Fitch Ratings has maintained Aston Martin Lagonda Global Holdings Plc’s long-term issuer default rating at ‘B-’, with a Negative Outlook, citing increased liquidity risk and weaker-than-expected free cash flow in 2024. The credit update, published on 2 June, follows continued financial pressure on the luxury carmaker, despite a recent capital injection and relief from proposed US automotive tariffs.

The rating action comes two months after Aston Martin’s executive chairman Lawrence Stroll told Bloomberg News (1 April) that he does not rule out taking the company private. Stroll described the carmaker’s market valuation — around £650 million — as a “joke”, noting it is now roughly equal to the amount his Yew Tree consortium has invested since 2020. After the latest £52.5 million capital raise, Yew Tree’s stake will increase to around 33%.

While Stroll insists the company is “severely undervalued”, Fitch’s view underscores the difficulty of turning around the carmaker’s financial performance. Fitch highlighted a larger-than-anticipated free cash flow deficit in 2024 and ongoing execution risks linked to Aston Martin’s turnaround strategy. These concerns persist despite a £125 million capital boost announced at the end of March, comprising a share issue and the sale of the company’s stake in its Formula 1 team, which temporarily eases liquidity pressures.

Aston Martin, which has declared its goal to become EBIT-profitable in 2025, has consistently struggled to achieve sustainable performance. Car sales fell 9% year-on-year to around 6,000 in 2024, while the group reported a pre-tax loss of £290 million. Analysts have questioned the company’s ability to deliver on revised profitability targets, particularly given ongoing supply chain constraints and past delays in model launches.

The company’s US exposure adds further complexity. The US accounted for 37% of group revenue in 2024, and earlier proposals from the Trump administration to impose 25% tariffs on UK car imports raised concerns.

However, a new UK–US trade agreement, whose implementation date remains unclear, will reduce duties to 10% for the first 100,000 vehicles exported annually, roughly equivalent to the UK’s 2024 export total, according to the Society of Motor Manufacturers and Traders (SMMT). While management has downplayed the impact, noting the tariff hike is “not catastrophic,” Fitch notes that the pricing implications are uncertain.

To mitigate near-term tariff effects, Aston Martin accelerated US-bound shipments in Q1 2025, providing inventory cover for the second quarter. Management has also indicated that passing on higher costs may be feasible for high-margin, limited-run models, but Fitch notes that long-term margin effects remain unclear. Tariff-related cost pressure adds to existing inflationary challenges, though the company continues to pursue cost-saving initiatives.

Since its 2018 IPO at a £4.3 billion valuation, Aston Martin has undergone several strategic resets. The latest, under new CEO Adrian Hallmark, who joined from Bentley Motors Ltd, prioritises profit over volume, scrapping previous sales targets and focusing instead on customised, high-margin models and derivatives of existing platforms. Hallmark previously led Bentley to record profitability, increasing its operating margins to over 20% by 2023.

Still, Fitch warns that Aston Martin’s “rating headroom remains constrained,” with profitability dependent on effective execution, shareholder support, and resilience to external risks including weaker demand, particularly in China, and potential delays to new launches.