Investors encourage Proton to sell Lotus

[Guest surferphil]

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.....

VW are partners with Protons new owners who build VWs for the region.

[Kimbers]

£50k base & 1,100kgs?

So your saying £50k isn't cheap? Wow, you must think that over £100k is extortionate then! And its my memory that all the new cars will be well over 1100kg and you are saying 1100kg isn't light.

So you agree that they aren't sticking to Lotus ideals of lightness etc. Which Db says they are. Which also means you must think he was telling porkys too!

Cool!

[Bibs]

Twisting words isn't big or clever. You were implying that the new Exige is selling so well as it's cheap and light, of which it's neither to any huge degree.

An original Elise was 725kgs and 22k, that's cheap and light.

[rogerch]

In 2012 it's a miracle.

[Kimbers]

My Exige s was nearer 1000kg's. I still see 1100kg's light and £50k cheap for a car with a heavy V6 block and the performance figures it has.

I know, I'm trying to find a replacement for my Exige and with the only requirement a 0-60 sub 4.5 I am having hell and all problems finding something.

And I believe that is why its selling so well, yes. I'm not twisting words because I don't see the future cars as following Lotus DNA. The Exige selling so well merely reinforces that. I may have been twisting your meaning, for which I apologise, however its true that if you think £50k to be expensive for a performance car then you would find £100k plus equally so, non?

I

[Bibs]

I can't imagine why what I think is relevant to the cars projected sales, I've never been a customer of Lotus for a new car nor am I ever likely to be. I think £500k for a house is expensive too but that doesn't mean people don't buy them, they buy ones for a million too and people spent £200k on a Ferrari, again nothing to do with me!

The Exige has that many orders and not a single magazine has written a review of it. There's more than price/weight that's driving those decisions...

[Kimbers]

I think people truely want the Exige and it was cancelled too early. Thats why they are buying it. And great news it is as well!!

[Gus82]

I think there is another point about the new Exige though. We'll have to see how its sales progress longer term before we know if a direct replacement is affordable. In other words the Elise/Exige platform already exists so adapting it for the V6 engine isn't going to cost as much as building a full replacement. Therefore a few hundred Exiges at £50,000 could be profitable, but would an all new model meeting all modern safety requirements etc. sell in the right quantities at the right profit margin to make enough money?

I frankly don't know the answer to that, however low volume cars sold for up to £50,000 are notoriously difficult to make sustained profits on, and I could imagine a situation were the lower half of the range (Elise/Exige/2-Eleven) is replaced with a single track day car, slightly more hardcore than the Elise S1 (racing harnesses instead of regular seatbelts and airbags) in the mid to long term.

[Iconic Ride]

It has been my impression that DB's main thrust for the "5 yr plan" was to take the company "up market" to a much greater degree than in the past. The "classic" Esprit was sticker priced for a pretty penny for its time, but the new Esprit (and the new proposed models in general) seems targeted to exceed that level significantly. Basic economics suggests that the more expensive the car, the more potential for greater profit margin. The obvious drawback is that you are now catering to a smaller pool of potential buyers. Determining where the "lines on the graph" most efficiently cross is a fine art, and that exercise in marketing is likely what keeps DB and his staff awake at night. No one said this would be easy. And all are aware that, once more, the future of the company is being bet on the outcome.

Either Lotus is destined to truly compete with the likes of Ferraris and Lambo's, or return (if it can survive the plausible failure of the current business plan) to its historical "cottage industry" niche. Most of us here have been quite happy with the latter, and many of us have reservations about the move "upscale," primarily owing to a perceived "loss of purity" with the marque's historical ["lightness of being"] attributes. But if long term viability and sustainable profits are only to be achieved through dramatic metamorphosis of the products offered, then so be it.

We thus have two parallel "arguments" ongoing here. Is the plan a good one? And how does Lotus finance it, if not through greater sales of existing models?

Can the gap be bridged, and will the new owners (whoever they turn out to be) of the company accept the risks involved?

Do the new principals know the lyrics to Kumbaya, and can they carry a tune?

[Guest surferphil]

DB has clearly stated all along that to achieve the end goal of going 'up market', there needed to be an investment of £x million.

some of that will come as a loan from Proton and some will come from sales of the Esprit.

I do not understand the continual conjecture surrounding this issue.

Everyone knows its a risk and it's a success or fail gamble with everything to loose.

I admire DB for having the balls to take it on even though I would have done it differently.

