Good morning or good afternoon, or welcome to the Aston Martin Lagonda Q3 2025 results. My name is Adam, and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing * followed by 1 on your telephone keypad to enter the queue. I will now hand the floor to Adrian Hallmark to begin. Adrian, please go ahead when you're ready.
Yeah, good morning and thank you, Adam. First of all, a warm welcome to everybody, and thank you for joining the call for the Aston Martin Q3 2025 results. Before we take questions on the line, Doug and I would like to provide a summary of our operational financial outlook during the last quarter, review for the last quarter and outlook for the rest of the year. Recognizing that we already updated the market earlier this month, much of what we will share today you'll already be aware of. It is important that we focus now on what we're doing and building forwards to highlight some of the actions that we've already taken in response to the challenges that we face. Let's start with operations, the heart of our business, and that's essentially our cars.
As we said at the beginning of this year, we remained focused on refreshing our core model lineup available to customers. Aston has a long-standing tradition of using the S suffix for the high-performance derivatives of core models, and we've continued that tradition this year by adding the Vantage S, DBX S, and most recently, the DB12 S. We now also have the Volante or Roadster models available for all of our sports cars, and we recently celebrated the 60th anniversary of the iconic Volante name with the release of a limited edition, Q by Aston Martin, DB12, and Vanquish models. There will be much more to come in 2026, and each of these small product events is providing an opportunity for communications, product relaunch, and customer engagement on a global basis. Valhalla has been a monumental and groundbreaking product for Aston Martin.
It's our first mid-engine PHEV in series production, and it's set to transform the business. I'm delighted to confirm that this week we commenced initial deliveries of Valhalla to Europe. We've achieved homologation there, and the first cars have been shipped and will be ready to be delivered to customers in the coming days and weeks. That's just the start. We will continue that process through the end of this year, and we expect to deliver about 150 cars before we close out 2025. In parallel to this, there is an extensive customer driving program where some 600 customers, existing and new, are testing the vehicle around the world. This week, the team are in Miami, and the feedback has already been incredible.
I can only concur with the positive feedback that we've had, having driven the car myself, both on public roads around Warwickshire, but also at pace on the limit again. The car is truly phenomenal, and that's the feedback we get from all participants in these events. As you're probably aware, already more than 50% of these cars are already deposited and sold for the full lifetime of the vehicle, and that means that any new orders that we generate over the coming days, weeks, and months will be delivered successively towards the end of 2026. This level of direct customer engagement is the platform that we'll use going forward for the rest of the core model lineup. We've seen fantastic response, actually, from these Valhalla supercar buyers when testing the Vantage on the same tracks before they go out in the high-performance car.
We've actually sold core models as a result of them being tested before the main reason for those visits. Clear example that getting behind the wheel of the Aston makes a truly unique and thrilling experience and surprises the unconverted. However, as we flagged earlier this month, our performance this year from a financial and operational point of view has been challenged by some significant macroeconomic headwinds. The sustained impact of the U.S. tariffs and continued weak demand in China compounded by a change in luxury taxation in the second and third quarter of this year. This trend has also been noted by other premium and luxury automotive peers, but obviously, we have to respond in our way to our specific situation. We have taken decisive and proactive steps to strengthen our position. First of all, we've passed through a second 3% price increase in the U.S.
from the 1st of October to offset more of the impact that we've been absorbing due to the tariff increases announced earlier this year. As we said at the half-year results, we've provided support for dealers in China in order to accelerate sales, clear stocks, and get us ready for a strong 2026. Unfortunately, this new luxury tax slowed that process down, but we redoubled our efforts, and we're making strong strides to ensure that we recover the situation by the end of 2025 as originally planned. What we're also doing is taking a long, hard look at our OpEx and CapEx plans, both for 2025 and in subsequent years.
With that in mind, work is underway to review our future cycle plan with the dual aim of optimizing capital investment while continuing to secure the innovative products that meet customer demands in our plan and, of course, meet regulatory requirements. We will not mortgage the future. We will merely reprioritize, retime, and refocus that CapEx to make it more efficient going forward. We'll be giving more details on that as we get to the full-year results, but you can expect that the five-year CapEx envelope, instead of the previously indicated GBP 2 billion range, will be more in the GBP 1.6 billion- GBP 1.7 billion range, a significant shift, but without damaging our future prospects. We'll continue to build on our current strengths of exquisitely designed high-performance cars, GTs, and SUVs, together with V8 and V12 engines.
