enhance our growth, and bring higher levels of profitability.”

Investor interest remains high, especially after Stroll’s investment vehicle increased its stake in Aston Martin to 26.2% from 23.0% by the end of September. Despite the challenges faced, Aston Martin’s strategic vision and the anticipation surrounding its upcoming releases continue to instill confidence in the market.