By on July 26, 2013

amamg

As part of an announced technical partnership between AMG, the performance subsidiary of Mercedes-Benz and Britain’s Aston Martin, Daimler will buy up to a 5% interest in the luxury performance car maker. The agreement will give AM “significant access” to the technical resources of both AMG and its parent. Aston Martin will use those resources to develop V8 engines and have access to Mercedes Benz’s electronic architecture and components.

Aston Martin product development director Ian Minards said, “We have selected AMG specifically as the basis for this powertrain development process.”

On behalf of AMG, the performance brand’s chief, Ola Kaellenius said that the technical partnership is “proof of AMG’s technological and performance expertise, and a real win-win situation for both sides.”

Aston Martin’s engines are currently supplied by Ford, which formerly owned AM, at a Cologne, Germany plant. Aston Martin’s V12 engine is based on the architecture of Ford’s Duratec V6 engine. Aston’s V8 is a hand assembled version of the Jaguar AJ V8 engine, a practice that started when Ford owned both of those companies.

Automotive analysts say that the deal helps Aston Martin avoid the substantial costs of not just engine development, but also electronic systems, which have become increasingly important in the auto industry.

For Daimler, it gets to amortize some AMG costs and gives it a foothold to take control of Aston Martin later should its current investors want to pull out. Moody’s currently rates Aston Martin at B3, non-investment grade. Last year, the Investindustrial group of Italy bought a 37.5% share in the company for $241 million, through a capital increase negotiated with majority owner Investment Dar, a sovereign-wealth fund of Kuwait.

Aston Martin is currently the only premier luxury car maker that is not owned by a larger automotive group. In January, Aston Martin announced plans to invest spend $765 over the next four years to keep pace with VAG owned Bentley and Fiat owned Ferrari and Maserati. The UK company has had a rough go of it since the economic crisis of 2008, with a 9% drop in profits in 2012, and a 10% decline in sales, to ~3,800 cars.

So far, Daimler and Aston Martin have only signed a letter of intent, with definitive agreements to be inked later this year, pending regulatory approval. Daimler will buy the 5% stake in stages, depending on the progress of the technical partnership, and its stock will be non-voting shares.

 

Get the latest TTAC e-Newsletter!

25 Comments on “Aston Martin & AMG Announce Technical Partnership, Daimler to Buy Up to 5% Stake in AM...”


  • avatar
    raph

    Hmmmm…. I suppose in the short run this might be a good thing, although if Mercedes where to get majority control I don’t know how that would be a good thing? At least AM doesn’t seem to be sitting on a big fat pile of cash like Chrysler had when the “merger of equals” occurred.

  • avatar
    AMC_CJ

    “Mercedes Benz’s electronic architecture and components”

    Which were stolen from Chrysler 10 years ago, as MB was so behind the times electronics wise when the merger happened. There was a good reason why MB joined Chrysler and then dumped them; access to their electronic engineering. After MB got done catching up, bye bye Chrysler.

    In return, we all know about all the last-gen platforms Chrysler got.

    Now MB is taking that and profiting of of it further. But the record needs to be known where that technology came from in the first place.

    • 0 avatar
      wmba

      “electronics ….. stolen from Chrysler”

      If true, Daimler spent $40 billion for something first tier suppliers would have been happy to supply for next to nothing except a fat supply contract. Hell, even Subaru, making only 450,000 cars a year had a CANBUS system with BCMs by 2004.

      So if spending $40 billion is stealing, then you’re right.

      • 0 avatar
        AMC_CJ

        I don’t know the entire business end of the deal, although I’m sure MB made some more money in there somewhere.

        I do know that MB’s electronics/modules/BUS (whatever you want to call it) was behind Chrysler’s before the merger. During the merge MB adapted Chrysler’s system to their own cars. Then they dumped them.

        It’s something many people don’t know, but this being The Truth About Cars I’d figure I’d point it out. I learned this stuff in some technical training via a ex-Daimler/Chrysler engineer.

        • 0 avatar
          raph

          MB made its money by raiding Chrysler’s cash reserves which they had squirreled away to ride through the inevitable carmaggedon.

          If MB realized some benefit from getting access to Chrysler’s electronics, that’s just icing on the cake.