This is at the heart of Aston Martin's strategy, and we need to embrace this to ensure that we have a business fit for today and the future. With that overview, I'd now like to hand over to Doug, who will take you through the key financials before we take questions from the invited guests. Thank you, Doug.
Thanks, Adrian. Morning, everybody. Overall, our Q3 performance reflects the position that we announced earlier in the month and is really predicated on the low and expected wholesale volumes. Our Q3 wholesale volumes of 1,430 were down 13% compared to the prior year period and below our previous guidance of expecting Q3 to be broadly in line with the Q3 of last year. This volume performance reflected the heightened challenges in the global macroeconomic environment, including the ongoing effects of tariffs, weak demand in China, and the planned delivery of fewer specials versus last year. Year-to-date revenue and total ASP also reflected the lower specials volumes when compared with the prior year period. As a result, revenue decreased by 26% and total ASP decreased by 22%.
However, year-to-date core ASP increased by 4%, driven by improved mix, including both Vanquish and Vanquish Volante, as well as continued strong options contributions, stable at around 18% of core revenue. Core ASP was lower sequentially in Q3 compared to Q2 this year due to the additional dealer support, including in China that we mentioned earlier, foreign exchange, and mix within the sports cars portfolio. The fewer specials deliveries and, to a lesser extent, the lower core volumes also impacted year-to-date gross profit and gross margin. The margin also reflected the impact of the previously communicated warranty costs and other investments made in product quality earlier in the year, as well as the elements impacting the core ASP I've just mentioned. We expect to deliver an improved gross margin performance in Q4, benefiting from additional core derivatives and the contribution from around 150 Valhallas.
Year-to-date adjusted EBITDA decreased against the prior year period by GBP 105 million to GBP 8 million, reflecting the gross profit movement. This was partially offset by a 24% decrease in adjusted operating expenses, excluding D&A, as we continue to focus on optimizing our cost base and to drive operating leverage. Here, we've taken further action and now expect to reduce full-year 2025 adjusted operating expenses, excluding the D&A, to around GBP 275 million from GBP 313 million in 2024. Year-to-date adjusted EBIT decreased by 42% to - GBP 172 million, with D&A decreasing by 23% to GBP 180 million, primarily reflecting the lower specials volumes ahead of Valhalla deliveries commencing in Q4.
Capital expenditure of GBP 254 million was below the comparative period, and we've taken action to further reduce full-year 2025 CapEx to around GBP 350 million, down from the initial GBP 400 million guidance at the start of the year and the GBP 375 million referenced at the Q3 trading update. Free cash outflow in Q3 was GBP 94 million, and from a liquidity perspective, and as previously announced, we received the net proceeds of GBP 106 million for the sale of the shares in AMR GP, which resulted in total liquidity at the end of Q3 of GBP 248 million. Whilst we announced at the beginning of the month our expectation that we'd no longer be free cash flow positive in H2 2025, we do expect to deliver an improved sequential Q4 performance for the reasons already outlined.
As we move into next year, we expect to complement the current core model lineup with additional derivatives and to deliver around 500 Valhallas with our production and delivery cadence established at the end of 2025. This, in addition to driving further operating leverage and being disciplined in our approach to CapEx, supports our outlook for materially improved financial performance in 2026. With that, I'll hand back to Adam so we can start to take some questions in the time we have remaining.
Thank you. As a reminder, if you'd like to ask a question today, please press * followed by 1 on your telephone keypad now to enter the queue. When preparing to ask your question, please ensure you are unmuted locally. * followed by 1. Our first question today comes from Henning Cosman from Barclays. Henning, your line is open. Please go ahead.
Yes, good morning, Adrian. Good morning, Doug. Thanks for taking the question. I have three, please, if I may. Really good to see the further action on CapEx and OpEx. I have to ask, how do you manage to do that with no effect to cycle plans or so on? Obviously, you're telling us the cycle plan is under review, but do you have that leeway, headroom to cut these costs? Perhaps, in other words, why wouldn't you have done that anyway? That's the first question. What are the effects? Second question, it's also great to see these new variants come through as variants across the model range, but what levers do you really have to stimulate demand? I believe these variants tend to take up quite a large share of the overall model mix and don't really tend to be that incremental over and above the existing unit sales.
