Mercedes-Benz to Increase Stake in Aston Martin to 20%

2020 has been a rollercoaster for everyone, including automakers and especially Aston Martin. Earlier this year, Canadian billionaire Lawrence Stroll’s consortium took a 20% stake in the company in exchange for a much-needed £182 million cash injection. Since Aston Martin was floated on the market in October 2018, its shares have lost about 90% of their value, and 70% within this year itself due to meager sales and profit warnings. And then, CEO Andy Palmer was replaced with former Mercedes-AMG CEO, Tobias Moers.

Now, Mercedes-Benz is throwing another lifeline by upping their stake in the ailing automaker from 2.6% to a significant shareholder of 20% by 2023. The two parties are already in a supply agreement, with Aston Martin accessing resources and electronic/ electric components from Mercedes. Mercedes will not be injecting capital into the ailing company but will help them develop hybrid and electric vehicles. Aston Martin will instead raise £1.3 billion through bond and stock offerings, most of which will be used to chisel down their mountain of debt.

Although a little late to the game, the 107-year-old British marque had added a luxury SUV to their range, the formula that has been helping other small-volume car manufacturers survive. (Aston Martin made only about 6,500 cars last year – even Tesla made over 360,000.) Delivery of the DBX began in July 2020, with their main target being the Chinese market, which is recovering ahead of the rest of the world. In June, Aston Martin had already racked up 2,000 orders for the SUV, and there is a 5,000 production quota set for the first year of production.

But the company couldn’t wait any longer for the DBX to save them. In the first 9 months of 2020, the company reported an operating loss of £229 million, and even with the enthusiastic response towards the DBX, they were not expecting to turn a profit this year nor the next.

Well, good luck, Aston Martin. Because without you, what would James drive?