Could Mercedes-Benz buy Aston Martin?

The new generation Vantage hasn't worked since its launch.

Buying a sports car is usually the culmination of years of hard work laying the foundation for success so you can splurge on a car you can truly be proud of. Buying a sports car company is much the same.

This week's events of Aston Martin's leadership change (AMG's Tobias Moers replacing Andy Palmer as CEO) are set to change the fortunes of the beleaguered British brand. But are they also meant to make Aston Martin a more attractive proposition for Mercedes-Benz for a possible future buyout?

The two companies have been linked since 2013, when Aston Martin gave German giant Daimler a non-voting 11 percent stake in the British firm as part of an agreement to use AMG-built engines, transmissions and electrical systems for the current Vantage and DBX.

This puts parent company Mercedes in a box to take advantage of Aston Martin's current low cost, suggesting it may see a light at the end of the tunnel.

Why is Aston Martin in trouble?

While the coronavirus pandemic has hit the automotive industry hard, especially in Europe, the harsh reality is that Aston Martin was in trouble long before the global health emergency. In 20, the brand's sales fell more than 2019 percent as the still-relatively new Vantage and DB11 models failed to resonate with sports car buyers.

Not surprisingly, poor sales have had a negative impact on the company's share price, as Mr. Palmer launched the trademark in 2018. Since then, the share price has sometimes fallen by 90%. Without a larger parent company to help bail it out during difficult times, the brand was in significant financial trouble by the end of 2019.

Enter Canadian billionaire Lawrence Stroll to try and save the brand once again. He led a consortium that invested £182 million (AU$304 million) to acquire a 25 per cent stake in the company, assumed the role of executive chairman and immediately began making changes to the way the business was run.

Who is Lawrence Stroll?

Those who are not familiar with the corporate world of fashion and Formula 60 most likely do not know Mr. Stroll's name. The 2-year-old has amassed a fortune of over $XNUMX billion by investing in some of the world's most famous fashion brands in need of help. He and his business partner helped turn Tommy Hilfiger and Michael Kors into global brands and got rich in the process.

Mr. Stroll is an avid car enthusiast who owns several high-end Ferraris, including the 250 GTO and LaFerrari, as well as the Mont-Tremblant race track in Canada. This love of fast cars led his son Lance to become a Formula One driver with Williams and eventually the elder Stroll bought the struggling Force India F1 team, renaming it Racing Point and appointing his son as a driver.

With his takeover of Aston Martin, he announced plans to turn Racing Point into a factory outfit for the British F1 brand to compete with Ferrari and Mercedes-AMG on the track. This should provide the right global platform to help start rebuilding Aston Martin's image and value.

Mr. Stroll also convinced current Mercedes-AMG F1 CEO Toto Wolff to join his consortium and he acquired a 4.8% stake in Aston Martin, leading to rumors that he would leave the German team to head the Aston Martin F1 project.

Mr. Stroll is clearly ambitious and has a history of (pardon the pun) repurposing underperforming brands.

Can Mr Moers make Aston Martin attractive to Mercedes?

While Mr. Palmer's term is coming to an end, his good work in rebuilding the brand cannot be underestimated. In his time, he led the launch of the latest Vantage and DB11 models, as well as the DBS SuperLeggera. It also launched the brand's "Second Century Plan", which will see the introduction of the first-ever SUV, the DBX, as well as a new line of mid-engined supercars. The pinnacle of this new family of mid-engined vehicles will be the Valkyrie, a car created by F1 design legend Adrian Newey as part of Aston Martin's partnership with the Red Bull Racing F1 team.

Mr. Moers will now be responsible not only for the introduction of the DBX and mid-engined sports cars, but also for increasing Vantage and DB11 sales and improving the company's profitability.

That's why he was hired by Mr. Stroll, because that's what he did at AMG - expand the range, optimize production and make the business more profitable, as Mr. Stroll explained in Mr. Moers' job ad.

“I am delighted to welcome Tobias to the Aston Martin Lagonda,” said Stroll. “He is an exceptionally talented automotive professional and proven business leader with a long track record of years at Daimler AG, with whom we have a long and successful technical and commercial partnership that we look forward to continuing.

“Throughout his career, he has expanded the product range, strengthened the brand and improved profitability. He is a suitable leader for Aston Martin Lagonda as we implement our business strategy to reach our full potential. Our ambitions for the company are significant, clear and consistent only with our determination to succeed.”

The key phrase in this quote refers to Mr. Stroll's desire to "continue" the partnership with Daimler. Under Mr. Palmer's leadership, Aston Martin began work on an all-new turbocharged V6 engine and hybrid transmission to replace AMG engines in future models, giving the brand independence.

This begs the question, does Mr. Stroll want to deepen his ties with Daimler in the hope that the German car giant will buy him, giving him a return on his investment and adding another car brand to the Daimler family?

Aston Martin would fit nicely over AMG, allowing the brand to appeal to an even richer group of customers than even Mercedes currently. Theoretically, this would also enable greater savings through high-performance engines and platforms for future AMG models.

It is worth noting that during Mercedes' own press release announcing the replacement of Mr. Moers at AMG, Daimler chairman Ola Kellenius praised his work and did not publicly express any ill will at the departure of such a successful company leader.

"Tobias Moers has led the AMG brand to great success and we would like to warmly thank him for all his accomplishments at Daimler," the statement said. “We have mixed feelings about his departure. On the one hand, we are losing a top manager, but at the same time we know that his experience will be of great importance for Aston Martin, a company with which we have a long and successful partnership.”

What are the chances that the partnership will expand in the coming years? It is very likely that the appointment of Mr. Moers is a move by Mr. Stroll to move closer to Daimler, because he is the most likely buyer of Aston Martin in the future. Watch this space...