Investors encourage Proton to sell Lotus

[Gus82]

I'm sorry Ruud, but that is sensationalist nonsense! Bahar has hired a large number of highly respected engineers to aid those already there. I'm getting increasingly frustrated reading nonsense from sources who have not been to Hethel recently, those who have generally seem to come away impressed.

[rudolphwolven]

@Gus82

The problem is not the lack of highly respected engineers; this never was a major problem with Lotus.

The CEO is a problem for some time already; I am not the only one with this opinion; more and more similarities with Victor Muller/Spyker/Saab are surfacing..........I visited Norwich in 1994 already.........this was not my last visit.

Best regards.

Edited January 30, 2012 by Ruud

[Guest surferphil]

Maybe you should tell us why you think DB is a problem for Lotus?

It looked like they were dead when he arrived due to MJK having returned too late and then un expectedly retired. Lotus' problems started before the Elise was unveiled. 2 years of DB doing something about it is not a problem for Lotus, the global manufacturing climate changing rapidly in a recession is a big problem and so was TF.

Tony F was ripping Lotus off and would have kept going until they were dead, then I guess he would have stepped in.

DB stopped it and really does want to turn the company around. I'm glad he got kicked back into place.

[Gus82]

@Ruud

No offense meant! I'm a little frustrated today from people writing off the plan as it is (on different forums). I agree there may need to be changes, however I think there needs to be a move to more profitable cars like the Esprit and Elite, as the Elise derived models won't bring in profits soon.

[Moxie]

I'm sorry Ruud, but that is sensationalist nonsense! Bahar has hired a large number of highly respected engineers to aid those already there. I'm getting increasingly frustrated reading nonsense from sources who have not been to Hethel recently, those who have generally seem to come away impressed.

Why should you need to go to Hethel to be impressed? I was just there last month and other than talking with Brian Angus and Guy Munday I didn't come away with any new insight in to the increased engineering horsepower that's been brought in. Instead, a lot of attention's been intentionally directed away from engineering news and toward branding mystique. Personally I'd welcome more prominant news about the engineering side of things, but other than Lotus proActive magazine, all the good stuff is hidden behind a press/media login and the pedestrian website's interface and information architecture would give Steve Krug or Jakob Nielsen a migraine.

[NedaSay]

I reacted to this piece in the motorsport section! I really hope we don't have a rerun of the tale of two Lotus in a near future!

[mdavies]

The "Lotus For Sale" story has made the Financial Times today. Business section, page 23 (thereabouts).

Quite a big splash, best part of half a page, under an large Evora pic. (Moody, front view, parked beside a lane through a woodland glade - right for the FT I suppose, gravel spurting from the wheels leaving rubber on the road might be seen as another bankers indulgence.)

Absolutely nothing in the story that has not been posted here. Rather less. Unless you count an "everything will be well" stance from DB.

One sub-editors slip: refers to factory extension "to build engines obtained from Toyota". (Something close to that, read in library, can't afford it and petrol.)

Very slack news day for the FT, Monday.

Edited February 13, 2012 by mdavies

[Kimbers]

Maybe you should tell us why you think DB is a problem for Lotus?

It looked like they were dead when he arrived due to MJK having returned too late and then un expectedly retired.

Phil, I'd appreciate some clarification on your point?

MJK arrived and within 12 months had both wiped out the companies debts and got the first all new model in 8 years on the drawing board.

The following year he took the company to its first Profit in 10 years and brought out the Evora, with less than £80 mill I might point out. He also had the new Esprit in place and a 5 year business plan.

The reason he retired was because he was going in to work on an icy saturday morning at 7am, as he always was and slipped and fell onto a high kerb, damaging his spine. He couldn't work due to this injury and has since had 3 operations on his spine to relieve the pressure and pain.

Now, as to Lotus, and this is my own opinion and in no way reflects anyone elses opinions, DB has done a good job of bringing the company into the public eye and has had 4 times more capital to work with than MJK did.

I suspect that Proton had an idea who was interested before it was up for sale and I would fully expect DB to still be there afterwards. His constant re-assurances seem to point towards a knowledge of said information.

