Aston Martin's 24-hour scramble to get lower US tariffs pays off
By invoicing the whole quarter's cars on that same day it avoided having to report a sales slump that might have alarmed investors.
The operation may not have matched the drama of the James Bond films that have long featured the brand, but it 'was quite exciting, to put it mildly', said Adrian Hallmark, Aston Martin's chief executive.
Donald Trump has shaken the global economy with a trade war, causing a particular stir in the car industry with his imposition of a 25% tariff on 3 April on top of an existing 2.5% levy.
Germany's Mercedes-Benz said on Wednesday Trump's border taxes would cost it about €360m (£311m) this year, while the sportscar-maker Porsche said it had taken a €400m hit from the levies in the first half of the year.
However, in early May, the US president and Keir Starmer agreed a deal to limit tariffs on 100,000 British-made cars per year to 10%. That rate came into force at one minute past midnight on 30 June, the final day of the second financial quarter.
Aston Martin Lagonda manufactures all its cars in factories in Gaydon, Warwickshire, and St Athan, south Wales. It shipped 328 cars to dealers in the Americas between April and June but the majority were sent on 30 June. It was a 'mammoth task', Hallmark said. 'This left us with 24 hours to invoice the entire quarter's-worth of vehicle sales in the US.'
The one-day scramble illustrates the tariff turmoil causing headaches for goods exporters around the world. Aston Martin revealed that it had raised prices for US customers by 3% to absorb some of the hit from the border taxes.
Getting the cars to dealers early would have meant a big financial blow from absorbing the higher tariff rate, while late arrivals that missed the quarter-end would have meant reporting a big slump in sales.
So Aston Martin decided to send hundreds of cars to bonded warehouses in the US – where goods can be stored without being subject to tariffs – before delivery firms raced to get them all to dealers before the end of day on 30 June. Those cars attracted the 10% rate, rather than 27.5%.
Other carmakers face higher costs. The EU reached a deal with the US to cut tariffs on most goods including cars to 15%. Mercedes-Benz boss Ola Källenius said he did not expect any improvement on that for the car industry, despite lobbying for a lower rate from Germany's carmakers.
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Aston Martin also said it had cut production and limited exports to the US to try to limit the financial impact.
Even after its 30 June operation, Aston Martin could still be hit later in the year when it launches its million-dollar Valhalla, a mid-engine hypercar that it hopes will be a major contributor to profits.
However, it is worried that the quota of 100,000 cars covered by the 10% tariff could be used up before it can get the Valhalla to dealers – potentially adding more than £100,000 to the price if importers must pay the 27.5% rate. British companies exported just over 100,000 cars to the US last year, with the bulk being Range Rovers shipped by JLR.
The quota could mean an end-of-year race between British carmakers to get their vehicles into the country, with 'pressure on the number of slots available on the 100,000 quota', Hallmark said.
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