Aston Martin reduces staff and saves money to cope with coronavirus losses

  •   05/06/2020 - 15h42
  •   DEHOUI Lionel

In its forecasts, Aston Martin, the British luxury car manufacturer, said on Thursday that it would lay off up to 500 employees. This is intended to compensate for declining production levels of sports cars. Indeed, it will help to reduce its basic costs. This decision was taken just one week after the change at the head of the English firm. What change is it? In fact, only a few days ago it was confirmed the appointment of Tobias Moers who was the CEO of Mercedes-AMG to the position of Managing Director of Aston Martin. As of August 1, Moers will replace former defending champion Andy Palmer. With more than 100 years of experience and background in the luxury automotive industry, Aston Martin is committed to improving productivity. However, its production volumes are lower compared to initial forecasts. It has therefore been decided to set up a consultation process involving employees and trade unions in the coming days.

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Aston Martin reduces staff and saves money to cope with coronavirus losses
Image copyright: Andrew Wilkinson

The impact of the pandemic

The health crisis has impacted all sectors of activity on the financial market. With the containment measures and all the restrictive measures that go with it, many companies have recorded considerable losses. The British luxury car manufacturer has not failed to be among the victims. In the first quarter of this year, most companies struggled to cope with the consequences of this difficult situation.

As a result, Aston Martin suffered heavy losses last month. This is the result of its first quarter. Indeed, its sales fell by almost a third. A situation that led the company to opt for solutions to compensate a little for the damage. Like many other companies in the same position, recourse to downsizing was also considered.

 

The various solutions to manage the losses due to the health crisis

Still to respond to the impacts of the pandemic, new marketing assets and new solutions are being studied. In this context, the coming summer is a period to be optimized in terms of revenues. Aston Martin's first sport utility vehicle (SUV), the DBX, is therefore first in line for this summer period. The vehicle is considered crucial to increase sales and thus attract new customers. In this case, women are a prime target. The DBX delivery then remains on track for the summer, as the group has a solid address book.

Aston Martin is also aiming to make savings by reducing its subcontractors and production sites. The company also intends to reduce marketing and travel expenses.

All these restructurings would result in total annual savings for the UK of about GBP 38 million (41.79 million). The restructuring costs amount to approximately GBP 12 million (EUR 13,2 million).

Information: Aston Martin's share price has been falling since its IPO in October 2018. This fall is 78% per year. This Thursday, the share still falls by 2.7% to 67 pence in the morning on the London Stock Exchange.