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The devastating cyber attack on Jaguar Land Rover and its production halt provided an unlikely windfall for Aston Martin as the struggling UK carmaker said it was now able to ship its luxury cars to the US at a lower tariff rate without hitting the quota limit.
Aston Martin is heavily exposed to US President Donald Trump’s tariffs because it does not manufacture vehicles in the US, and was forced to limit shipments to America earlier this year.
Under the US-UK trade deal that took effect at the end of June, Trump agreed to cut a 27.5 per cent tariff on cars imported from the UK to 10 per cent for the first 100,000 vehicles each year.
While the deal was broadly welcomed by the industry, the quota system also created uncertainty because it was allocated on a first-come, first-served basis.
JLR’s month-long shutdown cut UK vehicle output by 36 per cent in September from a year before, easing Aston Martin’s quota worries.
“The unfortunate and critical situation the JLR found themselves in has probably taken significant pressure off the quota allocation risk for quarter four,” said Aston Martin chief executive Adrian Hallmark.
Still, Hallmark said the company raised vehicle prices in the US by another 3 per cent starting this month following a similar 3 per cent increase in July to counter higher tariff costs that have dragged it into deeper losses.
The group will also cut capital investment in engineering and development to £1.7bn from an earlier £2bn over the next five years and said it would review its future product plans.
“We definitely can see there’s a little bit of hold back or more competition because of tariffs,” Hallmark said when asked about US market conditions. “It has created inflation and it’s created a bit of macro uncertainty.”
The company issued a profit warning earlier this month acknowledging that it no longer expected to generate positive cash flow for the second half of the year. Shares in Aston Martin were trading down 1.5 per cent after falling as much as 8 per cent on Wednesday amid lingering worries over another capital raise.
For the July to September quarter, it reported an operating loss of £56.1mn compared with a loss of £26.7mn a year earlier, while revenue fell 27 per cent to £285.2mn on weak demand in China.
The government shutdown in the US has also disrupted the certification process for its hybrid Valhalla supercar model, although Hallmark said all the necessary documentation had already been submitted.
The company earlier this month warned of a slower rollout of the Valhalla with 150 deliveries planned in the fourth quarter, compared with analyst forecasts for more than 200.
In March, the lossmaking company, whose shareholders include China’s Geely and Saudi Arabia’s sovereign wealth fund PIF, said it planned to raise more than £125mn with the sale of its minority stake in the Formula 1 racing team and additional investment from its chair Lawrence Stroll.
