A rather early obituary for Dany Bahar's tenure at Lotus

[Gus82]

1 of 3 LHD cars is already in Belgium... http://www.autojunk....tus-evora-s-jps

How would this news reflect towards the F1 Team owners?

It could be a coincidence, but if I was announcing that a rumour about the owner of the F1 team I was involved in wasn't buying into my company, then I wouldn't simultaneously release details of one of the companys cars in that F1 teams livery (I obviously know its based on a historic Lotus colour scheme!), unless I had a motive to promote that there is still a link between the two etc. Its not like it was a big preplanned launch given its just photos of a sticker pack that will be applied to just 3 cars.

It also seems especially odd as one of the three cars has blatently been advertised on Pistonheads for some time. I've been admiring it occasionaly for at least the last two weeks!

Plus I would also add that look at what has happened at Force India and Torro Rosso recently. One minute they're not for sale, the next minute large percentages of the team were sold to other investors. And the Proton press release leaves open the opportunity of future collabarations. Given the number of people reporting the rumours I still expect some sort of additional agreement or equity swap between the two organisations at some point in the not too distant future.

Edited October 13, 2011 by Gus82

[simonb]

Genii do have access to some Russian bankers, and Lotus are requiring investors; so I would expect them to be on good speaking terms. This is a world away from Proton surrendering equity, although swapping a bit of debt in Lotus for a bit of debt in LRGP might not be stupid

[Exploded]

Sounds logic, but as said before, if you need to convince 3/4th of the F1 team bosses, to have the chassis name changed and there is no relation between Renault F1 (aka Genii) and Group Lotus, than that would be more difficult as to when you have shared shares, no?And clearly Proton is not willing to do so, on (very) short term.

Edited October 13, 2011 by Exploded

[Bibs]

I think if Bernie wants the chassis names changed, they'll be changed. This is just posturing from the teams, clearing up the confusion is for the greater good of F1 and everyone see's Bernie's point of view when that's the case.

and Lotus are requiring investors

That's news to me! Unless they're looking to upgrade the coffee machines all their funding is in place.

[simonb]

I thought they had shortfall on their £750 million (or whatever the stratospheric [exopheric] total cost of new models was).

[rogerch]

That's been the case all along! I mentioned it in the 'Dawn of a New Era, a year on' piece back in June. Off the top of my head, the 5 year plan is £770m and £480m is funded, the rest is money that Group has to make itself.

Maybe they need contributions to the 290 mil.

[Bibs]

If they can't raise the money through projected sales (as is expected) then they're fcuked anyway! The budgets in place expect them to sell these cars they're planning on making to self fund, it's a business and the plan is it will be profitable at some point!

[Exploded]

the plan is it will be profitable at some point!

To my (limited) knowledge they never were (really) profitable during Colin Chapman's reign. Some dude named MJK did it though, he's the one who made a modest but most likely the biggest profit in lotus's history. It's funny they abandoned him if making profit was the goal, kinda ironic. But I'm hopeful Lotus can make a profit on the long term.

Edited October 13, 2011 by Exploded

[Bibs]

Funny how time skews the memory. Mike retired on health grounds, it was 100% his own decision. Lotus under Chapman made regular and healthy profits.

[rogerch]

They're scary numbers Bibs, so a car manufacturer has to make 290 mil in 3 years, that's almost 100 mil a year starting now.

I can't see it, not in the current economic climate.

[Bibs]

I'm guessing the ~£10m worth of Evora's they just sold to China came as a shock to you too? Lotus's biggest ever single transaction came in the middle of a double recession selling a car more expensive than they ever have before! Hold the front page...!

[rogerch]

That's disappointing as the target was for 200 vehicles this year, on those numbers they need to do that every month for the next 3 years.

[Bibs]

That's ONE TRANSACTION, the company have more than 1 customer... That was just a purchase of Evora GTE's, a car which didn't even figure on the product plan 6 months ago.

Your either acting dumb or...

[rogerch]

I thought we were having a debate on problems that face Lotus in generating almost 300 mil in 3 years, even Ferrari don't sell enough in China to fund that sort money. The Evora was in the projections as 1 of three models.

