Aston Martin Has a Few Problems

Keen to expand into new segments and redefine itself as an auto brand, Aston Marin is now a publicly traded company with a crossover vehicle on the horizon. The plan, established by CEO Andy Palmer and about as novel as dirt, was due for a checkup last week. Sadly, the automaker was not released with a clean bill of health. Aston reported a pre-tax loss of £78.8 million ($92 million) in the six months ending in June.

Speaking with the media, Palmer argued that the company had done well in the first quarter but claimed economic conditions and dwindling dealer interest had hurt the business in Europe, the Middle East and Africa. The United States performed comparatively better — possibly due to the marque bringing on Tom Brady as a brand ambassador, even though at least two of the cars built with the athlete’s name on them have already passed through the secondhand market $100,000 below sticker. Unfortunately, minor victories weren’t nearly enough to keep the firm’s share price from tumbling downward like an allegedly deflated football.

According to Reuters, Aston Martin Lagonda shares have fallen by around three quarters from their 19-pound float price to just below 5 pounds. “We are disappointed that our projections for wholesales have fallen short or our original targets, impacted by weakness in two of our key markets as well as continued macro-economic uncertainty,” Palmer said, skirting the stock issue.

It would be unfair to claim Aston’s problems as unique, though. It’s suffering from the same economic downturn that’s hampering mainstream automakers. It’s trying to expand by building an SUV factory in Wales and dabbling with electrification, which isn’t cheap. But its smaller scale places it in a more precarious position than most volume manufacturers. Aston Martin is lucky to sell more than 2,500 ultra-expensive cars in Europe each year, making every delivery count all the more. By that metric alone, the automaker is doing decently. Retail sales were up roughly 26 percent in the first half of the year before things soured.

However, the company is having trouble coping with Brexit and its numerous investments into what it hopes will be a thriving future. In the short term, it says it wants to keep its vehicles in demand and has reduced its global sales forecast from over 7,000 units to roughly 6,500 as dealers get skittish. While this makes sense for a high-end nameplate, Aston being publicly traded complicates things. Any chink in the amor can send investors heading for the hills and, when you’re a low-volume, ultra-premium British brand, problems are bound to arise.

Palmer has done a pretty good job with Aston Martin thus far, but the growth being promised has yet to manifest. The business may have gone public a little prematurely, but don’t presume the latest financial losses are a death sentence for the brand. This will likely come down to how the business navigates the UK’s leaving Europe and the success of its new products, especially the all-wheel drive DBX crossover. The model is slated to go on sale early next year.

[Image: Sibuet Benjamin/Shutterstock]