Luxury carmaker Aston Martin Lagonda has announced plans to cut up to 500 jobs as part of their turnaround plan to deal with the impact of COVID-19. The firm will also be replacing its CEO as part of the plans.
The firm released a statement which said the new strategy intended to deliver £10m in savings for the remainder of the year.
The statement read: “As communicated previously, the plan requires a fundamental reset which includes a planned reduction in front-engined sports car production to rebalance supply to demand. The company’s first SUV, DBX, remains on track for deliveries in the summer and has a strong order book.
“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 will shortly launch a consultation process on proposals to reduce employee numbers by up to 500, reflecting lower than originally planned production volumes and improved productivity across the business. The employee and Trade Union consultation process will be launched in the coming days.
“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.”
The Warwickshire-based company, has not revealed where the cuts will come within the structure of the business.
Christian Stadler, Professor of Strategic Management at Warwick Business School and an expert on the automotive industry, said: “It is no surprise that car manufacturers and dealers are feeling the pinch after sales plummeted during lockdown. However, a far bigger concern is that sales are unlikely to bounce back as lockdown is eased.
“Many people will feel less secure financially and more concerned about their jobs. They may hold off buying a new car, especially with the uncertainty of Brexit hanging over them as well. They might also feel less inclined to visit a car show room if social distancing measures continue.
“That has inevitably made job cuts more likely, but some firms who were struggling before the pandemic may also use COVID-19 as an excuse for cuts they were planning to make anyway.
“One crumb of comfort for the industry is that commuters may be more reluctant to use public transport after lockdown, which could encourage them to buy a new car if they are no longer working from home. However, if home working remains the norm after lockdown, that could convince even more people to put off purchasing a new car.”