Aston Martin Posts $110.9 Million Loss For 2014
Aston Martin is knee deep in the red after posting its 2014 financial results that saw the British carmaker post losses amounting to $110.9 million — three times more than its figures in 2013 when it reported losing $39.4 million.
According to the company, the staggering losses in 2014 are attributed to a number of factors, most alarming of which are declining sales numbers all over the world, especially in China. In 2014, Aston Martin only sold 3,661 units, a far cry from the 4,200-plus units it sold in 2013. Company CEO Andy Palmer also told Reuters that a February 2014 recall of most of its units built between late 2007 to the start of 2014 was another determining factor in the company’s less-than-stellar financial results. The recall was attributed to the use of a counterfeit plastic material by a Chinese sub-supplier in creating accelerator pedal arms. A total of 17,590 cars were recalled, including all of the company’s left-hand-drive models built since November 2007 and all right-hand-drive models built since May 2012.
The company’s problems doesn’t appear to be abating anything soon, and even Palmer himself admitted that Aston Martin isn’t going to be profitable until 2017. It’s a bad look all around for the brand, but company execs, including the majority shareholders made up of Kuwaiti and Italian private equity investors, are confident that the on-going brand expansion is still within reach of hitting 15,000 annual sales by 2020.
It seems like a longshot given how far away 3,661 units are to 15,000, but at this point, there’s no other recourse for Aston Martin other than to hope that it hits its targets.
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Why it matters
Aston Martin is in a really tough place, and it doesn’t help that it’s a stand-alone company, unlike some of its direct rivals that are owned by automotive conglomerates. I’m not saying that the likes of Porsche or Ferrari are bleeding money too because they’re not. But in the event that they are, they at least have Volkswagen and Fiat, respectively, to fall back on.
Aston Martin’s different because it’s one of the few independent holdouts. Sure, Mercedes owns a five-percent, non-voting share in the company but that’s not going to be of much help to Aston if it keeps bleeding money. Andy Palmer is saying all the right things now because he understands that turning around the company’s fortunes isn’t going to happen overnight. He’s laid out a long-term plan that will have the occasional short-term bumps in the road like this one. That’s part of the growing pains of eventually seeing the company complete a lineup overhaul with an eye towards having a seven-model range by 2020.
On the short term, it’s not looking good for Aston Martin. It might have to lay off some workers, something nobody wants to do in this line of work. But if it can keep its head (barely) above water for the time being, it should be able to hold off on further catastrophe until business starts getting better.
That’s the tricky juggling act Palmer and the rest of the Aston execs have to go through, but if they can do it, there just might be light at the end of that tunnel.
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