British luxury carmaker Aston Martin issued a profit warning on Wednesday citing a hit from US import tariffs and prolonged suppressed Asian demand linked to China's economic slowdown, sending the company's shares down as much as 7%.
It forecast adjusted operating profit to roughly break even this year, compared with its earlier expectation of positive earnings, as it also expects a hit from a stronger pound and investments in software.
US President Donald Trump's tariffs had been “extremely disruptive” in the second quarter, Aston Martin executives said during a call with journalists.
A trade deal Britain agreed with Washington last month establishes a quota-based US tariff system for imported British cars.
The first come, first served system allows 25,000 UK-made cars per quarter to qualify for a 10% tariff with additional imports facing a 27.5% levy.
The company said the quota mechanism had complicated financial planning for 2025 and possibly into 2026.
“We continue to engage the UK government to urge them to improve the quota mechanism to ensure fair access for the whole UK car industry to the 10% rate on an ongoing basis,” CEO Adrian Hallmark said.
Aston Martin resumed car shipments to the US in June after earlier curbs aimed at clearing inventories and has incrementally raised prices in response to the tariffs, it said.
US tariffs have pummelled global carmakers, forcing companies such as GM, Volkswagen, Hyundai, Porsche and Mercedes-Benz to book billions of dollars of losses, issue profit warnings, slash forecasts and raise prices.
Aston Martin also warned that demand in the Asia-Pacific region, which accounts for more than a quarter of its revenue, would remain suppressed in the short-term.
Sales in a “very stagnant” Chinese market, where a slowing economy is leading consumers to tighten their belts, were broadly flat in the first half of the year.
“The guidance reduction is understandable in the face of FX headwinds, investments in business and lower volumes until Q4,” Bernstein analysts said in a note.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.