The UK firm needs money. This automaker sees an opportunity.
Aston Martin's troubling financial situation could potentially be reversed thanks to some interested parties seeking to invest in the legendary UK car company. Last month we learned Canadian billionaire Lawrence Stroll was seeking a 19.9 percent stake in Aston Martin, though a deal has yet to be closed. Considering the company ended 2019 with a seven percent drop of wholesale volumes (and a pre-tax loss of $118 million in the first nine months of last year), additional investment sources are welcomed. It was also reported last month there were additional potential investors and now we know one of them.
According to the Financial Times, Chinese automaker Geely has held talks with Aston Martin investors and management, though it remains unclear whether this would amount to a financial stake, a technical partnership, or perhaps both. Geely also owns Lotus and Volvo, and part of Smart. It also recently increased its shares in Daimler.
The UK firm, which is publicly traded, could really use all the help it can get. The all-new Aston Martin DBX SUV, which is about to go on sale, needs to be a sales success but betting everything on a single model is not a good way to run a car company. The stock market is keenly aware of that as shares of Aston Martin rose by 15 percent last Friday once news of the Geely talks became public.
At the moment, a majority of Aston Martin's shares are held by the Kuwait-based Adeem/Primewagon group. The Strategic European Investment Group holds about one-third of Aston's shares. Daimler owns 5 percent of the carmaker as well. As of this writing, both Geely and Stroll have refused to comment on any reports regarding their potential respective investments.
The fact that both Geely and Aston Martin have links to Daimler (Mercedes sells engines to Aston) also shouldn't be ignored. An outright of sale of Aston Martin to Geely doesn't appear to be in the cards, however. Geely's history of buying European car companies, while controversial for some, is already showing results. Just look at Volvo, a company that was struggling even under Ford ownership. Today, Volvo has re-established itself as one of the premier luxury brands.