free hit
counters
Earning money - Lotus / Motoring / Cars Chat - The Lotus Forums Jump to content
Sign in to follow this  
TBD

Earning money

Recommended Posts

The discussions about Lotus future have got me thinking about their general chances of becoming profitable as a carmaker. Taking a look at the 2010/2011 figures from the other prestige car builders is not very promising:

  • Aston Martin: no or negligible profits, still focussed on reducing debt.
  • Bentley: no profits, details not published by VW, but seemingly still losing money
  • Bugatti: no profits, never. Even after writing off the development costs for the Veyron they are losing money on every ar built
  • Ferrari: the only one making money, heavily dependent on merchandising
  • Lamborghini: no profits, a black zero in best years
  • Maybach: no profits for Daimler
  • Rolls Royce: numbers seemingly not published by BMW

Except for Aston Martin all of the manufacturers are owned by one of the big carmakers that can easily absorb the loss of their prestige division. In fact, they leverage the image of their supercars into their full product line, for them the loss is just a marketing expense. Every Ferrari ad sells a few hundred Fiat 500, for which both Alonso and Schumacher were used.

So where does that leave Lotus? The challenge of earning money as a carbuilder seems immense and seemingly without precedence.

Fortunately Lotus Engineering is a self sustaining asset with its own, seemingly good market position. They also seem to be quite profitable and can probably grow their position substantially over time. Also, I'm sure they profit from Lotus Cars, giving them the chance to prove their competence through the final product.

I think we would do well to see The Lotus Group as an engineering company that also builds cars instead of a car company that also resells its engineering competence. Not a very romantic perception, but then I'm an engineer at heart.

... I'm starting to see why the whole situation must be difficult for DRB to assess.

Share this post


Link to post
Share on other sites
Upgrade today to remove Google ads and support TLF.

"to see The Lotus Group as an engineering company that also builds cars"............

I'm no engineer, just a humble retailer - but I like the potential marketing perspective in this statement. There's some romantic perception for you!

ATB

Scott.

Share this post


Link to post
Share on other sites

I know that the company I'm going to mention is now part of a huge group but I do remind that Porsche when not yet part of the VW -even if owned by the same family members- empire was making profits! Of course Porsche is the only company that reached what I'd call sports car critical mass by selling in excess of 100,000 car per annum if my numbers are accurate! People keep focusing on Ferrari but the one sports car maker with mass appeal is really Porsche this days!Actually it's always been Porsche!

Not that this does change anything in your analysis unless Lotus receives suddenly enough investment to raise production and sales volume a hundred folds!

Edited by NedaSay

Share this post


Link to post
Share on other sites

You are of course right. But Porsche also nearly went bust in the mid 90's, when they didn't even have the money to bring a new 911 and no other models. It was VW, resp. Ferdinand Piech who saved them at that time by paying Porsche to develop the Tiguan and its spin-off the Cayenne. Today this reskinned VW is Porsches best seller - not a sports car.

Interesting in this story is that also for Porsche the turnaround came through a paid development contract, much like the work of Lotus Engineering. Only thing missing is the family relationship to the CEO of any of the big car makers.

Share this post


Link to post
Share on other sites

I stated some time ago that Govt and Eu Policy and Fuel costs will start to have an effect on Prestige/performance car makers. It shows in the figures that the cars depreciating more than any others are big engined, high Co2 cars V8 and above. Its a dying market and was one of the reasons MJK went with a 6 cyl engine for the Evora rather than a V8.

Funnily enough I was discussing this yesterday with a Nissan GTR specialist who also said thats why Nissan went with the 6 cyl for their car.

It will be increasingly difficult to make money from High C02 and thirsty cars in the future as EU regulations will start to bite into 2015 with large "fines" to companys making these vehicles. Add in to this increasing RFL costs (for example a car over 255g/km will now cost you £1000 in the first year) and performance cars are becoming more and more "for a select few" which narrows the market, reduces margins as makers compete for the sales that are there. Of course this also effects development of new vehicles which cost more to develop and make because of trying to have to adhere to stricter emission controls whilst trying to get better fuel economy.

Theres a firm belief that anything above V8 is not really viable any longer, unless you have a massive cost base to spread the losses (Perfect example is Lambo with their new V12. Not an issue with VW behind you). I don't think you will see the end of bigger engined performance cars, but I believe they will be made to show off skills and market normal production cars for the large rich manufacturers (which there are becoming less off as well).

Like you stated above the exception is Ferrari who made 260mill Euro's pre tax (but lets not forget they get Fiat Backing who is also govt backed).

Share this post


Link to post
Share on other sites

Agreed, but its not just the gov't and EU policies cutting into the V8 and above market. With today's fuel prices consumption has become an issue even for the rich. Imagine, caviar is soon cheaper than Super+ :huh:

So, I think it is very good that Lotus Engineering has developed a solid position in hybrid and electrical propulsion. Another solid asset to build on.

The Esprit V8 seems to have been designed to allow smaller V6 and 4-cylinder variants, so that can also be a design edge for others. From the thermal and load perspective the V8 would be the most complex, so its definitively better to start there and then downscale to the V6 than the other way around.

And it has also always been better to launch with the top model. Not doing so with the Evora damaged its market potential even before Lotus had the chance to counter with the Evora S.

Share this post


Link to post
Share on other sites

Well Lotus has been working on alternative energy/fuels for a while but their tech hasn't got into a lot of mainstream cars so far! Rolls used the tech in a demo car, Jaguar is supposed to start producing their RE cars soon but seems rather focused on producing an awesome V6 - which I'm fine with! Nissan and the E-merge could be the lifeline Lotus needs! I'm not going to wait on Proton to get anything done with the city car even though I think it has a cool factor! I know Fagor Ederlan was contracted to build the RE engine but don't know if anyone has signed to buy any!

However if the market goes small car/engine... Lotus just need to go back to its roots! An Elise with RE tech or better an Elan type car (front engine, rear wheel drive, compact roadster with the RE engine) would probably sell like hot cakes in some markets!

Then off course comes the issue of reaching critical mass! This is the thing Porsche managed to reach with Boxter/Cayenne and building speedy soccer mum's car! The development of the V8 should be in its final stage by now! But Esprit sales will probably decide on whether they build the V6 and the the 4cyl is even harder to make a case for! Not designing it but producing it! Even with the economies of scale generated by the development you still have to build custom assembly parts for it! How much would cost the 4 cyl? How many should be build to break even and could Lotus sell it to third party to vent/offset the cost!? These are worrisome questions! Selling the V8 and V6 to OEM that is a long shot at best! Selling the new gearbox to OEM will not happen if the design is not proven either!

Edited by NedaSay

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

×
×
  • Create New...