Around a fifth of the company's workforce is being axed.
It's a worrying time for the British sports car industry right now. With sports car sales falling rapidly during the pandemic, McLaren was recently forced to cut 1,200 jobs, representing around a quarter of the company's workforce. And now Aston Martin is facing a similar situation.
Demand for the company's sports cars has dropped, meaning that the production of models such as the Vantage and DBS Superleggera is being reduced. Consequently, Aston Martin has announced it's axing 500 jobs as part of a £10 million ($12 million) cost-cutting plan to help it recover from the coronavirus crisis.
This represents around a fifth of the company's workforce, which has around 2,600 employees. These job cuts come just one week after former CEO Andy Palmer was replaced by Mercedes-AMG's CEO, Tobias Moers. Aston Martin said the plan requires a "fundamental reset, which includes a planned reduction in front-engined sports car production to rebalance supply to demand." Despite these setbacks, the Aston Martin DBX, is still on track for summer deliveries and has a "strong order book."
"The measures announced today will right-size the organizational structure and bring the cost base into line with reduced sports car production levels, consistent with restoring profitability," Aston Martin concluded.
In addition to Aston Martin's £10 million cost-cutting plan announced in January, Aston Martin is also planning to reduce manufacturing costs by £8 million ($10 million) and capital expenditure by £10 million. Related cash restructuring costs are expected to be £12 million ($15 million) this year.
Earlier this year, Canadian billionaire and Formula 1 team owner Lawrence Stroll led a consortium of investors to purchase a 25 percent stake in the company worth around $657 million, but Aston Martin is clearly still facing financial setbacks. In the first three months of 2020, Aston Martin recorded a pre-tax loss of £118.9 million ($149 million).