Why F1 is vital to Aston Martin's rejuvenation

Sixty years and several changes of ownership ago, Aston Martin dabbled its toes in Formula 1... and quickly withdrew them. And yet now its latest man at the helm is determined to bring Aston Martin back - not with a technology partnership or engine-badging deal, but as a manufacturer in its own right.

It helps that this individual is Lawrence Stroll, an incredibly successful entrepreneur who also happens to be head of the consortium which owns the Racing Point F1 team. And Stroll has confirmed that the team will be rebranded as Aston Martin from 2021 onwards, even though the factory has been in shutdown - apart from its involvement in the 'Project Pitlane' ventilator scheme - for the past two months.

Stroll increased his commitment even as the COVID-19 pandemic tipped the global economy towards recession. His Yew Tree Consortium took a 16.7% stake in Aston Martin in January, as part of a rescue package as underwhelming sales followed a troubled stock market flotation.

Aston's Initial Public Offering [IPO] in October 2018 valued the company at £19 a share; market jitters and poor sales figures drove that valuation downwards - and, after a brief uptick when Yew Tree agreed to its £182m investment, it plummeted along with other stocks in mid-March as the pandemic took hold.

Stroll then took the opportunity to renegotiate the deal. Instead of taking 16.7% at £4 a share, as planned, his consortium took 25% at £2.25 a share and agreed to an injection of £75.5m in "short-term capital support", along with a long-term capital investment of £260m. Stroll also became executive chairman.

"We are bringing a lot more than money," Stroll said in a video conference which replaced his appearance at the cancelled Geneva Motor Show. "I have a long history in building luxury global brands in both private and public sectors. As executive chairman, I will ultimately be responsible for the strategy we are implementing. The foundation of the strategy is returning Aston Martin to a works Formula 1 team on the grid for 2021."

While the board approved his plans, the company also had to disclose an unwelcome truth: that even with Yew Tree's money, it would fall short of the working capital required unless it could attract outside investment. Shares fell further in response, hitting a low of 65p at the beginning of April before rebounding.

"Our investment strategy places F1 as a central pillar of the global marketing strategy, and it makes perfect sense to rebrand Racing Point for this purpose" Lawrence Stroll

On the heels of that, Stroll spoke again, saying: "A brand with the pedigree and history of Aston Martin needs to be competing at the highest level of motorsport. I think it's the most exciting thing that's happened in recent memory in F1 and it's incredibly exciting for all stakeholders in the sport, especially the fans.

"Our investment strategy places F1 as a central pillar of the global marketing strategy, and it makes perfect sense to rebrand Racing Point for this purpose. Aston Martin has been competing very successfully in various classes of motorsport throughout its history, but we now have an opportunity to create a works team in F1. The global spotlight of Formula 1 is second to none and we will leverage this reach to showcase the Aston Martin brand in our key markets.

"The group of men and women at Silverstone are true racers and their determination and spirit is one of the main reasons I invested in the F1 team. After 30 years, they deserve this opportunity to represent this legendary brand. We are continuing to invest in the team to give everybody the resources required and we will see the benefit of those efforts this year."

Since Racing Point is one of five UK teams to furlough its staff during the COVID-19 outbreak, and Aston Martin's manufacturing facilities are also on shutdown, the F1 plan is precarious. The financial industry remained unenthused by Aston's stated aim of sourcing the additional working capital it requires for the next 12 months via loans and other financial instruments. Stroll urgently needs to make the road car business pay its way - and source more investment.

This has already begun to arrive. A week after the stock touched 65p, Mercedes F1 team boss Toto Wolff was moved to deny rumours linking him to a new role at Aston Martin, telling an Austrian newspaper: "I'm not going to become CEO of Aston Martin, and I'm not going to make a strategic investment there either." Twelve days later it was announced that he had bought a minor shareholding in Aston Martin, which amounts to 0.95% after the latest rights issue.

This is small beer compared with Wolff's 30% ownership of Mercedes F1, and he insists his future lies with Mercedes. But it's a meaningful - in terms of hard cash - and public show of support for Aston Martin and its F1 project. It's also going to be a rich source of speculation and controversy in the coming months as rival teams, already muttering about Racing Point's so-called 'pink Mercedes', grow fretful about the cosy relationship between F1's mightiest competitive force and its most ambitious midfielder.

Another Mercedes 'face' has also allied themselves with the Aston Martin project. This month, as the share price slid to 35p, Stroll moved to please the crowd by dispensing with CEO Andy Palmer, replacing him with highly rated AMG chief Tobias Moers.

The market seemed to approve of this choice because the share price immediately rose beyond 50p again. Palmer had vision - he declared at the IPO that, "We don't make cars, we make dreams" - but Moers comes with a reputation for steering ailing businesses back onto the right track.

It's this kind of pragmatism that will be required in the coming months as the automotive industry, and motorsport, tries to haul itself out of the economic mire.