Mercedes-Benz will take a major stake in Aston Martin as part of a “truly game-changing” strategic technology agreement that will underpin a plan for the British brand to double its sales by 2025.
The agreement expands the existing relationship between the two firms and will include Aston Martin gaining access to Mercedes technology – including electric and hybrid powertrains – that will form a key part of its expansion plans.
Speaking about the deal, Lawrence Stroll, Executive Chairman of Aston Martin Lagonda said: “This is a transformational moment for Aston Martin. 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.
In those six months, since I became Executive Chairman, we have made significant progress. We have appointed a world-class leadership team with deep experience of this industry. We have aggressively and successfully de-stocked the dealer network to rebalance supply to demand. We have strengthened the financial resilience of the business and have taken decisive action on costs. We have also very successfully launched the DBX. I am extremely pleased with the progress to date and that we are ahead of plan on timing, despite operating in these most challenging of times.
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.
In addition, we have developed a new business plan targeting revenue of c.£2bn and c.£500m of adjusted EBITDA by 2024/25. This reflects the technology agreement and the delivery of new, compelling vehicles to achieve these growth ambitions.
The plan will be underpinned by the new proposed financing that we are announcing today to strengthen the balance sheet, extend the debt maturity and improve liquidity. As part of this I am delighted to welcome Zelon Holdings, a European family office, and Permian Investment Partners as new shareholders in the Company. I, and my co-investors, are fully committed to delivering this plan, and our participation in this new substantial round of financing demonstrates both our confidence in the prospects for the business and our commitment to the future success of Aston Martin.
This is truly game changing. We now have the right team, partner, plan and funding in place to transform the Company to be one of the greatest luxury car brands in the world.”
Tobias Moers, Chief Executive Officer of Aston Martin Lagonda added his comments on the deal saying: “I am very excited to have joined the business to lead this transformation. I am incredibly impressed by the great work that has been delivered by the whole team here at Aston Martin. For DBX, the brand’s first SUV, the team at St Athan has followed a quality-led ramp-up as appropriate for our luxury product positioning and we are now delivering to meet customer demand.
We have updated our plans for the business, incorporating the benefits of our enhanced partnership we are announcing today. We are targeting delivery of significant growth and margin expansion in the medium-term, not just through product expansion but also by incorporating a strategy to deliver a level of operational excellence and efficiency throughout every aspect of the organisation.
We have also today reported results for the third quarter. We have made excellent progress reducing sports car inventory at our dealers and are ahead of plan, with an acceleration in Q3.
Today’s expansion of our partnership with Mercedes-Benz AG is a critical step towards achieving our goals for Aston Martin. The capabilities of Mercedes-Benz AG technology will be fundamental to ensure our future products remain competitive and will allow us to invest efficiently in the areas that truly differentiate our products.
We have great ambitions for Aston Martin and I look forward to keeping you updated on our overall progress.”
Wolf-Dieter Kurz, Head of Product Strategy at Mercedes-Benz Cars commented: “We already have a successful technology partnership in place with Aston Martin that has benefited both companies. With this new expanded partnership, we will be able to provide Aston Martin with access to new cutting-edge powertrain and software technologies and components, including next generation hybrid and electric drive systems. Access to this technology and these components will be provided in exchange for new shares in Aston Martin. These new shares will be issued to us in several stages, taking our shareholding up to a maximum of no more than 20.0% of the common equity. The supply arrangements for these new technologies will be on commercial terms. We look forward to continuing to work together with Aston Martin and we wish the company every success in its next stage of growth.”