The British luxury car maker will join forces with Daimler’s high performance Mercedes-AMG GmbH division to work on a new bespoke engine.
Aston Martin has sought the cooperation with Mercedes to better compete with Volkswagen-owned Bentley and Porsche, as well as Jaguar Land Rover.
"The opportunity to include content from Mercedes-AMG in our next generation sports cars is, clearly, good news," said Ian Minards, Aston Martin's product development director. "This points to a very bright future for the company as it starts its second century in business."
The V8 engines developed by Daimler will eventually replace the Ford-manufactured units Aston Martin has been relying on in previous years.
Apart from the powerful eight-cylinder engine, Aston Martin will also receive electric components manufactured by Daimler’s Mercedes Benz division.
"This is a great deal for Aston Martin, which needed a bigger partner, and will give it access to new engine technology and save it a fortune on the massive cost of developing powerful and fuel-efficient engines and electronic systems," said IHS Automotive research director Christoph Stürmer.
Mercedes-AMG offers three families of engines - an in-line four cylinder unit, a V8 and a V12. According to the Thursday's announcement, Aston Martin is only interested in the V8 powertrain. It hasn’t been specified whether a development of a new generation V12 engine will also be included.
Under the deal, which is due to be finalised before the end of the year, Daimler will take a non-voting stake of up to 5 per cent in the 100-year-old British firm, which gained the greatest fame with its 1963 DB5 sports car featured in early James Bond movies.
According to the deal, which is due to be finalised in the following months, Daimler will take a non-voting stake of up to 5 per cent in Aston Martin.
Aston Martin, having celebrated its 100 anniversary this year, has been struggling for growth since the 2008 economic crisis. The company, which has gained worldwide fame with its 1963 DB5 sports car featuring in James Bond films, has reported a 9 per cent decrease in profits in 2012, selling only about 3,800 cars - around 10 per cent less than a year earlier.
Approximately 15 per cent of Aston Martin cars are being sold in Asia. The company has been recently focusing on increased marketing in this region, which is now dominated by Jaguar Land Rover.