Luxury carmaker Aston Martin saw its share price drop by more than 20% after announcing that profits for this year will be lower than expected.
The British brand, known for its association with James Bond, has been impacted by supply chain disruptions and declining sales in China.
Similarly, Stellantis, the owner of brands such as Peugeot, Citroen, Fiat, and Jeep, experienced a steep share price fall following a profit warning.
Aston Martin, which sold 6,620 vehicles last year, has been hit hard by the slowing Chinese economy, reducing demand for luxury cars.
The company is also facing supply chain issues that have delayed production of new models, forcing it to cut its planned output by 1,000 cars for the year.
Consequently, earnings are expected to fall short of market expectations.
Adrian Hallmark, Aston Martin’s new CEO, acknowledged the need for “decisive action” to adjust production but remains optimistic about the brand’s long-term growth potential.
Stellantis, meanwhile, faces similar challenges, particularly weak demand in the U.S. market, where it has resorted to offering discounts to move unsold inventory.
Increased competition from rapidly expanding Chinese car brands has also taken a toll on the company’s profit margins, leading to a significant downward revision of its financial forecasts.
As a result, Stellantis shares dropped by over 14%.
The struggles of Aston Martin and Stellantis reflect a broader crisis in the European car industry.
Volkswagen recently issued its second profit warning in three months and is considering closing plants in Germany for the first time in its history.
Mercedes-Benz and BMW have also reduced profit expectations, citing falling sales in China and rising competition from Chinese carmakers.
Another significant issue facing the industry is the decline in electric vehicle (EV) sales in Europe.
Sales of battery-powered cars fell by nearly 44% in August compared to the previous year, with market share dropping from 21% in 2023 to 14.4%.
This decline is partly attributed to the reduction of incentives for EV buyers in countries like France and Germany.
Also read:Frasers Group Makes Takeover Bid For Struggling Mulberry
