Daimler takes a stake in Aston Martin

Aston Martin, the 100-year-old company whose cars are a favourite of James Bond and the Royal Family, is to join forces with Mercedes' owner Daimler.

The companies yesterday announced a deal that will see Aston Martin, which is battling to stop falling sales, use high-performance engines from Daimler's Mercedes-AMG division on its next generation of sports cars. It will also be able to include Mercedes-Benz components as part of the tie-up. Germany's Daimler will take a stake of up to 5 per cent in Aston Martin.

The partnership – due to be finalised before the year end – was hailed as a major boost for Aston Martin, whose car shipments dropped about 10 per cent and profits slid 9 per cent in 2012. The tie-up will make Aston Martin models "a lot more competitive on the global sports car market", said Chas Hallett, editor-in-chief of What Car?. "They look modern but the engines are really falling behind now compared to rivals in terms of performance and environmental considerations," he added.

Ian Minards, the product development director at Aston Martin, said the deal "points to a very bright future for the company".