Coronanvirus: Aston Martin plans to cut 500 jobs under turnaround plan
The carmaker's turnaround plan steps up a gear as it moves to cut its costs following COVID-19 disruption and a slump in sales.
Thursday 4 June 2020 10:57, UK
Aston Martin Lagonda has announced plans to cut up to 500 jobs as the luxury carmaker gears up for a turnaround plan aimed at restoring profitability amid plunging sales.
The company, which secured new investment earlier this year after struggling since a flotation in 2018, announced just over a week ago that it was replacing its chief executive under a new strategic plan.
It said then that the COVID-19 crisis had exacerbated its sales woes, with the number of vehicles sold almost halving in the first three months of the year.
Thursday's statement said the new strategy intended to deliver £10m in operating savings each year.
Aston Martin said: "As communicated previously, the plan requires a fundamental reset which includes a planned reduction in front-engined sports car production to rebalance supply to demand.
"The company's first SUV, DBX, remains on track for deliveries in the summer and has a strong order book.
"The measures announced today will right-size the organisational structure and bring the cost base into line with reduced sports car production levels, consistent with restoring profitability."
Shares, which were trading above £5 at the time of its Initial Public Offering in 2018, have collapsed since and were 10% down at 55p-per share in early deals on Thursday.
The Warwickshire-based company, which has around 2,450 staff, did not say where it expected the planned job cuts to be made.
It has a state of the art manufacturing facility at St Athan in south Wales alongside operations at Gaydon and in Newport Pagnell.
It made the announcement at the same time as Lookers, which sells Aston Martin cars from its dealership network, revealed it was to cut 1,500 jobs under its own plan to navigate the wider crisis for car sales.
Industry figures released on Thursday demonstrated the extent of the pressure on the sector - already struggling before the pandemic.
The latest sales statistics from the Society of Motor Manufacturers and Traders showed only 20,000 new cars were registered in the UK last month - down 89% on May 2019 - the worst May performance since 1952.
"Aston Martin will shortly launch a consultation process on proposals to reduce employee numbers by up to 500, reflecting lower than originally planned production volumes and improved productivity across the business," the statement continued.
"Aston Martin continues to take decisive action in other areas to reduce cost and remove non-critical expenditure from the business at every level including in areas such as contractor numbers, site footprint, marketing and travel."
The company anticipated restructuring costs of around £12m this year.