However, they are still going to need another £3-400 million to complete their current plans so I look forward to finding out what organisation with these funds is going to buy the company.

[chandrew]

The FT story wasn't quite the rehash that mdavies suggests. Basic overview is:

Morale at factories has been hit by rumours

Proton: quote from MD (Syed) to FT “So despite what you hear – rumours based on management disposing this or that – no decision has been made.”

Syed: "no discussion with Genii on sale"

Bahar: "no truth to rumours of MBO / seeking funding"

Syed: "rumours coming from those interested in Lotus 'stirring the pot'"

Syed: "Owned for 13 years, interested in staying the course"/

Most of the article seems based on an interview with the Proton MD that the FT has had.

[Guest surferphil]

Phil, I'd appreciate some clarification on your point?

You are welcome to it:

Rudd wrote "The CEO is a problem for some time already" and I was asking him/ suggesting he tells us why he thought that.

I then added that MJK retired suddenly due to his health (you mentioned before that he had a serious back problem and doctors orders to retire, rather than the predictable retirement at a certain). I think Lotus were dead before MJK returned and would be dead again without him, Proton hired DB to fill a void.

My point was that Proton hired DB for a good reason and that Lotus were not in a good position before they hired him as MJK had retired.

I admire MJK for what he did at Lotus, I think we all do.

[Kimbers]

I agree that they were on a rocky road and MJK got them back on track and even saved the company. I know he had a fight and 7 day weeks 14 hour days and the stress nearly did him in.

However when he left it it was in a much better state and stable. Don't believe what some parties say.

I don't agree that DB was the man for the job. However he's there now and for no other reason than the 30 or so years of hard graft and passion the old man put in, I feel that I must support the current staff and management.

BTW, I'll see you for a pint soon. I am in Risborough once every few weeks as my head office is next to the Bell pub. We can have a chat over a beer or 2

[Gus82]

Interestingly, the Caterham article that appeared on the Car Magazine web site yesterday, dropped in a mention that the only significant work carried out by Lotus (regarding the all new models) is on the all new Esprit. This is the second different publication to claim this, though there was the Evo article which talked about the Elite styling models. I wonder if the funding that was said to be in place really is all there?

It's not necessarily a bad thing though. It explains to some extent how Lotus "only" lost £20m last year, and if the original Bahar plan isn't realistically workable its better that they are not wasting money on something that won't happen but would still lumber Group Lotus with debt.

Perhaps MJK's plan of two closely related mid-engined models (Evora 2+2 and Esprit) will end up being the way forward, at least for the short and medium term.

I do think the main benefit Mr Bahar brings is his ability to create a lot of press about Lotus, he has also persuaded some interesting characters to assist with the re-invention and I think some of the motorsports investments have been good for the brand too. He has benefited from a larger budget though.

I think the business could do with confirming if there have been any changes to the future plans, as the FT article indicates that uncertainty is hurting sales and relationships with suppliers. If ambitions have been scaled back to some extent it means a new owner might be more inclined to continue to run the business the same way and wouldn't need to bring as big a budget, which might put some questions to bed and allow Lotus to build up during 2012 to the new Esprit, enjoy what could be strong Indycar and F1 campaigns and perhaps launch some useful Evora derivatives that if they sell strongly could help bring profits or a break even ahead of the Esprit next year.

Edited February 14, 2012 by Gus82

[Bibs]

The new era cars have up to 50% shared components and technology. The idea has always been to develop the Esprit first then the others are up to half done already, nothing has changed there.

The new cars will cost between £120m & £140m each to develop but £200m is going into the Esprit as it's the lead technology

[hedgerley]

Interestingly, the Caterham article that appeared on the Car Magazine web site yesterday, dropped in a mention that the only significant work carried out by Lotus (regarding the all new models) is on the all new Esprit. This is the second different publication to claim this, though there was the Evo article which talked about the Elite styling models. I wonder if the funding that was said to be in place really is all there?

