Britain’s Aston Martin Looks To Germany’s Mercedes-AMG For Help Developing New V-8 Engines

One of Britain’s most iconic vehicles is looking for a little help from German engineering in its bid to reverse declining sales and become more competitive in the luxury car market.

Gaydon, UK-based Aston Martin announced it has formed a supply partnership with Mercedes-AMG, the wholly owned Daimler AG (FRA:DAI) subsidiary that engineers and customizes Mercedes-Benz vehicles. No financial details were disclosed.

“The proposed deal will see Aston Martin access significant Mercedes-AMG GmbH and Mercedes-Benz Cars resources, allowing the development of bespoke V-8 powertrains and the use of certain components of electric and electronic architecture,” Ian Minards, Aston Martin's product development director, said in a statement released Thursday.

The deal also gives Daimler the option of taking up to 5 percent of the privately held maker of the Aston Martin Rapide S and the DB9 coupé.

While other carmakers are reaping luxury car sales and profit -- even in Europe -- Aston Martin sales have been flagging. Last year the automaker sold 19 percent fewer units, 2,340, in the nine months ended Sept. 30 than it did in the same period the previous year, according to Reuters.

Through the deal with AMG, Aston Martin is hoping to eventually take market share away from Volkswagen AG (FRA:VOW3), which owns Bentley, and Jaguar Land Rover, which was bought by Mumbai, India-based Tata Motors Limited (NYSE:TTM) in 2008.

Aston Martin, which celebrates its 100th birthday this year, sold a 37.5 percent stake to Italian private equity group Investindustrial last year for $241 million. The company’s majority shareholder is Kuwait-based Investment Dar, which in May began selling assets to creditors as it restructures its debt, estimated by Bloomberg to be $5 billion in 2011.

Daimler reported on Wednesday that it saw a 193 percent jump in second-quarter profit, to 4.6 billion euros ($6 billion). Unit sales grew 6 percent to 605,800 vehicles.

Meanwhile, Mercedes-AMG this month released its new E63 AMG 5.5 liter V-8, which went on sale in India on Thursday, according to the Economic Times.