Aston Martin to axe 500 jobs as Covid-19 hammers sales
By Frank Prenesti
Date: Thursday 04 Jun 2020
(Sharecast News) - Luxury car marker Aston Martin said it was axing 500 workers as it cut back production after the coronavirus pandemic led to a sales slump.
The company on Thursday said its restructuring plan would save £18m a year in operating and manufacturing costs and a further £10m in capital expenditure. Aston Martin said it would start consulting employees and trade unions within days.
Aston Martin last month posted a big first-quarter loss after sales dropped by almost a third due to the impact of the coronavirus outbreak. It was already feeling the effect of the US-China trade war with demand slumping from wealthy Chinese customers.
It was now cutting back production of front-engined sports cars to focus on its DBX sports utility model, which remained on track for deliveries in the summer and had a strong order book.
"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.costs," the company said in a statement.
"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," Aston Martin said.
On Monday major shareholder Investindustrial Advisors Ltd cut its stake in the UK carmaker by nearly 5% to 14.99%.
The Italian private equity group is the company's second-biggest shareholder after Canadian billionaire Lawrence Stroll who became the executive chair of Aston Martin after leading a £536m rescue deal in March and agreed in recent weeks to inject more than £75m in short-term funding to enable the firm to fight off a cash crisis.
The news on jobs came a only days after Aston Martin sacked chief executive Andy Palmer in a boardroom restructure, replacing him with Mercedes-AMG boss Tobias Moers, who will join on 1 August after he leaves the German carmaker's high-performance division.
Aston Martin's share price has been in freefall since floating on the stock market in October 2018 and is now valued at £1.04bn, compared with £4bn when it listed.
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