(qlmbusinessnews.com Tues. 1st Oct, 2024) London, UK —
Aston Martin Shares Drop Over 20% After Profit Warning.
Luxury carmaker Aston Martin has seen its shares plunge by over 20% after issuing a profit warning for the year, citing supply chain disruptions and declining sales in China. The British carmaker, renowned for its association with James Bond, has faced challenges in meeting production targets and is now forecasting lower profits than previously expected.
Stellantis, the parent company of brands such as Peugeot, Citroën, Fiat, and Jeep, also experienced a sharp decline in its share price, dropping over 14% following its own profit warning earlier this week.
Carmakers across Europe have been grappling with weakening demand and rising competition, particularly from Chinese manufacturers, which has put pressure on earnings.
Aston Martin, a producer of premium, low-volume vehicles, sold 6,620 cars last year, with around 20% of sales in the Asia-Pacific region. However, a slowdown in China’s economy has caused a drop in demand for luxury cars, further hurting the company’s financial outlook. Additionally, supply chain issues have hindered the production of new models, leading the firm to produce 1,000 fewer vehicles than initially planned.
Sales that were initially forecast to grow are now expected to decline, with earnings falling short of market expectations. New CEO Adrian Hallmark, who took the reins recently, acknowledged the need for “decisive action” to align production with the changing market conditions but remains optimistic about the brand’s potential for growth.
Challenges for Industry Leaders
Stellantis has joined other major car manufacturers in revising its financial outlook, citing a challenging industry environment. Weak demand in the US has forced the firm to offer discounts to reduce unsold stock, and competition from Chinese car brands has intensified in global markets.
The announcement of reduced profit margins sent Stellantis shares tumbling, reflecting the broader struggles facing the European automotive sector.
Volkswagen, Mercedes-Benz, and BMW have all recently downgraded their profit forecasts as well, citing similar issues, including weakening sales in China and fierce competition from Chinese brands. VW has even suggested it may close factories in Germany for the first time in its history.
Electric Vehicle Struggles.
The European car industry’s investment in electric vehicles (EVs) has also been challenged by faltering sales. Data from the European Automobile Manufacturers Association (ACEA) revealed a 44% drop in EV sales in August compared to the same period last year. The market share for battery-powered cars fell to 14.4%, down from 21% in 2023, largely due to the reduction of government incentives in key markets such as France and Germany.
EU nations are expected to vote soon on the imposition of steep tariffs on electric vehicle imports from China, a move aimed at protecting European manufacturers from what the European Commission claims are illegal subsidies provided to Chinese manufacturers by their government. The proposal has received mixed reactions from European carmakers.
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