Perhaps you could remind us what levers you're foreseeing to increase overall unit sales. Finally, a third question on the liquidity. I don't know, Doug, if you can give us a feel for where you think you might be ending the full year 2025 in terms of liquidity, but perhaps also a feel beyond 2025. It's perhaps not the time to talk about whether you're foreseeing free cash flow break even next year or not. If you could just give us a bit of color if you think you can stay well within that GBP 200- GBP 300 million liquidity range without any need for further debt or equity, that'd be great. Thank you.
Henning, Adrian here. I'll kick off and I'll pick up on the demand and variants and their influence, then we'll come onto the financials. I think, first of all, the idea of the variants, without giving a detailed forecast of next year's volume, even without incremental volume, the variants are a better average selling price and a different product proposition to the products that we've sold in 2025. The levers that we have are their new models. They offer new performance, new features, and a different price-value relationship. They give us a reason to go back to existing customers, which is clearly a significant opportunity for resale and upgrading through their life cycle, but also an opportunity and a platform to recommunicate the nameplate because there's still people that don't know every model that we do in the world and get new business too. It's an ASP activation.
It's an existing customer repurchase opportunity. Of course, it's comms op to get more awareness for each nameplate and keep the brand salient in between the big life cycle changes on new product launches. That's the basis for those. Just in terms of the mix of them, to clarify that point, as we move through the year, we intend to essentially switch most production to these new models so that the existing core range is ordered on demand and is a much smaller percentage of our total mix. That also helps with residual values.
Okay, I'll pick up on questions one and three, Henning, which I think were kind of linked, to be honest with you. Obviously, from a cost and CapEx point of view, you can see that we're taking the action that we outlined that we would when we updated the market early in October. Indeed, on the cost front, on SG&A, it's really a continuation of the action that we've been taking all year. I think you can expect SG&A at the end of this year, as I said, around GBP 275 million, hopefully a little bit improved versus what we previously indicated. Our job is to try and offset the impact of any inflationary or other impacts on the SG&A cost base as we move into next year and make sure that we do deliver operating leverage.
From a CapEx perspective, it's really about having a really good long, hard look at the product cycle plan, making sure that we do it in the most efficient way that we possibly can. There's a little bit of rephasing with the benefit of electrification moving to the right, as we'd already outlined earlier in the year. We're already running at the kind of rate that I would expect CapEx to be in the window of next year. We're guiding to circa GBP 350 million this year. I think next year it's probably likely to be somewhere between GBP 300 million and GBP 350 million. We're focused on ensuring that we don't impact any near-term revenue-generating products with the rephasing of the CapEx plan. That's how we'll go about doing that. Of course, those two things are then linked to your third question around liquidity.
We're absolutely laser-focused on ensuring that the company has the liquidity it requires. That GBP 200 million - GBP 300 million window that I've talked about previously remains the goal and the avenue that we're operating within. We were around GBP 250 million of liquidity at the end of Q3, and we're targeting to make sure that we stay in that window as we move through next year.
Thank you, Adrian. Thank you, Doug.
The next question comes from Harry Martin at Bernstein. Harry, please go ahead. Your line is open.
Good morning, everyone. I have two questions on the Valhalla to start with. The first one, with the activation going on right now and in the coming months, would you expect to be fully sold for the 2026 build slots by the year-end of this year? What is your updated expectation for the full 999? The second question on the Valhalla is just how many of the 150 deliveries in the guide for this year are in the market for the U.S. if we do get an ongoing government shutdown there?
Okay, Harry, I'll start with the easy one first. The number of cars going to the United States is around 40 in the final quarter of this year, 40. In respect to the government shutdown, the certification process that we have to run is complete. The documentation is all being submitted. Until about 10 days ago, we were still getting responses from them until they ran out of funding. It is tight. We no longer have a significant risk on quotas. We're not gleeful about this, but the unfortunate and critical situation that GLR found themselves in has probably taken significant pressure off the quota allocation risk for quarter four. Yes, you're right. We now just still face this certification risk. Until a few days ago, we were still in active contact. The work has been done. The documents are submitted. We're cautiously optimistic that that will flow.
