British luxury carmaker Aston Martin announced that its chief executive officer (CEO) Andy Palmer has stepped down following a 94% fall in the company's share price.
Aston Martin CEO Andy Palmer tendered his resignation after the company posted a 94% fall in its share price since its flotation in 2018. The automaker has been struggling to hit sales even prior to the coronavirus pandemic.
Management Changes
Palmer will be temporarily replaced by Keith Stanton, head of Aston Martin’s manufacturing unit. By August 1, Tobias Moers, the current chief executive of Mercedes' high-performance subsidiary AMG, will take over the position.
In a statement, Aston Martin executive chairman Lawrence Stroll said: "The board has determined that now is the time for new leadership to deliver our plans."
According to Palmer, it had been "a privilege" to work at Aston Martin for almost six years. He expressed his gratitude to the management and staff for "their hard work and support, particularly during the challenges presented by Covid-19".
The management shakeup comes several months after Canadian billionaire Stroll took over as chairman of Aston Martin. He invested $653 million in cash to rescue the company.
The automaker also announced that three of its directors, namely Richard Solomons, Imelda Walsh and Tensie Whelan, have vacated their posts and expressed that they will not seek re-election in June.
Financial Problems
In the first quarter of the year, Aston Martin's sales were reduced by half with the onset of the coronavirus pandemic. The carmaker was only able to sell 578 vehicles during the first three months of 2020, compared to 1,057 in the same period last year.
The sales decline pushed up the loss before tax from £17.3 million in 2019 to £118.9 million during the same period this year.
Under Palmer's leadership, the company was able to return to profitability, revamp its products, open a factory in South Wales, and conduct a stock market launch.
However, global economic conditions and several strategies of the company resulted to a slowdown in sales. Purists were critical of Aston Martin's investments in electric and sports utility vehicles.
Palmer also entered odd projects such as a speedboat and property in Florida.
Company Outlook
News of the leadership changes at Aston Martin were positively received by the markets. The company's share price went up by over 40% in Tuesday morning trading.
According to Neil Wilson of Markets.com, the share price surge was "a pretty damning indictment" of Palmer's tenure.
Stroll, who now serves as the firm's executive chairman, partly owns the Racing Point Formula 1 team, which will be branded Aston Martin starting 2021 under the deal.
Stroll said Moers was "the right leader for Aston Martin Lagonda as we implement our strategy for the business to achieve its full potential".
"Our ambition for the company is significant, clear and only matched by our determination to succeed," he added.
Moers said: "I am truly excited to be joining Aston Martin Lagonda at this point of its development. I have always had a passion for performance cars and relish the chance to work for this iconic brand."