[Iconic Ride]

The problem with loans (if they are in fact extended at all) is that they can be "called due" (via liquidation) early if things go south. I consider the current plan completely "conjecture," in the sense that DB's "balls" are not made of crystal. Like you, I have come to grudgingly admire his apparent fearlessness when it comes to pure business moxie. But this entire enterprise entails a very large risk to the future of Lotus. The question remains, is it financially viable? Future sales results of Esprits are unknowable at this point.

I grant you that DB may not have much choice in the matter. Stagnation was not an option.

[Bibs]

The question remains, is it financially viable?

You have to assume that the banks lending them half a billion quid would have run this one by their advisers who came up with a yes!

[Guest surferphil]

Unfortunately the question will remain unanswerable until the debt is due, when the bet is to be won or lost.

If DB is clever then he got Lotus involved in Motorsport to spread the bet and offset some sales revenue losses by investing early in the brand presence, which will undoubtedly make some sales back for the Esprit from global exposure alone.

I believe this has inadvertently bolstered Ferrari sales to a large degree during what would have been hard times for the prancing hores in the past.

DB would know that (through advice or experience)

[Iconic Ride]

Hope springs eternal.

"...the prancing hores..."

Not to be pedantic, Phil, but you dropped the "w."

[Guest surferphil]

Was I too subtle.

[Iconic Ride]

Not at all, my good man. It's an art form.

[Bibs]

http://www.btimes.co...icle/index_html

"

As for Group Lotus, it had promised much but delivered very little. A decision will be made once a complete due diligence is done.

The DRB-HICOM corporate culture is that each unit must act as a profit centre on its own. They are constantly reminded that they should not expect easy hand-me-downs from the parent,” added the source."

[Iconic Ride]

"Due diligence," part deux?

[Bibs]

Well if it was good enough for the banks to take the risk...

Any new owner is going to want to know what they've just bought I'd have thought?

[Guest surferphil]

I would expect that for any company. 'The source' for the BT article could have been the madman down the pub, I suspect 'the source' would not understand group Lotus one bit more than Proton did, which is less than a Norwich graduate on work experience.

If they had any interest in G Lotus they would have carried out their diligent viewing before they bought the shares in the Parent.

It seems the takeover is as crude as idiosyncratic investments come.

The 'easy hand-me-downs' comment is probably aimed at pre government owned Proton, who re manufactured Mitsubishi components for the pacific market which seems ironic coming from a company built on re manufacturing VW cars for China.

Either that or a bad tlansration for hand outs.

But its all just 'talking up the business'

Edited February 16, 2012 by surferphil

[Kimbers]

But if you look at my post before you'll see that Autocar quote the New Owners as saying they are open to offers for Lotus. I'm not sure what to think. Does that mean they just bought it to sell it on at a profit or are they interested in running it?

Like people say, we'll have to wait and see.

[Bibs]

What's not for sale? If someone offered them £500m for Lotus I'm sure they jump at it...

[Iconic Ride]

Why is Lopez et al so quiet these days?

[MikieP]

Just curiously, just how many TLF members will be able to afford the new Esprit? I think I can make a fairly accurate guess already. Upscale move to me puts the production numbers down, the costs/car up, and jobs go down, etc. The BE is somewhere but where. Lightness seems a thing of the past in the new lineup and mpg way down. The Evora looks terrific but does not go like it looks it should. Something quite amiss there to my way of thinking. More money into marketing a product does not create better sales once the comparisons are out there for all interested parties to see. A good product does indeed sell itself in my experience. Make it competitive at competitive price and it will sell. $200k for a Lotus! Really? Good luck with that one.

Just so I do not look like an ass, I have 10K (BP or $) to chip in - just so I hopefully can keep my hands on some parts and perhaps get an employee discount sometime on something less than an Esprit assuming they survive their new business model.

Edited February 17, 2012 by MikieP

[Guest surferphil]

But if you look at my post before you'll see that Autocar quote the New Owners as saying they are open to offers for Lotus. I'm not sure what to think. Does that mean they just bought it to sell it on at a profit or are they interested in running it?

Like people say, we'll have to wait and see.

They seem to have no interest in Lotus like they just wanted Proton with it's manufacturing capacity and market share. They haven't talked about Lotus and how excited they are about the company, technology or brand as if they wanted it. They bought Proton and got Lotus for free, I expect they will sell Lotus when the time/price is right for them.

Just curiously, just how many TLF members will be able to afford the new Esprit?

How many of us could afford the last one when it was new? Most of us just help with the residual vales