Aston Martin bets on demand for bespoke supercars after £495m loss
Aston Martin is betting that a combination of high-margin supercars and its best-selling SUV will help it put an end to years of losses, including a £495m deficit last year.
The luxury car marque said it had already pre-sold many of the sports cars it plans to make this year as it reported better than expected production numbers for its Valkyrie hypercars. The £2.5m vehicles have the same high-end specifications of a Formula 1 track car.
Aston Martin said it would be focusing on more luxury vehicles such as these – including a special, limited edition car to commemorate the company's 110th anniversary this year – as a turnaround effort under executive chairman Lawrence Stroll enters its fourth year.
All the DBX sports utility vehicles that Aston Martin plans to manufacture until autumn are already pre-sold. 80pc of the sports cars and GT models, like the Vantage and DBS, that Aston will produce this year are also pre-sold.
The company delivered 80 of its Valkyries last year, up from 10 in 2021 in a sign that production problems are easing. The higher-than-expected completion numbers helped boost sales last year, which rose 26pc.
Half the cars sold last year were DBX SUVs and Aston Martin said this model will be key to future growth.
The Warwickshire-based business is aiming for £2bn in sales by 2025 and £500m of earnings before interest payments, write offs to old machinery and tax.
The company said its next generation of sports cars and limited edition luxury cars will have profit margins of 40pc in a bid to return the company to profitability.
As a result, the car maker said it should hit its 2025 target with sales of just 8,000 cars a year, down from a previous target of 10,000. Last year it sold 6,412 vehicles.
Finance chief Doug Lafferty said he was “very confident” of meeting its 2025 goals.
Nevertheless, losses rose to £495m in 2022, up from £214m a year earlier, as interest payments on its £700m debt pile climbed.
The sports car company has struggled with high debts since it was re-listed on the stock market as an independent business in 2018.
Its debts are held in dollars and a tumbling pound has made the interest costlier. Sterling was worth $1.30 when it listed and reached lows of $1.03 last year.
Despite rising losses, Aston Martin said it was expecting to bring in more cash than it burns later this year.
Mr Stroll, a Canadian billionaire, last year oversaw a £653m capital raise to help shore up Aston Martin’s balance sheet. The car maker raised money from existing investors and Saudi Arabia’s sovereign wealth fund, a new backer.
Aston Martin used some of the money it raised to pay off its more expensive loans, bringing debts down 14pc to £765.5m.
Mr Stroll ruled out asking investors for any more funds. Last year he and his backers upped their stake in Aston Martin to 27.9pc.
Other investors include Saudi Arabia’s Public Investment Fund, which holds 18.7pc, Mercedes, at 9.7pc, and China’s Geely, which owns 7.6pc of the company. Less than 40pc is held by pension funds and retail investors.
The results were greeted favourably by investors and the shares rose 15pc in early trading.