New investors to rescue Aston Martin

United Kingdom
Published:  10 February, 2020
Aston Martin DBS

In financial difficulties, the British luxury sportscar manufacturer is to focus on strengthening its balance sheet after what has been described as a "disappointing performance" in 2019.

According to analysts, Aston Martin’s struggles date to its ambitious decision of opening a new factory at St Athan in South Wales, where the manufacturer is to produce its sports utility vehicle, the DBX, whose price tag is US$189,000. Reportedly, the company has not generated enough cash to pay its bills, including the costs of setting up the factory, while dealers have been reducing stocks instead of ordering new cars. After having borrowed £120 million (US$155 million) at a steep interest rate in 2019, the luxury sportscar carmaker needs to raise £500 million (US$646.3 million).

A consortium led by Canadian billionaire Lawrence Stroll, who partly owns the Racing Point Formula 1 team, is to inject £182 million (US$235.2 million) in the listed British company, with the rest of the money coming from an existing investor. Racing Point is to be branded Aston Martin from 2021 under the deal.

Allegedly, Aston Martin is to put on hold its plans for an electric model, which requires years of research and development, and which could put the company at a disadvantage compared to it rivals. On February 4, the UK government announced that its ban on petrol and diesel cars is to be introduced in 2035, five years earlier than previously planned. And with the ban now also expanded to hybrid cars and plug-in hybrids, which had not been included under the original proposals, consumers will only be able to buy fully electric or hydrogen cars and vans.

Source: BBC