Each year the Goodwood Festival of Speed showcases a featured marque, a car maker which inspires adoration, perhaps because of its style, success on the track, or the enigmatic founder behind its name. This year the opportunity falls to Lotus which is celebrated with a with a huge 28-metre-high sculpture outside Goodwood House.

But what started out 12 months ago as a celebration of its proud sporting achievements, feels more like the memorial to a fallen hero.

Looking back at the announcement made by Goodwood in December 2011, it reads “Goodwood will celebrate this much-loved British brand at an exciting time in the marque’s history, as Lotus is currently two years into a dynamic five year brand re-invigoration plan with the goal of returning the marque to its original status alongside other prestigious sports car manufacturers. The plan includes an entire new range, the first of which will be the return of the iconic Esprit in 2013.”

How telling it is, that an announcement made just six months ago, no longer bears any semblance of truth.

This year is the 60th anniversary since Colin Chapman founded Lotus and yet the past 12 months have been some of the most torrid in the marque’s history – a foray into the US IndyCar series (as an engine supplier) led to former F1 driver Jean Alesi and Simona de Silvestro both being thrown out of the Indy 500 for being too slow.

Sponsorship of the Lotus F1 team, owned by Genii Capital, was terminated in April leaving the car little more than an exercise in brand engineering. The race team, previously run under the Renault name, and prior to that Benetton, considers itself descended from the 1981 Toleman Motorsport team, further underlining the sad decline of a once proud marque.

Road cars

If you were expecting ‘two’ new Lotus variants to launch at Goodwood, then you’ll be disappointed to hear those plans have been shelved (along with many others that were set in motion by ex-CEO Dany Bahar).

The intention behind these new variants was to offer more for less, with higher-quality interior trim, a more imposing road presence and better performance – Lotus recognised that their cars were pricey compared to the competition and were working on revitalising the existing range, while they awaited the new Esprit (which had been delayed until 2014 at the earliest).

Despite seeing the cars testing at Hethel last month (and thoroughly impressed I was too), new owners DRB-Hicom quickly put a stop to the kind of marketing which promotes a product before its ready to be delivered (never mind that Goodwood is one of the biggest promotional events of the year for new sports cars).

This change comes on the back of Aslam Bin Farikullah’s recent appointment as Lotus’ Chief Operating Officer (COO). As we profiled at the time, Farikullah is a production and supply chain guy, more used to making the components and sub-assemblies used by other manufacturers. He’s about as far away from being a marketer as Bahar was an engineer, so it’s hardly surprising to see such an about face.

Besides missing out on the ‘golden’ opportunity to showcase its updated products as the feature marque at Goodwood, there are many more challenges facing the Norfolk sports car maker.

Since Farikullah took over last month, DRB are now controlling everything, so any decisions or press releases must first be approved by Malaysia and in most cases the answer is no. DRB see little reason to communicate with the media, unless they have something important to say, so at least in the short-term the chatty, friendly, sometimes quirky style of ‘Updates from Hethel’ are no more.

Farikullah’s primary focus is on engineering and production, which in many respects is a good thing – Dany was more about product and brand, with the finer details of how it all came together being sorted out downstream. Because of this DRB don’t trust anyone who was close to Dany, nor any decisions that were made under his watch, so they are literally reviewing ‘everything’ (good or bad), consequently stopping anything that doesn’t meet with their approval.

As has been mentioned elsewhere, dozens of contractors and temporary staff have been dismissed at Lotus as part of a move by DRB-Hicom to limit it’s outgoing expenditures. It’s all about cutting costs, removing wastage and only producing the most profitable models (where components can readily be sourced). A description I gleaned from those inside Hethel was of an environment akin to a bootcamp – with DRB people on the ground supervising every activity and imposing the structure and routine of a volume manufacturer.

There is good reason why Farikullah was appointed as COO rather than CEO of Lotus – he’s a fixer, a company man, who knows the rules and is used to keeping a low profile. While most company leaders would by now have publicised their plans, that’s not Farikullah’s role – he’s there to clean and prepare the business for an ‘as yet’ un-named goal.

Farikullah said in a statement yesterday, “Goodwood has become the most important car culture event in the world, and the similarities between what the Festival of Speed is trying to do and what we would like to communicate are clear. It’s about showcasing the past, present and future of sports cars and motor racing. We’ll be in Goodwood to show what we’ve done over the last year, as well as the last 60 years.

“Heritage is absolutely everything. If you don’t understand your past, you can’t realise your future. We remember not only the good times, but the bad times too, it’s what makes us stronger and gives us depth of character. Lotus has been pioneering both on the road and on the track for six decades. At Goodwood we’ll be able to showcase everything the company has done, and we will use this as a foundation for the future.”

Whether that future is to continue making sports cars is as yet unclear, but unless something changes (soon) I fear the 2012 Goodwood Festival of Speed may be remembered as a swansong for the marque rather than a celebration of its first 60 years.

* * *

What about Bahar?

As explained last month, the reason for ex-CEO Bahar’s dismissal was his failure to meet the covenants of the company’s £270 million syndicated loan. DRB-Hicom discovered this additional liability while completing its purchase of Proton and with several bankers wishing to exit from the loan (due to Lotus being in breach), this left DRB-Hicom to pick up the pieces.

Sulaiman Yahya, head of corporate communications at DRB-HICOM, revealed in a statement last week that the company had been given until this month to meet certain conditions on its loan agreements with its banks.

He confirmed, “As early as July last year, the signs of trouble emerged when Lotus failed to meet certain conditions in its loan agreement with the syndicate of Malaysian banks. But after seeking a second extension in November last year, the banks stopped further drawdowns and gave an extension till the end of this month.”

Lotus chairman Dato’ Mohd Khamil has been working on a plan to help stabilise the car maker, by refinancing the loan under new terms.

Meanwhile ex-CEO Dany Bahar has been preparing his case against DRB-Hicom for wrongful dismissal – he will argue that his actions were within the mandate given to him as CEO (by Dato’ Syed) and therefore he is due a 5% commission payment if DRB-Hicom sell all or part of Lotus.

DRB’s Sulaiman said in response, “We had anticipated this when Lotus dismissed him.” He added: “Bahar was dismissed based on the results of Lotus’ investigations into his conduct. We shall rely on this evidence should he wish to take legal action.”

Headline credit: Inspired by Mike Harvey (@mikeyharvey)

Written By

Steve Davies

Steve is an investor, private equity advisor and former Partner at KPMG, PwC and Bain.   Most importantly he's a life-long car enthusiast, mountain biker and active sports enthusiast. He designs and builds technology platforms and is the architect behind Transmission.

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