Carmakers slash profit guidance as Aston Martin suffers China slowdown

Carmakers 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 earnings would likely fall below last year’s outcome of £305.9million and it no longer expects to boast positive free cash flow.

The FTSE 250 carmaker, which saw losses widen in the first half of the year, announced a ‘strategic realignment’ to address the issues, with a 1,000 vehicle cut to 2024 wholesale volumes.

Chinese authorities have piled in with monetary and fiscal stimulus in efforts to reverse a significant slowdown in the world’s second largest economy, amid a severe downturn in its property market.

Weaker Chinese consumer strength has weighed on western luxury brands over the last year, with the likes of Burberry and Louis Vuitton seeing lower sales. It has also impacted the world’s mining giants amid forecasts of weaker demand for copper and steel.

Global exporters have also faced supply chain disruption, with significant issues facing the crucial Red Sea shipping lanes proving particularly impactful.

Aston Martin boss Adrian Hallmark, who has been with 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 re-align our production plans to optimise efficiency and achieve a more balanced delivery cadence in the future.’

Aston Martin shares slumped 7.5 per cent at the open to 147.6p. They have fallen roughly 31 per cent since the start of 2024 and almost 90 per cent over the last five years. 

French-Italian carmaker Stellantis NV also slashed its annual guidance, citing a deterioration in global industry dynamics and Chinese electric vehicle competition.

‘Competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition,’ Stellantis said in its guidance.

The profit warning also reflects Stellantis’s decisions to ‘significantly enlarge remediation actions on North American performance issues’, the carmaker said without giving further detail.

Stellantis also announced in August that it was laying off as many as 2,450 factory workers from its assembly plant outside Detroit as it ends production of its Ram 1500 Classic truck.

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