Aston Martin, Mercedes announce partnership

MERCEDES-BENZ and Aston Martin have announced a significant expansion of their strategic partnership, one that will see Benz take a 20 per cent stake in the British luxury brand while giving Aston access to its technologies and componentry.

 

The partnership will assist Aston Martin in its plans for expansion, with the brand targeting 10,000 vehicle sales per year, £2 billion ($A3.66b) in revenue and £500 million ($A914m) in adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) by the 2024/25 financial year.

 

To give context to its sales ambitions, Aston sold a total of 5862 combined units in 2019.

 

Sales will be made up of a product range that includes a refreshed iteration of its entire front-engined sportscar range (currently consisting of models such as the Vantage, DB11 and DBS), an expanded line-up of SUVs (with the DBX the only current offering) and a new range of mid-engined models.

 

No further details on its expanded product range have been revealed other than saying it will move into “the more profitable segment of mid-engine cars” suggesting some special performance models are on the way, which will use technology derived from Aston Martin’s Formula 1 team.

 

An expansion of its SUV range will likely mean we will see Aston Martin bring a competitor for the likes of the Porsche Cayenne, Range Rover Sport and Maserati Levante to market in coming years, which could significantly help the brand achieve its future sales goals.

 

Aston Martin estimates the partnership with Benz will give it around £500m of projected future cash flow, which will enable the brand’s expansion of sales and products.

 

As for Mercedes taking a larger slice of Aston Martin ownership, the equity transfer will ramp up over the next three years from the 2.6 per cent stake it holds currently, up to a maximum of no more than 20 per cent.

 

Mercedes has said it has no intentions of increasing its ownership of Aston beyond 20 per cent.

 

The first share tranche and technology exchange has already been finalised, and will see Mercedes’ share level rise to 11.8 per cent.

 

In exchange for the increased share, Mercedes will make available to Aston Martin a supply of its new technologies and components, particularly in the areas of next-generation hybrid and electric powertrains.

 

Sharing EV tech with Benz will no doubt be of great help for getting Aston’s EV revolution going, after a series of misfires with its Lagonda sub-brand.

 

Lagonda was previously slated for a launch around 2025 after a series of delays with an all-electric luxury SUV counterpart to the DBX, however plans to launch Lagonda were reportedly scrapped earlier in the year.

 

The first Aston Martin vehicles to use the shared technology are expected to be launched late next year, with a product offensive coming around 2023 once Aston is able to efficiently retool the new tech for its range of offerings.

 

While the exact details of the tech sharing have not been detailed, the supply of said tech and components will be on “agreed commercial terms”.

 

Mercedes and Aston already have a history of sharing components – the 4.0-litre twin-turbo V8 engine used in the V8 Vantage and DBX is the same Mercedes mill employed across a number of AMG models.

 

The new arrangement will provide a deal of financial relief for Aston Martin, who has been in financial dire straits recently before now-chief executive Lawrence Stroll oversaw a £260m ($A474m) capital injection via the investment group he heads, Yew Tree Consortium.

 

Mr Stroll said the new arrangement was a great opportunity for Aston Martin.

 

“This is a transformational moment for Aston Martin,” he said. “It is the result of six months of enormous effort to position the Company for success to capture the huge and exciting opportunity ahead of us.

 

“Today, we take another major step forward as our long-term partnership with Mercedes-Benz AG moves to another level with them becoming one of the Company’s largest shareholders. 

 

“Through this new expanded agreement, we secure access to world-class technologies to support our long-term product expansion plans, including electric and hybrid powertrains and this partnership underpins our confidence in the future.”

 

Along with the increased ownership by Mercedes-Benz, Aston also announced two new shareholders for the company, Zelon Holdings and Permian Investment Partners.