By on December 7, 2012

Aston Martin won’t be sold to the Indians, nor will it be sold to the Chinese. The low-intensity bidding war for the British boutique sports car maker was won by the Italian private equity group Investindustrial. It is buying 37.5 percent for $241 million via a capital increase agreed with majority Kuwaiti owner Investment Dar, Reuters reports after having received confirmation by Aston Martin.

Investindustrial beat tractor maker Mahindra and Mahindra in a two-way battle. Dark horses like Geely, Toyota, or BMW, offered by the media as contenders, did not take part in the bidding.

The cash helps Aston Martin to invest $1 billion in new products and technology, and says, Reuters, to “compete with Volkswagen’s Bentley and rival UK luxury car manufacturer Jaguar Land Rover.” However, in the car business, a billion dollar does not go far. The money is supposed to last through 2018.

Bernstein analyst Max Warburton told Reuters that is looks like a temporary fix because Aston Martin’s owners were unable to attract another car manufacturer to invest at the price they wanted.

“It doesn’t look like a long-term solution,” Warburton said. “This deal doesn’t sort scale, access to technology, emissions or entry to new segments.”

Aston Martin sold 2,340 cars in the nine months to Sept. 30, 19 percent down on 2011.

No agreement has been made on a technical partnership for Aston Martin with Daimler AG’s Mercedes.

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21 Comments on “End Of The Chase: Aston Martin Sold To Italy...”


  • avatar
    Astigmatism

    Uh oh. Private equity guys aren’t exactly known for pouring money into R&D in the interest of long-term profitability.

    Niche car maker with ancient platforms sold to private equity firm = worth more dead than alive.

    • 0 avatar

      The VH platform isn’t really ancient, but yeah. AM needs an engine, and it needs to at least seem like a bespoke Aston engine. The spirit of Aston will live on as long as Works Service exists, but I’m not optimistic about the near-term future of the current iteration of the company.

  • avatar
    Dimwit

    Yep, here comes another army of MBA’s. Another round of hot potato passing and it’ll get sold again.

  • avatar
    Pch101

    “It is buying 37.5 percent for $241 million”

    So Aston Martin is worth about $650 million, even though it was modestly profitable in 2011. That’s not even one times revenue.

    Next time that someone claims that the bankrupt GM and Chrysler were worth a mint, you may want to remind them of this.

    • 0 avatar
      Morea

      Hey PCH, what’s up with Judge Gerber possibly reopening the GM bankruptcy?

      • 0 avatar
        Pch101

        “what’s up with Judge Gerber possibly reopening the GM bankruptcy?”

        I haven’t followed it in detail, but I would say that it’s not particularly relevant. It won’t unwind the entire bankruptcy; at most, the New GM entity may be on the hook for some amount of cash (and I expect that in the worst case scenario, that amount would be a fraction of the few hundred million dollars that was originally owed to those creditors that were paid off.)

    • 0 avatar
      ranwhenparked

      I think some of it had to do with Investment Dar’s desperation for cash, the company’s finances are fairly shaky at the moment.

      • 0 avatar
        Pch101

        “I think some of it had to do with Investment Dar’s desperation for cash”

        Aston Martin isn’t worth much, even in a best case scenario. Barring some astounding level of improvement, it still wouldn’t be worth much.

  • avatar
    GoesLikeStink

    Italian private equity firm. So the Mob now owns Aston Martin?

  • avatar
    Trail Rated

    So Mahindra isn’t going to be burdened with Aston Martin after all.
    What were they thinking? They make tractors, sell vacations, take
    defence contracts, make planes, software, run a bank, what does
    Mahindra stand for? They should try to sort out highway comfort issues
    on their vehicles first.

    Mahindra has bigger problems at home, now that the real Jeep is finally
    entering the Indian market.

  • avatar
    Ron B.

    Aston Martin Died when Ford,maker of the model T and the F100,Pinto, and other crap bought them out. Astons real saviour was the gloriously named,late Victor Gauntlet .
    As for Mahindra, they may have built a jeep with a different name but they make money in a climate which is not conducive to doing so. .

