Aston Martin narrows losses as demand picks up

Aston Martin narrowed its losses last year as revenues climbed back above pre-pandemic levels, boosted by customer deposits for its high-price special cars and increased demand for its luxury sport utility vehicle.

Annual pre-tax losses at the luxury carmaker, which is in the middle of a five-year turnround plan under Canadian billionaire Lawrence Stroll, shrank from £466mn to £213.8mn.

That compared with a loss of £104mn in 2019, the year before the pandemic struck, and when the company was under its previous management.

The news prompted shares to fall 9 per cent to £10.02, the lowest level since July 2020, by the close of trading in London.

Sales last year rose to £1.1bn from £611.8mn, while the average selling price for its cars climbed to £150,000, higher than both 2020 and 2019, helped by the DBX sport utility vehicle and more pricing discipline.

The company is forecasting a “double-digit” rise in selling prices this year, helped by the high-power DBX707 and the new V12 Vantage, chief financial officer Ken Gregor told the Financial Times.

Both cars, the first produced by the new team, will have a margin of above 40 per cent, a benchmark that Aston believes will help the perpetually cash-strapped company become self-funding.

The business is still stung by high interest loans taken out in October 2020, which resulted in Aston paying £171mn in financing costs last year compared with £75mn a year earlier. The group expects to pay a similar level this year, of which about £125mn will be cash, Gregor added.

Stroll has said this month he wants to begin paying back the loans when the business starts generating cash, which he expects next year. Gregor on Wednesday confirmed the company still expected to lose money this year on the pre-tax level, but aimed to be profitable in 2023.

Aston expects that car sales will rise to more than 6,600 this year from 6,178 last year. It wants to produce 10,000 a year and generate £2bn in annual sales by the middle of the decade.

Stroll, who led a £540mn bailout of the company in April 2020, wants to restore Aston’s luxury credentials by removing excess cars from dealerships, taking the brand back into Formula One, and introducing a range of mid-engine cars to compete with Ferrari.

During the year the company booked £71mn from customer deposits on the open-roof version of its Valkyrie hypercar and for its Valhalla supercar.

In January, Aston said that delays to its £2.5mn Valkyrie hypercar would cost the business £15mn. It delivered only 10 models last year. On Wednesday, the company said it expected to produce between 75 and 90 of the cars this year, although added it was still “fine tweaking” the production process, chief executive Tobias Moers told the FT.

The business aimed to produce “two a week, maybe more”, he added. “We are just focused on execution.”