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Aston Martin hooks up with AMG

British supercar maker, Aston Martin, is set to team up with Mercedes' AMG high-performance division to create a new series of powerful V8 engines for use in future Aston Martin models. The deal is set to be finalised by the end of the year and will involve Daimler Benz taking a 5% non-voting stake in the luxury sports car firm.

British supercar maker, Aston Martin, is set to team up with Mercedes' AMG high-performance division to create a new series of powerful V8 engines for use in future Aston Martin models. The deal is set to be finalised by the end of the year and will involve Daimler Benz taking a 5% non-voting stake in the luxury sports car firm. The new agreement comes on the back of majority owner, Kuwaiti outfit Investment Dar, selling a 37.5% stake to Italian private equity firm, Investindustrial, earlier this year. The £157 million Investindustrial deal was said at the time to underpin a £500 million programme of investments by Aston Martin over the next five years, of which the AMG partnership is an early example.

Aston Martin is the only global luxury car brand not owned by a larger parent; like, for example, Volkswagen's Porsche and Bentley, or Fiat's Ferrari. Engine development is a notoriously expensive business and the tie up with AMG will help the company compete against rivals with much deeper pockets. Under the partnership, Aston Martin will receive engines from AMG along with electronic components from Mercedes. Aston Martin's product development director, Ian Minards, said: "The opportunity to include content from Mercedes-AMG in our next generation sports cars is, clearly, good news. This points to a very bright future for the company as it starts its second century in business."

The new deal puts a question mark over Aston Martin's relationship with Ford, who currently supply engines to the firm. Ford makes V8 and V12 units for Aston Martin at its Cologne plant and the American giant owned the company until 2007. It had been reported that Aston Martin recently extended that deal for another five years but the company declined to comment on the relationship.
IHS Automotive research director, Christoph Sturmer, welcomed the AMG deal, saying: "This is a great deal for Aston Martin, which needed a bigger partner and will give it access to new engine technology and save it a fortune on the massive cost of developing powerful and fuel-efficient engines and electronic systems."

The partnership could eventually pave the way for a takeover by Mercedes, should the current owners look to cash in on their investment. Other luxury marques, like Jaguar Land Rover and Bentley, have seen significant increase in sales and profits from the emerging markets, especially China. Aston Martin, on the other hand, has actually seen sales drop by around 12% in 2012 and has struggled to make an impact in the far-east. With Mercedes' financial muscle behind them, that situation could change.

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