Sparks

Aston Martin Lagonda reported a £111.9m loss before tax for Q3 2025, compared with £12.2m a year earlier, as wholesale volumes fell 13% to 1,430 vehicles. Revenue dropped 27% to £285.2m while gross margin declined to 29% from 36.8%, according to third quarter results.

What’s going on here?

The luxury carmaker blamed “significant macroeconomic headwinds” including sustained US tariff impacts and weak China demand for the deteriorating performance. The company withdrew its guidance for positive free cash flow in H2 2025 and warned FY25 adjusted EBIT would fall below market consensus. Management cut capital expenditure targets to £350m from £400m and reduced SG&A targets to £275m as immediate cost-saving measures.

What does this mean?

Aston Martin’s struggles reflect broader luxury automotive sector challenges, with China demand remaining “extremely subdued” following luxury car tariff changes in July. The company’s adjusted net leverage ratio deteriorated to 8.3x from 4.2x a year earlier, highlighting balance sheet pressure. However, Valhalla supercar deliveries commenced in October with around 150 expected in Q4, potentially providing sequential improvement.

Why should I care?

The company expects material improvement in FY26 profitability driven by approximately 500 Valhalla deliveries and continued cost reductions. Management has reduced its 5-year capital expenditure target from £2bn to £1.7bn while maintaining its core model orderbook at five months coverage.