Aston Martin Just Cut 500 Jobs: How Long Before It’s Dead?
None of the news coming out of the UK about Aston Martin’s woes is good. In the past week, its troubles mounted as it replaced its CEO and today announced that it just cut 500 jobs from the Aston Martin payroll. That is about 20% of its total workforce. How long before Aston Martin is Dead?
In making this latest announcement Aston Martin said that this is a move to align itself with the lower volumes it is experiencing. It also mentioned improved productivity throughout the company. We expect it had more to do with the former rather than the latter.
Last week in another surprise move CEO Andy Palmer was let go by the Aston Martin board. “The board has determined that now is the time for new leadership to deliver our plans,” Aston Martin said in a statement. Taking his role will be Tobias Moers who has been the head of Mercedes-AMG. Since 2014 Palmer has been leading the charge for an Aston Martin SUV.
The Aston Martin DBX SUV is on schedule to begin deliveries this summer
That SUV called DBX is on schedule to begin deliveries this summer. The good news is that Aston Martin says pre-orders have been brisk. Palmer hoped that an Aston Martin SUV would result in the same fortunes as Lamborghini’s Urus SUV has for it.
Cars are becoming less popular and until the DBX comes onto the scene that is all Aston Martin sells. That was no more apparent than to look at the first quarter of 2020. Aston Martin’s sales dropped by about a third. Granted, some of that is related to the COVID-19 crisis. But Aston Martin is sold to a group of customers normally immune from negative outside influences.
Other up and coming models have been delayed in an attempt to shore up capital. The Rapide EV has been put on indefinite hold. It intended to revive the Lagonda name and apply it to a series of electric vehicles. Now the company has also put those plans on hold until at least 2025.
Valkyrie, Valhalla, and Vanquish are all still on schedule
Besides the DBX Aston Martin is still expecting to roll out the Valkyrie supercar later this year. The Valhalla is expected to arrive in 2022. Both are mid-engine sports cars. The Vanquish will then follow suit; also with a mid-engine layout.
All of this plays just after billionaire Lawrence Stroll stabbed almost $700 million into the company in January. He is the largest shareholder of Aston Martin stock controlling a bit over 20%. The second-largest shareholder, Investindustrial, cut its share from 20% to 15%, also last week.
Aston Martin is still wallowing in debt and paying interest on loans
All of these moves are expected to reduce annual outlays and give Aston Martin an almost $50 million savings. The restructuring costs are estimated to be $15 million. However, the company is still wallowing in debt and paying interest on loans.
Aston Martin will begin reducing costs and noncritical expenditures throughout the company. That includes reducing costs and budgets with contractors, site footprint, marketing, and travel. So the company is shrinking as are its sales.
How long will it be before there is no more cutting left to cut? And how many more times can Stroll keep bailing the company out? All eyes will be on the DBX. If it is not a success then Aston Martin will be dead. That, or it will become a much different company than what it is now.