LONDON -- Aston Martin swung to a third-quarter loss on Thursday, as the UK automaker pins a sales revival to the launch of its first SUV, the DBX.
The company posted a 13.5 million-pound ($17.4 million) loss before tax in the three months to the end of September, according to an earnings statement on Thursday.
Vehicle sales dropped 16 percent to 1,497 cars in the quarter as demand for some of Aston Martin's traditional sports models has stumbled amid uncertainty surrounding Brexit, weakening economies and global trade wars.
Volumes to dealers fell 22 percent in the UK. Volumes in the rest of Europe, Middle East and Africa dropped 17 percent and in Asia volumes declined by a third, hit by weak demand for the company's Vantage model.
Vehicle sales this year are expected to fall below the previously targeted range of 6,300 to 6,500 autos, according to the company, a setback as the automaker is aiming to lift annual output to 14,000 by 2023.
"The industry is in the midst of a slowdown and I'm happy that we've seen 13 percent sales growth year to date," CEO Andy Palmer said.
"All year, we have been working on reducing inventories," Palmer said, adding that wholesale volumes have fallen even as retail sales advanced.
The global automotive industry has undergone a torrid year, hit by declining sales in China, trade war worries between the world's two biggest economies, a slump in diesel sales in Europe and the need to invest heavily in electrification.
Palmer is betting on the coming DBX as the main driver of growth.
The DBX will be built at Aston Martin's new factory in St Athan, south Wales.
"We are essentially holding the cost of a complete factory right now without the benefit of the revenues coming in ... so from that point of view of course it's a really important model," Palmer said.
The DBX will be priced alongside its competitors such as the Bentley Bentayga and Lamborghini Urus. Prices will start at 158,000 pounds in the UK, 193,500 euros in Germany and $189,900 in the U.S., Aston said earlier this week.
The car will be launched in Beijing on Nov. 20, with deliveries beginning next year.
Analysts have said the company may need to sell new stock to shore up its balance sheet, though a shareholder meeting in June restricted management's power to do so without approval. It can also only gain access to a further $100 million of financing if it secures 1,400 orders for the DBX by June.
Earlier this year, Aston Martin said it was raising $150 million in debt at a 12 percent interest rate to bolster its balance sheet ahead of the launch of the SUV, which it hopes will revive its fortunes by doubling its output.
The company can service its debt and leverage will come down over time, Chief Financial Officer Mark Wilson said.
Market reaction
Aston shares have declined 78 percent from an initial public offering price of 19 pounds in October last year. That has shrunk the company's market value to 952 million pounds.
On Thursday, Aston said its net interest expense guidance for 2019 stood at around 83 million pounds, also hit by the impact of unhedged expenses in U.S. dollars, with prior guidance at roughly 70 million pounds.
Aston, which is primarily owned by Italian and Kuwaiti private equity groups, and not part of a wider automotive group, said it could thrive on its own alongside its work with Mercedes-Benz owner Daimler, which has a small stake in the company.
"Our relationship with Daimler is also important so we're not completely alone. We obviously have their technology to fall back on," Palmer said.
Reuters and Bloomberg contributed to this report
