Luxury car giant Aston Martin has gone on an investment push as it seeks to lure wealthy Chinese buyers.
The Gaydon firm has secured a $165 million – £100 million – loan to invest in new models, starting out with the Lagonda SUV.
The first models will probably be introduced sometime in 2018, with the luxury 4x4 seen as an attempt to break China – which has transformed the fortunes of the likes of Jaguar Land Rover.
The news has added fuel to rumours that Aston is planning to work alongside Mercedes to piggy back on platforms for its SLK and SL roadsters.
David Bailey, professor of industrial strategy at the Aston Business School, said Aston Martin’s line-up needs updating, with its current range dating back to a 2003 platform and some “pretty dated Ford technology”.
Prof Bailey said the firm had been losing global market share in recent years, but questioned whether £100 million was really enough to secure its long-term future.
He said: “$165 million doesn’t buy you very much in car industry terms: JLR spent over £440 million on the new Range Rover for example.
“So Aston Martin will have to spend that $165 million very wisely if it is to come up with a new platform that underpins a range of new models. The loan is due to be repaid or refinanced in 2018.
“So what will Aston Martin do with the money? While yet to be confirmed, a view circulating in the industry is that the firm will – like Lamborghini, Prosche and Bentley – create a luxury SUV.
“Of course, making SUVs is akin to making tractors for some die-hard Aston Martin fans, but it’s this SUV market which is set to surge ahead in coming years, especially in emerging economies like China, and Aston need a slice of it.”
Aston Martin Holdings announced the funding through the issue of $165 million senior subordinated pay-in-kind notes due 2018.
The notes, purchased by Waddell & Reed, accrue interest in kind at a rate of 10.25 per cent a year.
It comes after Mercedes parent Daimler took a five per cent stake in Aston last year, in exchange for supplying engines to the 101-year old firm.
Prof Bailey said with the Mercedes GL set for a facelift next year, ahead of a completely new model being launched in 2018, if Aston Martin could craft an SUV off the same platform, as Porsche does with Volkswagen, it would save Aston huge amounts in development.
The new family of cars will replace the Aston Martin DB9, Vantage and Rapide models the company first started selling in 2003.
Aston Martin chief financial officer Hanno Kirner said: “Together with the issuance of the senior secured bonds in 2011 and the capital increase in 2013, we have put in place the key elements of our funding strategy.
“This provides a solid foundation for our future plans, allowing Aston Martin to continue to develop and launch some of the world’s most exciting new sports cars.”