Mercedes-Benz to snap up 20 per cent stake in Aston Martin

Mercedes-Benz has announced that it will increase its shareholding in Aston Martin Lagonda from five per cent to 20 per cent.

In an announcement to the London Stock Exchange, Mercedes said as part of the investment it would also extend its "strategic technology agreement", hinting the German car-maker will continue to supply powertrains and its electrical architecture to the British brand.

Coming just months after Aston was plucked from near bankruptcy by F1 team owner Lawrence Stroll, the deal is also mooted to give Aston access to Mercedes-Benz's pure-electric car technology that could see the relaunch of the Lagonda brand as an ultra-luxurious all-electric car-maker back on track.

The extra cash will also help Aston invest to boost its annual sales to 10,000 units by 2025, up from the 5862 vehicles it shifted in 2019.

Along with pursuing higher sales, early this week Aston Martin announced its long-term strategy to increase annual revenue to £2bn ($A3.7bn) in just five years' time.

The first stage of Benz's investment will see it bump its stake up to 11.8 per cent as part of a £140 million ($A260m) share issue.

The German car-maker's interest in Aston Martin has been well signposted within the industry following Tobias Moers' move from the head of Mercedes-AMG in Germany to take the reins of Aston Martin.

Former Aston chief Andy Palmer left the company in May after pressure continued to build in the wake of Aston's disastrous floating on the stock exchange in 2018 that subsequently saw its shares nosedive by 94 per cent.

Moers now has a huge task ahead of him to address a slump in sales and ongoing financial difficulties that saw a £29m ($A53m) pre-tax loss in the third quarter, down from £43m ($A80m) profit over the same period last year.