China sales will help, but it's no magic bullet.

[Gus82]

They're scary numbers Bibs, so a car manufacturer has to make 290 mil in 3 years, that's almost 100 mil a year starting now.

I can't see it, not in the current economic climate.

I think its a reasonable ask. And if they offer Ferrari and McLaren rivaling machinery for a little less money then a recession could play into their hands. There will still be plenty of people buying cars but they may not want to pay just quite as much. The news from China sounds good too.

I am troubled about how they will make money off the cars that cost less than £50,000 though. I wouldn't be surprised if all these cars are eventually replaced by a more hardcore track day car (think updated 340R with a new F1-ish Lotus V6) that is priced higher and sold in limited numbers. Could be built by Lotus sport (like the 2-Eleven currently is - I think?) and wouldn't cost as much to develop. It would mean that once the Esprit and Elite are launched shortly they could spend the money slowly on expanding those ranges and updating/replacing the Evora and still make healthy profits.

Loved the Elise concept (and had hoped to buy the production car) but investing £100,000,000 on develping another car in the run up to 2015 will drain profits that the other cars are generating and I think at the £35,000 price tag it would struggle to turn a profit too.

Take that problem away though and I think its very likely that it will all work out beautifully!

Edited October 13, 2011 by Gus82

[simonb]

If they can't raise the money through projected sales (as is expected) then they're fcuked anyway! The budgets in place expect them to sell these cars they're planning on making to self fund, it's a business and the plan is it will be profitable at some point!

Surely they would need the money up front though, seems to me that all the cost is in development, and you need to do that before you sell anything.

Even if Lotus sell their intended 10K cars a year, that will not magic up $290 million development funds, but it might service a $750 million investment. It is still a bank loan, whether it is short or long term (or bank of Proton or bank of somewhere else), and still required before all 5 cars are rolling off the line

Edited October 13, 2011 by simonb

[Bibs]

They've got the money up front in place!!!

[Kimbers]

If they can't raise the money through projected sales (as is expected) then they're fcuked anyway! The budgets in place expect them to sell these cars they're planning on making to self fund, it's a business and the plan is it will be profitable at some point!

Only just catching up with this as I've been away for a couple of days. Wow, this topic took off!

Sorry Bibs but they'll be fcuk'd then because even Ferrari would struggle to earn that from sales and Engineering in the time frame they need to do it to keep their plan on track. And £10 million in sales to china doesn't equate to £10 million added to the funds. Only the profit on those cars.

Funny how time skews the memory. Mike retired on health grounds, it was 100% his own decision. Lotus under Chapman made regular and healthy profits.

Bibs is right. My Father left because of health reasons after making the only profit the company had made in 10 years, £1.8 million. However, as Bibs says it regularly made profits under Colin and then MJK, just bought a magazine that shows in 1984 the company, under CEO MJK made £485,000 and first 6 months of 1985 it made £325,000, the problem they always faced was cash flow.

This was true even in 2008.

That's ONE TRANSACTION, the company have more than 1 customer... That was just a purchase of Evora GTE's, a car which didn't even figure on the product plan 6 months ago.

Great news.

I thought we were having a debate on problems that face Lotus in generating almost 300 mil in 3 years, even Ferrari don't sell enough

Ferrari made a profit of Circa £130 mill last year I believe. However, according to Porsche guy I know (I was at Silverstone with him a few weeks ago) only a percentage of that can be used for reinvestment. Assuming 50% reinvestment of profits (which is high tbh) it would take even Ferrari 5 years to get enough to fulfill Lotus's 3 year requirements.

Like Roger I just don't see how anyone with a ounce of monetary and car industry knowledge would believe a statement that they will find £290 mill in 3 years from profits made (they have started with a massive (but not announced) loss last year, rumoured to be in excess of £20 million!).

Surely they would need the money up front though, seems to me that all the cost is in development, and you need to do that before you sell anything.

