Aston Martin to cut 500 jobs amid Covid-19 sales slump
The luxury car maker plans to axe 500 jobs after the coronavirus has impacted demand, leading to a slump in sales and the need to cut back on production of its vehicles.
Aston Martin Lagonda said that it will lay-off 500 workers due to the coronavirus pandemic leading to a slump in sales and, therefore, a need for the company to cut back on production.
The luxury car maker plans are part of a wider restructuring plan that aims to save the company £18 million a year in operating and manufacturing costs, with an additional £10 million reduction in capital expenditure. Aston Martin expects to talk with its employees and trade unions in due course.
Aston Martin is down 2% to 66p per share at the time of publication.
Aston Martin suffers Q1 loss amid Covid-19 crisis
In May, the luxury car maker recorded a significant first-quarter loss due to sales falling by almost a third due to the economic impact of the Covid-19 pandemic.
Its losses were compounded by rising US-China tensions prior to the outbreak, which reduced demand from the Chinese market. Relations between the world’s two largest economies have begun to worsen again, something that could hurt the company’s sales throughout the year.
‘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 added.
Aston Martin: technical analysis
The stock continues to come under pressure on Thursday, having already shed almost 90% of its value over the past six months.
In March, Aston Martin shares tried to retrace some of its recent losses but faltered at key resistance just above £2.85, before gapping sharply lower to hit an all-time low in mid-May.
Since then, the stock has recovered modestly, trading in an ascending trendline with a series of higher lows, although it still remains significantly below the key £1 level.
The recent narrowing of the Bollinger bands might suggest that there could be some volatility ahead for the stock, which is currently testing the upper band, according to Victoria Scholar, market analyst and presenter at IG.
‘There appears to be key resistance at the 50-day moving average of 83p. A crossover of price above this level would act as a bullish indication for the stock,’ Scholar said.
‘Then next resistance levels to watch would be the psychological £1 mark and £1.19 where the stock gapped lower in March. Meanwhile on the downside look for support at the 20-day moving average around 45p,’ she added.
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