          Heh… 40 billion is what they spent to acquire and fail with Chrysler? Good, I bet the 25 billion in cash reserves doesn’t look so rosey in hindsight.

      • 0 avatar
        MBella

        This is entirely laughable. The electronic systems in a modern Mercedes are so far ahead from anything Chrysler ever had. When I was trying to explain a CAN issue on an S class to a customer who was a Chrysler engineer he was amazed. He was thinking of Chryslers simple one CAN network and one body control module controlling the locks and windows. When I tried explaining how the system with 5 CAN networks, a door control module for each door, a seat control module for each seat, pneumatic control system, etc.. he was left amazed and a bit confused.

    • 0 avatar
      pacificpom2

      Examples please. What electronics did MB gather from Chrysler? Suspension? Stability control? Fuel? Transmission? What did Chrysler get out of the merger, some Jeep underpinnings, and the crossfire (poor mans SLK). But maybe there is a more sinister reason….. To undermine a competitor you make friends with them and then sell them your old technology to them (or license it) for less money than it costs them to create from scratch. They think you are a friend and keep making objects a generation or two behind you. In the meantime you are flush with their money and you go one to make the next generation of object. Witness Daimler + Chrysler and MB + SsangYong.

      • 0 avatar
        AMC_CJ

        Electronics, all of them.

        I don’t really want to sit here and give you an entire lesson in this stuff. Suspension, Fuel, Transmission. everything runs off of various module, and everything is tied together.

        Engine Control module, Tranmssion Control module, Body Control module, etc. Your typical car has about a few dozen, a new S-Class about is around a hundred. They’re the little computer that control everything from ignition timing to power seat positions.

        Got that part down, good.

        Next, they’re all tied together. If you’ve ever used advanced OBD-2 diagnostic equipment, which I’m going on a limb, and say that you haven’t, but if you have, especially a system like Star-mobile from the Daimler/Chrysler days, you’ll see them listed, and see them tied together.

        So they’re tied together, and communicate with one another, through various voltage signals, usually operating on a 5V reference signal. One wire running through the harness can perform multiple functions; this is called multi-plexing. It’s been around for awhile, but everything pretty much relies on it now.

        MB’s modules, or computers, were far slower then Chrysler. I was going to say think of a Pentium 2 vs. Pentium 3 processor, but I guess the modern analogy is what, 3G vs. 4G? Sorry, I’m not a modern electronics consumer. So MB’s computers were slow, but Chrysler also had better multi-plexing/routing. Think of it as a road system; and Chrysler had a much better one.

        You want a example, but I already stated. Yet, here we are again, and here it is again: all of it.

        • 0 avatar
          Numbers_Matching

          Interesting. I’ve seen this claim before and just couldn’t beleive it. I worked for a Tier One supplier to D-C back in the early 2000′s. The consensus on the Chrysler side was usually a
          disgruntled ‘they (Daimler-Benz) won’t share much, if anything’ whenever the topic of technology or development was brought up. So it seemed to be a one way transfer type of relationship – that wasn’t working very well.
          Electronics and CAN based systems were never discussed first hand, but its hard to imagine that Daimler was behind since so many of the systems that depend on them were introduced on MB products. Also, Daimler-Benz had a large aerospace component that may not have impacted any MB products.

          • 0 avatar
            wumpus

            I’ve worked on AEG (a huge German electronics company owned by MB,or at least they did in the 1990s). I wouldn’t want the stuff they produced (then again, I wasn’t too certain of the mechanical side, but didn’t know enough to be certain.

            Look up Megasquirt*. This stuff is not difficult. Getting corporate to allow you to do it is difficult. Getting corporate to use the same thing on two different platforms is difficult. As far as the engineering goes, it is a matter of beating reliability into the engineer’s heads (typically easier on hardware guys than software guys. Physical dangers to hardware are obvious). Automotive parts are also tricky, but I assume they could find a vendor (electronic parts tend to go: commercial, industrial, military, automotive in increasing degree of ruggedness. This is mostly from heat, but probably also the lifetime hard knocks a car takes).

            *I wouldn’t compare it to Linux. Linus had a ton of GPLed software he absolutely needed to get started. Megasquirt pretty much put chips on a board and kept running.