Even if Lotus sell their intended 10K cars a year, that will not magic up $290 million development funds, but it might service a $750 million investment. It is still a bank loan, whether it is short or long term (or bank of Proton or bank of somewhere else), and still required before all 5 cars are rolling off the line

Agreed. It won't. I believe 2 cars Max.

[Iconic Ride]

Many years ago a company called Boeing (you may have heard of them) decided to "shoot the moon" with a product they called a 747. It was the most ambitious (and expensive) developmental program they had ever attempted. The big wheels within the corporate hallways knew they were essentially "betting the company" on the hoped for outcome. The technical and financial challenges made It an exceptional gamble at the time.

I'm convinced that Lotus is at just such a crossroads, with the "New Esprit" representing their paradigm entry into the true "big leagues" of supercar competition. The difference being that the automotive "747 market" already exists, under long available and established marques. The number of potential purchasers at this level of marketing is a fractional percentage of the whole, and their demographic is an often quirky and finicky bunch that travels in a rarefied universe. Inducing them to lay out substantial sums on a new "toy de jour" isn't so much a "bargain sale by comparison" attempt as an exercise in "emotional need to have this" undertaking. In this aspect Lotus has historically managed to excel. We here are proof, albeit at less challenging (in most cases) levels of financial commitment. Now, however, it appears that the company's openly professed desire to move its product(s) significantly "up scale" are all but ensuring a "bet the company" reprise. Perhaps they have no choice. After all, the profit margin ascends in proportion to the sticker cost on any given vehicle.

Dany Bahar's background (actual and perceived) would seem to lend itself to just such a shift in marketing. In some ways it is hard to fault Proton for selecting him to carry the fire in "the new era." He is without doubt a man of great controversy, both now and in his past endeavours, but we must (begrudgingly?) admit that he has great capacity for thinking outside the box (and is the first to tell you so!). Like many here, I have tossed the occasional verbal barb his way (not that he's listening to the likes of me, a peasant among peasants), but one must do their best to keep the pot stirrred, if only for cathartic reasons. At the end of the day, I continue to wish the man well. How could I not? The fate of the company is riding on his shoulders.

[61GT]

.......... At the end of the day, I continue to wish the man well. How could I not? The fate of the company is riding on his shoulders.

+1

[Stirling_Villeneuve]

+1 more

[USAndretti42]

Ferrari made a profit of Circa £130 mill last year I believe. However, according to Porsche guy I know (I was at Silverstone with him a few weeks ago) only a percentage of that can be used for reinvestment. Assuming 50% reinvestment of profits (which is high tbh) it would take even Ferrari 5 years to get enough to fulfill Lotus's 3 year requirements.

Aren't you mixing up profit and margin. Ferrari may have made £130 million profit last year but that would have been after putting aside money to develop new models, re-equip factories, pay back loans, etc. Lotus need to make the 290 million from spending less on making the cars than they sell them for which is not the same as profit. For example, the money they are now spending in new car development will count as an expense, reducing or negating any profit which probably contributed to their loss last year.

[rogerch]

To analyse the 10 mil order to China, OK, I'm going to guestimate, the lead time from Hethel to the showroom floor in China would have to be around 3 months, production configuration, colours, shipping, importing red tape, in fact it could well be more.

So the distributor knows from the time he places the next order it will be 3 months before the cars arrive, initial orders are tough, bloody tough, there is no sales history, nothing to work with, he will have local knowledge, and importing sports and luxury cars knowledge, but his best guess is that those cars will last the lead time to replace.

That being the case orders of that size will only be raised once a quarter. Of course they could go like hot cakes, but that itself poses problems for production, or worse they don't sell well.

I'm not trying to be the prophet of doom just realistic, right now I can't see where 290 mil is going to come from within 3 years, and doing the proverbial into the wind isn't going to find it.

[Iconic Ride]

I'm not trying to be the prophet of doom just realistic, right now I can't see where 290 mil is going to come from within 3 years, and doing the proverbial into the wind isn't going to find it.

[Bibs]

700 3rd party engineers, tens of millions of aftersales parts, merchandise, driving academy, motorsports and so on.

Lotus do more than make cars and if they relied on car sales to pay the bills they'd have closed down decades ago.