We should know in the coming weeks how that looks. In terms of the sell-out of Valhalla, it'd be great if we could sell them all tomorrow. By the year-end, I think certainly we will sell the majority that will be available in 2026 because we've already sold most of them as we sit here today, if you add the total numbers up. In terms of the 999, that's still our plan over the two-year period or to the mid-year period while the car's in the marketplace. We are encouraged by the fact we've got more than 50%. We had more than 50% of those sold before anybody saw the actual car or drove it. We have a high number of people that are currently speccing, negotiating, and finalizing arrangements for the car.
I won't predict exact numbers and exact dates, but it's looking positive as we open up the marketing channel.
Great. I wondered, Adrian, if I could just ask for an update on some of the strategic agenda. It's totally acceptable with a lot of the market issues hitting demand for the luxury manufacturers out there. When you came in, you highlighted opportunities versus peers in terms of option availability and more personalization revenue, and also on optimizing manufacturing and supplier processes. I wondered if you could share any data points that you have, maybe the personalization rates on those new S variants or any other data points that you have on some of those strategic goals that you had when you came in.
Yeah, I think if we start from the really good news, if you think of, I don't know, six or nine months ago, the condition that we were in operationally as a company was pretty dire. The first time or right-first-time performance in manufacturing was nowhere near industry norms. I think we quoted 55%, 65% of vehicles being right first time out of the factory. Massive shortages from suppliers, problems with production and launch of cars, etc., etc., some of which was caused by external and some by internal factors. The good news is we fixed all of that. If you were to sit in the regular reviews that we have on a weekly basis, supply stability, manufacturing KPIs are normal.
96% - 98% right first time, and four or five suppliers that we are monitoring or working with on a weekly basis to ensure that things move smoothly compared with 30, 40 critical ones going back a year. I call that business as usual. The quality process at the end of the line, the quality flow to dealers, we've seen massive reductions in demerits and in issues in that part of the process. From an industrial operational point of view, I would say we have done the turnaround. We have a balanced production system and it works. We've also taken a huge cost out of it. We mentioned the transformation program, which covers cost of quality, material costs, etc., etc. All of the 39 fields of action that we've defined are well underway with huge amounts of energy and effective activities going on across the company.
That's partly the reason why we've been able to cap the SG&A this year. We're, again, quietly confident that we can sustain similar levels of SG&A next year despite inflationary effects. The underlying efficiency and capability of the company, we have made a step change with. If I look at the external side and the added value and incremental value of the car, I have to be honest that the rate of development and launch of those incremental options to catch up with competition has been slower than we originally planned. It's for three reasons. One, these derivatives that we've launched, bearing in mind we didn't have any of these Ss. All of them take time and effort. They took a lot of the resource effort that we had in engineering and in the whole process chain last year. We, I guess, underestimated the effort that that would take.
Together with the significant quality improvements that we've made during the period, it meant that there was more limited resource to be able to really boost those options. We have added circa 15, but we didn't add the circa 40 that we wanted. The derivatives are being done, body styles as well as these performance and character models. Options that will continue, and it will ramp up during this year. Watch this space for that. Operationally strengthened, market ASP and customer attractiveness, derivatives are very successful. About a third of the incremental options that we wanted this year have been delivered, but we'll play catch-up next year.
All right, that's very useful. Thank you.
Pleasure.
The next question is from Michael Tyndall from HSBC. Michael, please go ahead. Your line is open.
Thanks, James. Just the one from me. If I look at your guide for shipments, it feels like we are, again, expecting a very strong Q4. I guess the concern in my head, I can see that Valhalla is incremental, and that's part of why we're going to see that sequential lift. It also feels like there's a big lift in the core volumes. What confidence do you have that we don't end up in the same situation we were this year where first half of next year you are then trying to unwind that inventory?
Okay, Michael, thanks for the question. The first thing I would say, if you look at the inventory development through the year this year, we've also been pretty effective at bringing that down significantly. As we get towards the year-end, you're right, we have a disproportional reliance on Q4 for various historic reasons. The market is also stronger in Q4 than other quarters, particularly December. If I separate two elements, if I look at the retail rate for this year, we will see a step up in retail rate in Q4. That's predicted, and we're, again, quietly confident that that will occur.
