Anybody following the ongoing story of the cataclysm wrenching at the relationships between Group Lotus, its adoptive parent Proton, and Lotus F1 Team will be used to reading opinions so wide and varied that even the most extreme soap-opera storyline might seem tame in comparison.
More than ever, this week’s musings of allegations, contradictions, suppositions and bile have been dominating automotive content on the blogosphere, Twitter and mainstream media, but at the heart of this lie real issues relating to a much-loved marque, that now overshadow the livelihoods of many around the world.
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So what is really going on? And what, if anything, can be done to keep good people building great cars in Hethel?
We’ve spent the past 24 hours speaking to both sides of the situation, both here in the UK and Malaysia, gaining insight into the thinking of Lotus’ new owners and the steps they are now taking.
What next for Lotus?
None of us should be in any doubt how valuable Lotus Cars could be, under the right management. But it needs the scale and industrial processes of a major car maker, so that the undeniably talented folk at Hethel can do what they do best – make the best handling, most rewarding sportscars that money can buy.
With today’s customer expecting great performance, all the creature comforts AND a 7-year warranty, it’s simply not possible to deliver this at mainstream prices without significant economies of scale. This is something that has been hurting Lotus for quite some time and whilst financing is part of the problem, it makes no sense to re-invent the wheel and carry the burden of being a start-up.
Lotus need a new owner, someone who understands their brand, can use the synergies of their existing business to bridge the investment gap and keep one of the world’s best known marques open for business.
We know it’s possible. Just look at the success Volkswagen has had with Bentley, or BMW with Rolls-Royce and MINI. Our most iconic car makers can thrive in the right environment. And with Lotus back in Formula 1, the brand is now reaching the eyeballs of more than 500 million TV viewers worldwide.
Yesterday, a Lotus Exige S trounced the old Exige Cup 260’s lap time around the Hethel test track, recording a time of 1 min 32.68 seconds (Exige cup 260 – 1 min 37.90 seconds). If that’s not progress, I don’t know what is. Let’s hope we see plenty more of such achievements in the years to come.
DRB-HICOM, who now control Lotus’s owner, Proton, were originally formed by combining The Heavy Industries Corporation of Malaysia Berhad (HICOM) and Diversified Resources Berhad (DRB). Their mission is to make Malaysia a preferred automotive hub, for the import and assembly of vehicles and subsequent distribution across South East Asia.
Unsurprisingly, Lotus do not feature in the plans of such a business.
Malaysia has dropped behind Thailand and Indonesia in terms of the volume of vehicles produced and may even slip behind Vietnam. In its purchase of Proton, DRB-HICOM is focused on developing the most effective business plan to return Proton (and therefore Malaysia) to the top spot and removing anything that might hinder that goal.
As such we learned two things yesterday; DRB-HICOM has installed a new senior management team in Proton (replacing Proton MD Syed Zainal) and the decision has already been taken to cease all current and future investment into Group Lotus operations.
Moreover, the relentless negative attention about the sportscar maker’s future mean that the order has also been put-out to either sell Lotus – and to do so quickly – or to simply close-up shop and put an end to the car maker and the losses it incurs.
This is confirmed from our fact finding earlier this week. We also understand Lotus CEO Dany Bahar is involved in discussions (he’s certainly been noticeably absent from any outgoing publicity these past few weeks) to quickly find a buyer and establish a role for himself in any ongoing business.
As viewed from Kuala Lumpur and Putrajaya (the Malaysian federal capital), the situation has escalated to one of national embarrassment and Proton’s new keepers have been told to deal with the situation and to do it swiftly.
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Turning to how Lotus might be saved and suddenly the situation becomes far more contentious.
Of the three most obvious candidates, two (Genii Capital and Tony Fernandes) might both be able to allow the Lotus name to continue, but face strong opposition from within Malaysia’s political and commercial elite; Genii because of the perception that they were participants in a conspiracy to acquire Lotus through stealth, and Fernandes because of the negative way that he has sought to engage Lotus, especially on the back of his acquisition of Caterham Cars.
Unlike Genii, Fernandes does enjoy some support from a number of junior Proton executives, but it is the establishment calling the shots and they’ve made their position very clear.
This leaves Pang Qingnian’s “Youngman” Group. Youngman, based in Jinhua, China, which already has a significant working relationship with both Lotus and Proton, producing a handful of “engineered by Lotus” models, and is both financially and structurally capable of making the investment required to acquire Lotus and to take it in whatever direction it chooses.
What’s not so clear is which direction this would be and how it would impact the many hundreds of dedicated employees in the UK, Europe, Asia and the USA.
In an ideal world, Lotus needs to find someone with the time, passion, resource, and above all, realism, to not only deal with the enormity of the task but to also consider how the marque can be carried forward to future generations.
