Probe call following profit blow for luxury car-maker
ASTON Martin Lagonda has warned coronavirus has the potential to impact on demand and supply in China – its fastest growing market – as it posted widening annual losses and confirmed a £500m investor cash call.
The luxury car-maker reported pre-tax losses of £104.3m for 2019, against losses of £68.2m a year earlier.
It is a big year ahead for the manufacturer with a move into the luxury SUV market, which will be made at the company’s new facility in the Vale of Glamorgan.
The DBX, which will be Aston Martin’s first foray into the sports utility vehicle market, is designed to appeal to women in countries such as China and the US, enabling the company to expand away from its traditional maledominated sports car clientele.
The SUV is seen as critical to the long-term success of Aston Martin, with full production of the DBX in the next few weeks at the St Athan facility following its official opening in December 2019.
The car-maker was enticed to St Athan by the Labour Welsh Government with nearly £20m worth of taxpayer grants in the hope of boosting the south Wales economy.
In reaction to the news of the pre-tax losses South Wales Central AM, Andrew RT Davies has written to the National Assembly’s Public Accounts Committee Chairman, Nick Ramsay, asking his committee to investigate the Welsh Government’s investment.
“This is a very troubling set of finances, and behind the excitement of what seems a good brand and project, it once again poses serious questions for the Labour Welsh Government’s judgement and investment strategy,” he said.
“Millions and millions of pounds of Welsh taxpayers’ cash has been thrown at Aston Martin, yet it appears to have been in significant financial difficulty for quite some time, which is very concerning.
“There is always an element of risk when investing in business, but where taxpayers’ money is concerned the public has a right to question whether value for money is achieved and it’s now paramount the Welsh Government does all it can to ensure both taxpayers cash and jobs are protected.
“Labour’s Welsh Government has a chequered past with such investments and their actions during this process must be fully investigated and taxpayers will expect robust evidence that due diligence was followed.
“As such, I have therefore written to the chairman of the Assembly’s Public Accounts Committee, Nick Ramsay, to ask whether his committee would be inclined to initiate an inquiry into the investment and partnership between
Welsh Government and Aston Martin.”
When fully operational the factory is expected to employ 750 members of staff, increasing to 1,000 when the site adds the manufacturing of Rapide E and Lagonda brands to the marque’s output at the Vale of Glamorgan site.
It is anticipated there could be as much as a further 3,000 across the supply chain and local businesses in Wales.
Aston Martin said that, while it had not yet seen any impact on production in China from the coronavirus outbreak, it confirmed there had been some disruption to supply of components from China and warned over the possibility of a hit to the overall supply chain and customer demand.
China was its fastest growing market last year and accounted for 9% of total wholesales.
Automotive expert Christian Stadler, professor of strategic leadership at Warwick Business School, said Aston Martin was right to flag potential coronavirus woes and said the outbreak could see the sector “grind to a halt”.
He said every car contains around 30,000 different parts, many of which come from China or contain components that do.
He said: “The Chinese market for new cars had already started to slow along with the economy and since the coronavirus outbreak we