The uncertain economic wave in Europe lead to massive drop in the share price of British luxury car maker, Aston Martin. The share drop of over 24% was triggered by the plummeting sales in the region which shrunk by almost one-fifth in the first half of the year.
The company’s CEO Andy Palmer said that the auto industry across the continent had been affected due to recession risks and Brexit uncertainty. He blamed “macro-economic uncertainties and enduring weakness” and informed shareholders about the slim chances of conditions getting back to normal within this year.
The company suffered the most within UK, as the sales fell by 22%, whereas its combined sales in Europe, Middle East and Africa region went down by 28%.
The company’s market value went down by more than half since it got listed on London Stock Exchange in October. Some analyst, observing the company’s performance, also suggested that the company should consider the option of going back private. An Investment director Russ Mould commented, “Floating on the stock market can boost a company’s reputation and provide an opportunity for the public to buy into the story. However, it can also expose a company to criticism from investors, who are watching every move like a hawk.”
THE 106-years old company, gained world-wide fame through Bond movies, brought its yearly sales forecast down from a range of 7,100 to 7,300 to 6,500 vehicles. The contraction shows the company’s concern over slump in demand from the dealers, who said that they won’t be able to sell the targeted amount.
Palmer said, “We are disappointed that short-term wholesales have fallen short of our original expectations. We are today taking decisive action to manage inventory and the Aston Martin Lagonda brands for the long-term.”
He added, “We are not seeing people cancel orders, but softness in terms of new orders, in particular on dealers and dealer confidence,” said Palmer. “As a luxury brand, we simply shouldn’t make cars we don’t think we are going to sell. It is about matching our order book.”
The insiders informed that the company would also bring down its production due to reduced sales. The British carmaker has already declared its plans to slash down its investment of 40 million pounds ($49.77 million).