Top Chinese car maker Geely doubles stake in Aston Martin
Britain’s car industry gets a much-needed boost as top Chinese carmaker Geely doubles its stake in Aston Martin
One of China’s largest car manufacturers has doubled its stake in Aston Martin as a vote of confidence in the British car industry.
Geely spent £234 million raising its stake to 17 per cent, making it the British company’s third-largest shareholder behind a consortium led by Aston chairman Lawrence Stroll and Saudi Arabia’s Public Investment Fund, which Newcastle United FC in 2021.
Geely, owner of Lotus and Volvo, bought about 42 million shares of the Stroll group for 335 pence each and another 28 million new shares for the same price.
Aston Martin shares rose 12.5 percent, or 28.8 pence, to 260 pence.
Stake: Geely, owner of Lotus and Volvo, spent £234 million raising its stake in Aston Martin to 17%, making it the UK company’s third-largest shareholder.
The agreement promises to create a “long-term partnership” and supply materials to the car brand, a favorite of James Bond.
The move brings in £95 million for Aston, which has had a top year as demand for luxury goods remains resilient despite economic pressure on consumers.
It said this month that revenues in the first three months of 2023 rose by almost a third to £295m, while losses fell to £74.2m.
Victoria Scholar, an analyst at Interactive Investor, said: “This is a welcome development at a time when there are growing concerns about the Brexit trade deal for UK car production.”
Vauxhall owner Stellantis sounded the alarm this week about possible import duties on the export of electric cars to the EU.
It warned it might have to close UK factories, costing thousands of jobs, due to rules requiring 45 percent of electric vehicle parts to be sourced from the UK or the EU to qualify for free trade.
But with battery shortages in Britain and on the Continent, car manufacturers are warning that this is becoming increasingly difficult.
Prime Minister Rishi Sunak said: ‘It is something that car manufacturers across Europe, not just the UK, have expressed as a concern.
As a result, we are having a dialogue with the EU on how to address those concerns when it comes to car production in general.”
But the looming crisis has not discouraged Geely. Chairman Li Shufu, better known as Eric Li, said: ‘Our decision to increase our stake in Aston Martin reflects our confidence in the growth prospects, the technologies and the management team.’
Geely owns European brands, including Swedish Volvo and Norfolk-based Lotus, and has attempted to buy Aston several times, including a rival bid for Stroll in 2020 and again last summer.
It bought a 7.6 percent stake last September and some might see the latest move as a move toward a different takeover approach.
But Russ Mould, investment director at AJ Bell, wondered “whether this would be publicly or politically acceptable” after other foreign acquisitions.