Aston Martin shares dive as uncertainty grips

Aston Martin shares slumped by 22 per cent in early trading today after the news the British car-maker has cut its sales and profits forecast following a weak market in the UK and Europe.

Aston Martin announced that it would slash up to £40 million ($A72m) of its previous investment plans in response to what it described as a deepening auto industry slump in Europe.

Blaming rising costs due to both its aggressive investment plans and Brexit provisions, Aston says it now expects annual volumes for this year to be around 6300-6500 vehicles – down from an earlier estimate of between 7100 to 7300 cars.

In the second quarter in the UK alone, Aston Martin said demand fell by 22 per cent while in the rest of Europe demand dropped by 28 per cent.

Offsetting some of the damage from a weaker European economy, Aston said there were double-digit gains in the Asia-Pacific and Americas regions.

In response to the drop in demand and sales, Aston told the markets it was working to both boost efficiency and reduce costs.

"We are disappointed that short-term wholesales have fallen short of our original expectations," CEO Andy Palmer said. "We are today taking decisive action to manage inventory and the Aston Martin Lagonda brands for the long-term."

Sources close to Aston Martin have reportedly said the car-maker would also cut vehicle production as a result of the lower sales expectation to avoid a potential backlog of cars.

A spokesman for Aston Martin said the British car-maker expects the rest of the year to remain a challenge for the brand.

The slump in fortunes is seen by the industry as a sizeable blow for Aston Martin's reputation on the stock market.

Since its initial public offering in October at £19 a share, the value of Aston stock has more than halved.

Aston Martin has already announced that it plans to double the volume of cars it makes by 2023 following the launch of Lagonda brand and its first SUV, the DBX.

Despite the doom and gloom Aston Martin said its retail sales actually grew by 26 per cent overall in 2019 but it was the poor performance in wholesale – the cars bought by its dealers – that prompted the downgrading of its 2019 expectations.