        • 0 avatar
          MBella

          I never new Chrysler came up Bosch’s Motronic engine engine controler. Those sneaky Germans. Daimler stole it from Chrysler in 1998. Licensed it to Bosch. Then Bosch went back in time to sell it to VW in the early 90s. Either that or you’re talking out of your ass. One or the other.

  • avatar
    AKM

    $765? Dang, engine development is a bargain nowadays!

  • avatar
    Waterview

    +1 to AKM (I noticed the same thing)

    I think that in the interest of sustaining spirited international competition for the development of sporting automobiles, we should all chip in a few bucks. Please tell me where to mail my $35 so AM can increase their development budget to an even $800.

  • avatar

    Aston’s engines are built in a set-aside corner of Ford’s big Cologne (Germany) engine plant, under a contract that is set to expires soonish — this year, if I remember right. So there is probably some urgency here on Aston’s part; they aren’t really set up to build their own engines anymore, so they need a supplier, and soon. Meanwhile, Daimler gets a little more scale for AMG and what is probably a cheap option to buy Aston outright if and when that seems to make sense. Seems like a reasonable deal.

    Reading between the lines, this probably means that the days of V12 Astons are numbered, and that number isn’t a big one. Sad but not surprising.

  • avatar
    kmoney

    For some reason I feel this is kinda crappy. Technical merits aside, as everything that comes out of Affalterbach is decidedly amazing, I just hope this doesn’t mark the start of Aston becoming part of another corporate monolith. I get that they are still using tech from when they were still under ford, but something about them being an independent makes them somehow different. I just hope they don’t end up being slotted within the MB product hierarchy with an effort on appealing to a certain MB demographic instead of just swinging for the fences w/ every car.

    • 0 avatar
      Kyree S. Williams

      I agree. You really don’t mind the kit-car-like interiors of these cars. There’s something very proper and charming about Astons cars that would be entirely lost were it to be integrated into the antiseptic structure of Daimler AG…more so than any German dilution that has occurred with Bentley, Rolls-Royce or Lamborghini. Let’s hope that AMG supplies Aston Martin with necessary resources while mostly keeping its nose out of product-development.

  • avatar
    MBella

    The concept of an Aston Martin powered by an AMG engine excites me. A Vantage with an AMG 157 twin turbo V8 would be pretty spectacular. A high end Aston with an AMG V12 would be astounding.

  • avatar

    wow, seems to be quite a few MB appologists in here, “chrysler could NEVER do anything better than MB!!!”
    the truth is that, as has been alluded to, daimler absolutely and positively took what they could from chysler and left them for dead…
    http://www.allpar.com/neon/engineering.html
    http://www.autonews.com/article/20090216/ZZZ_SPECIAL/302169860#axzz2aK8oXWxo
    http://www.washingtonpost.com/wp-dyn/content/article/2009/04/29/AR2009042904327.html?hpid=artslot&sid=ST2009043001828
    despite what all the keyboard warriors want to believe, chrysler was immensely successful during the 90′s, while MB was struggling. daimler recovered MB with what they could get from chysler, then practically payed cerberus to take them.

    • 0 avatar
      LectroByte

      Chrysler “immensely successful” in the 90′s? Perhaps compared to their performance in the 80′s, but seems like other than RAMs and Wranglers Chrysler was pretty much irrelevant then. And if they were so “immensely successul”, then why merge with MB?

      • 0 avatar
        28-Cars-Later

        I recollect Chrysler having that “comeback kid” mentality which impressed Wall Street and I imagine Daimler. Twice in twenty years Chrysler staved off bankruptcy, first with K-cars and minivans, later the LHs and Jeep GC. If you don’t have the inside track and are looking to effectively buy a distribution network in circa 1997 United States, Chrysler looks attractive.

    • 0 avatar
      MBella

      Not one of those articles says anything about Daimler “stealing Chrysler’s advanced technology”. Chrysler was on the brink of a complete financial disaster towards the late 90s, and they needed to be bought out. That huge one billion dollar stock pile of cash that Daimler “stole” from the company they paid 30 billion for. Yes when you buy a company you keep whatever good there is. The only thing Mercedes received was contacts with a few American domestic suppliers that they used to build the first generation ML.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India