One of the biggest challenges facing such a niche business is continuity; just as TVR became nothing without Peter Wheeler, so Lotus has waned without Colin Chapman. Much, of course, relates to money, but far more has to do with personality and leadership.
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But this is only one difficulty facing any potential “white knight”.
Of more immediate concern will be how to justify the type of investment required that might allow Lotus to regain its reputation and future revenue potential. By this, I’m not referring to the recent multi-car ‘New Era’ plan but rather, a return to what the company is good at; building light-weight, affordable sports cars.
Lotus has a new V8 engine on the dyno, a stunning new test track at Hethel and some real engineering ‘substance’ behind all the recent marketing razzmatazz.
It is going to need courage, cash and above-all, a human face to deliver a return to key brand values and to rebuild the relationships with staff, customers, dealers and the media. This is what makes a business out of a brand.
For Lotus, time is now critical, and no-doubt over the weekend, there will be yet more derision cast in Hethel’s direction. And whilst we, the curious, read and reply to posts and threads on the internet, it’s important to remember that there are others who will be wondering when they’ll receive their next pay cheque.
As for the future, if the Lotus legacy is to continue, all I can do is to hope that it will be under the guiding hand of someone capable of instilling in the hearts and minds of men, women and children everywhere, that in an uncertain world, one thing they can aspire to is that some day, they too might own a Lotus.
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I know that last year's Lotus vs. Lotus drama was damaging to all concerned, but I thought Tony Fernandes was still highly regarded within Malaysia for his airline and other business ventures? He would still seem to be the best man to lead a re-born Lotus, even if he is part of a cartel of sorts. That and the fact that he is actually Malaysian would make him a face-saving option for Proton, especially if the deal included ongoing work with Lotus Engineering to help develop Proton's future models.
Although Fernandes is viewed as a very successful businessman, he is not a 'Bumiputra' (i.e. ethnic Malay – sons of the soil) – he's a Malaysian Indian of Portuguese Malaccan descent. Some people believe he would never have made inroads into Malaysian industry without his three business partners – Kamarudin Meranun, Dato' Pahamin A Rajab and Abdul Aziz Abu Bakar – who are all Bumiputras.
Hence why we say that some of the junior Proton executives are supportive, but the old school are less generous with their praise. Back in the 1980's when state owned enterprises (SOEs) were privatised, the Bumiputras were favoured so that outsiders would not benefit (i.e. rape and pillage) Malaysia's industries.
DRB-HICOM know Fernandes – he bought Air Asia from them over ten years ago – so he has access to the right people, but a lot of those people weren't happy with the way he dishonoured Proton/Lotus during the Group Lotus vs Team Lotus scuffles.
The real problem at the moment is Lotus' future is taking attention away from DRB-HICOM's plans for Proton. They've come along as the savior of the Malaysian car industry and found themselves embrioled in a media storm about a small business 6,000 miles away. There's a lot of pride and honour in these types of nationalist deals and our source in that part of the world says they are prepared to silence Lotus unless the problem goes away.
As you can imagine we've shared all of what we know with Lotus directly, since the last thing we want to see is Lotus becoming a casualty of Malaysian politics.
I see, very helpful info that I had never been aware of. Hopefully somebody steps up to take charge of Lotus as a long-term project. They need an equivalent of Luca di Montezemolo at Ferrari, someone who can combine flair with business acumen and crack the whip when required to get results.
Fundamentally, Lotus, as it stands, is not an investible business. Here in the UK, we revere the memory of Colin Chapman and have fond associations of the great era of Team Lotus and the iconic road cars of the 60s and early 70s, but even then, money was always an issue, and it was only by innovation in the boardroom, as well as on the drawing board, that Chapman was able to keep Lotus alive.
After his premature death in 1982, a succession of suitors attempted to use Lotus’s engineering prowess to create value for their own brands but a lack of strategic vision married with conceptual folly led to a period of decline from which the brand has never recovered.
In more recent times, the Elise, then Exige looked to be statements of Lotus’s intent that it was serious about rebuilding its reputation, but then when the Evora was introduced, it was clearly lacking in both handling and outright performance, and it has taken two years of lost sales to get the car to the point of where it should have started.
As for Dany, I think he was completely misguided with his vision; the world, today, does not need another super car, let alone a whole family of them. But he has brought a talented team together, and Lotus have started to reach into the lucrative potential of key emerging markets.
I think that it’s completely fair to say that Dany cannot be a part of Lotus’s future but if a deal can be struck that will allow a core group to continue with niche product, then there’s a chance that the marque can survive. However, the power is in the hands of those who have seen £Ms squandered, and are they really that concerned about a little British sports car company that now sells less cars at home than Westfield or Caterham? I fear not.