Saudi Arabia is looking to acquire a stake in British luxury car brand Aston Martin but such a move could damage the company's reputation.
Saudi Arabia is looking to acquire a stake in British luxury car brand Aston Martin. The Gaydon, England–based company claims to be keeping funding options open, but has neither confirmed nor denied the potential deal, which is valued at £200 million ($237.5 million).
James Bond’s favorite carmaker has been on a rocky road since it listed on the London Stock Exchange in October 2018. While the launch of its first SUV, the DBX, partially curbed financial losses in 2020, the pandemic severely damaged the company’s books, given lower sales and delivery delays. From 2023 onward, Aston Martin promises to release new models and more SUVs, including hybrid and electric vehicles. But for that, it needs a cash influx.
The Saudis are offering to buy in through the kingdom’s sovereign wealth fund—the Public Investment Fund (PIF). Under Crown Prince Mohammed bin Salman Al Saud’s supervision, the PIF’s investments aim to diversify the Saudi economy away from oil and extend soft power abroad.
“This is one in a series of investments designed to promote industrial diversification,” says Simon Chadwick, global professor of sports at Emlyon Business School. “While many people may talk about ostentatious purchasing, I think there is a much harder economic and political dimension to what Saudi Arabia is trying to do.”
In recent years, the PIF invested massively in Western companies including Uber, Tesla, Meta Platforms, Citigroup, Disney and Nintendo. “The potential acquisition of Aston Martin shows Saudi Arabia is continuing in its ascent to being a more legitimate member of the global economic and industrial community,” Chadwick adds.
Just like its Gulf neighbors, Saudi Arabia is looking to become a player in the global sports industry, especially motorsports. In 2021, Jeddah welcomed its first Formula One race, rivaling the Grand Prix of Abu Dhabi and Bahrain. A few months after, it started sponsoring Aston Martin’s F1 team. The kingdom has hosted the Paris-Dakar desert race since 2020.
But selling off to the Saudis could cause reputational damage to Aston Martin. In 2021, the PIF bought British Premiere League Newcastle United football club in a controversial deal valued at £300 million. Several nongovernmental organizations and industry experts called it “sports washing,” pointing to Saudi Arabia’s human rights violations and the murder of journalist Jamal Khashoggi. Right after the news broke of Aston Martin’s potential acquisition by Saudi Arabia, the carmaker’s share value dropped.