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In my opinion, Aston Martin Lagonda (LSE:AML), the FTSE 250 luxury sports car maker, is a bit of a legend. It makes some of the most beautiful cars around and has won numerous awards for its cool brand.
Since 1982, it’s held a Royal Warrant and its vehicles have featured in over half the films made under the James Bond movie franchise. Its cars were once described as “authentic pieces of art”.
Even the group’s annual reports look stylish with some eye-catching photographs and attractive typeset. What’s not to like about Aston Martin?
Persistent losses
Well, if I was a long-standing shareholder, I’d be pretty disappointed. That’s because, since its IPO in October 2018, its share price has fallen 96%. And another profit warning issued today (6 October) is unlikely to help shareholders’ mood. Sales in 2025 are now expected to be a “mid-high single-digit percentage” lower than in 2024.
In 2017, just before the group listed, it recorded a post-tax profit of £77m. Every year since, it’s reported a loss.
Some might prefer that I’d used adjusted figures in the table below — I’ve taken each period’s statutory result from the group’s annual report and accounts – but it’s still loss-making even when one-off non-recurring items are removed. Fundamentally, it doesn’t really change anything.
| Year | Volumes | Revenue (£m) | Net profit/(loss) (£m) |
|---|---|---|---|
| 2017 | 5,098 | 876 | 77 |
| 2018 | 6,441 | 1,097 | (57) |
| 2019 | 5,862 | 981 | (118) |
| 2020 | 3,394 | 612 | (411) |
| 2021 | 6,178 | 1,095 | (189) |
| 2022 | 6,412 | 1,382 | (528) |
| 2023 | 6,620 | 1,633 | (227) |
| 2024 | 6,030 | 1,584 | (324) |
| 2025 (first six months) | 1,922 | 454 | (149) |
| Totals | 47,957 | 9,714 | (1,926) |
Since 2017, it’s accumulated losses of £1.93bn. It means it’s lost nearly £200,000 for every car its sold. Compared to 2017, its average selling price (ASP) is approximately £86,000 more. But its gross profit margin has fallen from 43.4% to 27.9%.
In effect, it’s having to do more to stand still.
Challenging times
Tariffs have contributed to the group’s problems. Aston Martin euphemistically describes them as “unhelpful”. To provide some relief, the UK now has an agreement where 100,000 cars can be imported into the US at a tariff of 10% (previously it was 25%). Although disappointing, at least there’s some clarity.
However, the group remains hopeful that things will improve over the medium term (2027-28). It has a revenue target of £2.5bn which, based on its current ASP, is equivalent to approximately 10,500 vehicles. It’s aiming for an operating margin of around 15%.
But the group has a history of missing its targets. When it presented its 2018 results, it said its medium-term aim was to produce 14,000 cars a year and have an adjusted operating profit margin greater than 20%. In 2024, it sold 6,030 units and its margin was negative.
I think Aston Martin has all the hallmarks of a company that will eventually be taken private. I’m sure its directors would argue that a stock market valuation of £870m doesn’t truly reflect the value of the group. They might point to Ferrari — which has a market cap of €82.6bn (£71.9bn) – to support their argument. But that firm’s 2024 accounts reveal that it sold 13,752 cars, achieved a gross profit margin of 50.1% and made a post-tax profit of €1.53bn. Although I don’t think its market cap is justified, it does show how a premium brand can attract an above-average valuation from enthusiastic investors.
I remain a fan of the Aston Martin brand. But it hasn’t yet found a way of making cars profitably. Until it does, there’s no point being in business. As an investment, it’s not for me.