    • 0 avatar
      el scotto

      I’ll disregard the facts that the Model T revolutionized the automotive world and the F100 was integral to America’s post WW-II pick-up boom. The same people who don’t understand the Empire was lost as soon as Lord General Kitchener started issuing orders can’t conceptualize that a company that makes beautiful cars but has a continuous half-assed financial condition won’t succeed.

    • 0 avatar

      No. Gauntlett realized that Aston needed to follow the path blazed by Enzo Ferrari, who did two things after hitting the skids and seeing that the old bespoke-ultra-expensive model wasn’t working: He brought in a big patron (Fiat, in Ferrari’s case) and developed a mass-market model that would expand the company just enough to keep things going.

      The Dinos and 308s saved Ferrari, and the DB7s saved Aston. It had to happen, Gauntlett knew it and made it happen. He chose Ford because Ford’s Walter Hayes promised him that Ford would do it the right way, and they mostly did.

      Ford did a very good job with Aston, all things considered…. right up to the point where they stopped building bespoke-ish cars at Newport Pagnell. Once the Gaydon plant opened, the whole thing got kind of weird with the “Power Beauty & Soul” nonsense, but Aston hasn’t died — it’s still in the old barns in Newport Pagnell, now home of Aston Martin Works Service and all of Aston’s old craftsmen.

  • avatar

    I agree with the comment about AM’s death being the result of Ford’s takeover. The same can be said about Saab. I am sure that Volvo and Range Rover’s death knell sounded when they were purchased too, just theres is a long painful slow death, and in the case of Range Rover, awfull to watch.

    • 0 avatar
      ranwhenparked

      That ignores the fact that Aston would have likely died years ago had it not been for Ford’s takeover. The company has been marginally profitable or worse for the majority of it’s history, and the period under Ford ownership was basically the only time when it had a parent company with deep enough pockets to absorb their losses and fund new development.

    • 0 avatar
      el scotto

      I’m just waiting for British Leyland to start pumping out world class cars any day now. All the major English car brands were leaking money like a minnow sieve leaks water. Decades of bad management and 3rd world production standards somehow get transferred to American companies that rescued failing brands?

    • 0 avatar
      WozTheWise

      Rover died horribly in 2005, but the Land Rover arm (which makes the Range Rover) was split off and sold to Ford in 2000, who sold it to Tata in 2008, under whose watch it continues to go from strength to strength as part of Jaguar Land Rover.

  • avatar
    el scotto

    Best urban legend I heard about Jaguar. Ford sends some engineers to Britain to fix Jaguar’s many electrical issues. Some Brits confront the Ford engineers and tell them “Well, we’ve always done it this way”. Ford engineers: “We know, that why we’re here”. The truth? I don’t know. Funny? Yes.

  • avatar

    Aston Martin will live on as Ford Fusion coupe. But seriously – Ford made so many stupid mistakes in 90s like buying British brands and Volvo which Germans rejected for a good reason. All those money could be spent to develop RWD Lincolns and midsize Ford cars but never mind – it is America after all – wasting money is in national character. Or as Sir Winston Churchill said: “You can always count on Americans to do the right thing — after they’ve tried everything else.” So after wasting all hard earned cash Ford came to sensational conclusion that best thing to do is to spend money on itself (who knew LOL) and to do that they needed to hire Mulally! Bill Ford tried everything else except of right thing to do – his face looks so dumb – who in his right mind would make this guy CEO of major corporation? Only in America. In Germany or Japan he would have no chance.

    So essentially Lincoln gets same amount money (1 billion) as AM. We will see which one will survive.

  • avatar

    Of course we know how great Germans are at managing car companies! Look at Daimler-Benz and the record of success with Chrysler, Smart and Mitsubishi! Or maybe BMW with Rover. Ford should have learned from their big wins when dealing with a high-tech, high-profit entity like Aston Martin.


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