As we stand today, from the low point that we've seen in stocks, we do and can imagine that by the year-end, that total stock in the pipeline will go up again to somewhere between the low point and the start of the year, but not at the level at the beginning of the year. That's based around the combination of retails and the phasing of those wholesales. You're right that those late Valhallas in particular, we will be able to invoice them, but some of them will be so late that maybe some customers won't take delivery in this year. The wholesale will happen, but the retail may be held off until the 1st of January for residual value reasons.
Looking forward, and part of our planning that we've done for the CapEx, OpEx, and outlook, we've made sure that for next year, we have an even more balanced approach throughout the four quarters, and that we continue this trend to bring the stock down in line with norms and market expectations. Final thought, we have been quite prudent, at least on the baseline planning for next year, on core models, and we have already pre-planned production, sales, and stocks accordingly.
Got it. Thank you very much.
Pleasure.
As a reminder, that's * followed by 1 to ask a question today. The next question comes from Akshat Kacker from JPMorgan. Please go ahead. Your line is open.
Good morning, Akshat from JPMorgan. Two quick ones, please. The first one, coming back to the core portfolio. Given the product cycle plan review, and as you mentioned, electrification is moving to the right, could you just give us some more insight on what that means for the core portfolio going forward? How are you thinking about powertrain derivatives, or probably if there's a new generation of core cars that is within that CapEx plan of GBP 1.7 billion over five years? The second question is on the underlying demand trends. I see you have talked about an order book that is still at five months of sales. Could you just give us more insight on the regional demand that you're seeing specifically in the U.S. as you have implemented a second price hike in the region? Also, if you could talk about some demand trends in Europe.
Thank you so much.
Okay, super. Thanks for the questions. I think first with powertrains, it's pretty consistent with what we've said in that we will be predominantly, between now and even 2035, if you use that time window, we'll be predominantly combustion engine and electrified combustion engine dominated. We will have BEVs in the first part of the 2030s, but it will be, in total, it will be a low proportion of the volume of that 10-year run. We believe high-performance Ice and ever more efficient EU7 engines, both V8 and V12, should be our foundation stones for the future. Between now and the relaunch of the current core models, we will also be launching a number of specials based around the various technology stacks that we have available to us.
Without going through those today, each of them sequentially and well-timed will give us an ASP and a cash boost each year between 2026 all the way through to 2030, 2031. That's as far as we've planned the specials at this stage. In respect to the core programs, which is key, I can absolutely confirm that the period between late 2020s and early 2030s, in the next five years, we will refresh all of our core nameplates with new models that are both exterior, interior, and powertrain, and the architecture and technology renewed from the ground up. That is secured within the CapEx plan that we've indicated in this GBP 1.6 billion- GBP 1.7 billion range that we've now defined.
As Doug mentioned, how we've done that is ruthless prioritization of the specials and efficient use of technologies across all programs, SUVs and sports cars, and changing the way that we buy and create that platform in the next generation of cars. I think in terms of demand and the outlook, the U.S. is interesting. Overall, we definitely can see there's a little bit of holdback or more competition because of tariffs. It has created inflation, and it's created a bit of macro uncertainty, which is making customers slower to make decisions. We still have good footfall. We still have great interest in the products and helped massively by the great press that we get on everything that we launch, including DBX S being ranked better than the Purosangue, which was fantastic. The general demand is strong, but the conversion rate is slower than we would normally expect.
Competitors are working a lot harder to keep their customers. China is very difficult and remains very difficult. The U.K. is pretty strong. Europe is in line with our expectations. Between the two, we're slightly above. The Middle East remains an area that we want to develop in the future, but there are particular reasons why we can't fully activate the brand potential there. That will be an area of focus for us in 2026. Finally, India, with a trade deal at least highlighted or outlined, we're working with government and within the team to look at what we can do to get ready for that opening up of India, which could be quite significant as a result of the drop in import tariffs on cars built in the U.K. It could give us a significant opportunity. That's the outlook for the next 12 months.
Thank you, Adrian.
We have no further questions, so I'll hand the call back to the team for any closing comments.
Thank you for your time and the clear questions, and look forward to seeing you for the year-end call. Thank you very much.
Thanks, everyone. Have a good day.
This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.