I still prefer to read the news from Lotus themselves - as discussed elsewhere the update on Lotus Light Weight Structures and the Esprit and Elite in particular in the latest Lotus Pro Active Magazine. In fact the editorial and other articles seem to show Lotus is making good progress. Rightly or wrongly, DB is delivering exactly what he said he would in the first 2 years of his 5 year plan. I prefer to remain optimistic...

http://issuu.com/lotuscars/docs/proactive_issue43/1

Edited February 15, 2012 by hedgerley

[Gus82]

Thanks for posting that Hedgerley, I hadn't seen that and from a brief glance it certainly looks very interesting. I think what I was trying to get at in my last post though is that they may need to rely less on loans and trying to do too much too quickly to expanding at a slightly slower rate using money generated by the Esprit and new Evora variants, as without direct backing from the Malaysian Government it may be more difficult to obtain such large long term loans. And if they need to do this explaining the change in plans now is better than soldiering on and then cancelling programmes in what would seem like a panic later on.

That said if they can continue with the original plans and deliver them as originally intended its good news anyway!!

Todays Autocar has an article similar to the FTs confirming that the new management have told Lotus to continue with their original plan and that the first Esprit prototypes will be out and about in May. It also confirms that during the sale period there will be some restrictions on cash flow but this is a temporary issue relating to legal issues and the sale process. Its a good idea to offer this as an explanation now rather than wait for the inevitable "there is no cash" stories that would otherwise get leaked by someone otherwise!

[jonwat]

Todays Autocar has an article

“We have explained our plans to the new owner,” the Lotus CEO told Autocar in an exclusive interview,

“and have been told to keep going as we are. The immediate problem is to manage the cash in the business carefully during the 60-day pause, but I am confident that this is a temporary technical issue.”

Lotus is now more than two years into its five-year plan, Bahar pointed out. “Our new gearbox is on the dyno and our new V8 supercar engine is running and progressing on schedule. We will have supercar prototypes to test in May. We’ve spent so much money already that it would be silly to write it off.”

That means stop spending money because you've already spent millions and have nothing sale able to show for it.

[Gus82]

Well, thats taking two points from the article but leaving a lot of other stuff out! The full article is now on the website:

http://www.autocar.co.uk/News/NewsArticle/AllCars/261333/

Any instability isn't good news, but the upturn in Exige sales and the good reception of the £100,000 plus Evora GTE is very promising and will help with the cash flow.

[Guest surferphil]

That means stop spending money because you've already spent millions and have nothing sale able to show for it.

Is this really what you think? To stop now would be the worst thing in the history of the company.

[TBD]

Is this really what you think? To stop now would be the worst thing in the history of the company.

Underline that! Lotus is worth only a fraction without the new cars on line.

[simonb]

You think the value of Lotus is a mid engined v8, or the whole bonded aluminium chassis business?

[Guest surferphil]

The value of Lotus cars is how much it makes back from the investment of the Esprit: car, engine, transmission and all.

They won't pay the debts with out it and they won't have a future..

Edited February 15, 2012 by surferphil

[hedgerley]

Elsewhere in this weeks Autocar is a small snippet about VW renewing its interest in a joint venture with Proton to help them get into SE Asia. We've heard that before in the context of VW buying Lotus. Is that back on the agenda I wonder?

I hope not. I prefer DB's statement.....

[Stirling_Villeneuve]

Makes this a little more interesting...

Still utterly pointless though.

[Kimbers]

Is this really what you think? To stop now would be the worst thing in the history of the company.

Yeah thats what you would think with the previous Managements Esprit that they had spent millions on.

Also interesting to see that its the new Exige (old Exige) that DB quotes as such a great seller. Why? Hmmm, light, relatively cheap, back to basics pocket rocket.....Maybe that tells him something about what he should be doing in the future.

No one else has picked up on this: "Proton’s new owners are reportedly “open” to talks about the sale of Lotus".

Or this: "The Malaysian Government owns a 5.39% stake in DRB-Hicom through its investment arm Khazanah Nasional Berhad."

Khazanah were a majority shareholder in Proton and The Malaysian Govt a shareholder in Khazanah........

Is it just me or does this all seem strange?

[Bibs]

Hmmm, light, relatively cheap, back to basics pocket rocket.....

£50k base & 1,100kgs?