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Autocar: Lotus boss: 'The recovery has begun'


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http://www.autocar.co.uk/car-news/industry/lotus-boss-recovery-has-begun

 

Lotus is recovering, after several years of turmoil, losses and soaring costs that most industry pundits associate with the Dany Bahar era.

Following the announcement last March of a record-breaking £168 million loss in the 2012-2013 financial year, the company has been quietly cutting costs and expanding sales under a turnaround plan led by its low-key chief operating officer, Aslam Farikullah.

Lotus’s UK car sales climbed by 86 per cent in 2013, while sales in export markets, especially in new regions such as China, also improved. Quality has been boosted by refinements to the Hethel manufacturing process, and the company currently has a four-month waiting list for cars.

Appointed 18 months ago by DRB-Hicom, Malaysian parent company of Lotus and Proton, Farikullah is a Bath University engineering graduate with expertise in product development, manufacturing and quality and has been based in the UK for the past 26 years.

He is a practical character who knows both the Lotus and Proton businesses well and regards the 2012-2013 loss as “housekeeping, carried out as part of our turnaround plan”.

“The loss was expected,” he told Autocar. “We want Lotus to be at the forefront of automotive success and innovation, and we’ve spent the past 18 months laying the foundations.”

In pursuit of these goals, claims Farikullah, Lotus’s shareholders recently contributed £100 million to stabilise and expand the business, which has largely maintained its 1150-strong workforce in tough times and currently has 100 engineering jobs open.

Since 2012, overheads have been slashed by nearly 50 per cent, a move that has dramatically lowered the break-even point of car production.

Farikullah identifies two key objectives for Lotus: maintaining financial stability (a condition he believes the company reached last March, ironically at the same time that it was required to report the record 2012-2013 loss), and further improving the build quality of its cars.

The step up in quality is being achieved through improvements in Lotus’s own manufacturing practices, as well as continual contact and dialogue with underperforming suppliers.

Between January and December last year, Lotus production amounted to 1368 units, 31 per cent ahead of the 2012 figure. UK sales for 2013 expanded from 120 to 230 units, with further gains in prospect this year. Farikullah says he is not satisfied with the totals but cites them as evidence of progress.

Car production at Hethel is currently about 40 cars a week, at a markedly improved quality level. The aim now is to increase output to 45 or 50 EliseExige and Evora derivatives per week, pushing on towards an annual output of 1800 to 2000 cars. 

The company’s motorsport arm will build and sell around 110 of its lucrative bespoke models this year, nearly doubling its annual output of recent years. Lotus’s engineering consultancy — which made a mere £22 million contribution to turnover in 2012-2013 — is expanding again and currently has 120 live projects on the go, most of them commissioned by large, global manufacturers.

On new models, Farikullah carefully avoids specifics, although he says: “Our long-term vision is for Lotus to be at the forefront of automotive innovation.”

Farikullah declines to sign up to Bahar’s eye-popping suite of new model proposals, revealed several years ago, saying merely that Hethel has “a number of exciting new projects under development”.

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At least this interview should resolve the confusion started by the independent article on Lotus numbers. http://www.thelotusforums.com/forums/topic/51798-lotus-in-the-post-db-era/?p=487725  :gathering:

 

Good thing is that, considering how sparse information from Lotus is nowadays it is at least trustworthy. When Aslam states that financial stability was reached last march I'm inclined to believe him. And that really is very good news! Ans a "number of exciting new projects under development" sounds even better. :cheers:

 

Now, from a marketing perspective its not quite what we would expect, but probably the best we can expect from Lotus.  :getmecoat:

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If you have the choice between a Stairway to Heaven and a Highway to Hell don't forget the Nomex®!

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I won't say I told you so "A number of exciting new projects in development".

 

Like you say Thomas, they don't say much so when they do people sit up and listen. Different tactics to previous but I suppose if you don't have good news to shout about you keep quiet. Like we've said elsewhere, Lotus seems to have turned that corner.

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For Aslam/Lotus to remain silent for so long, you have to believe what has been said. What would be the point of fibbing after such a long period of silence?

 

Would not make sense.

 

Good news. Can't wait to see what they are talking about. :detective:

All we know is that when they stop making this, we will be properly, properly sad.Jeremy Clarkson on the Esprit.

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2 weeks ago today I asked PR at Lotus if I could have this chat with Aslam and was told no. I have complained.

 

I like to think I'd have asked more pertinent & searching questions, not sure there's anything new there apart from the Engineering revenue figure (which is very, very low).

88 Esprit NA, 89 Esprit Turbo SE, Evora, Evora S, Evora IPS, Evora S IPS, Evora S IPS SR, Evora 400, Elise S1, Elise S1 111s, Evora GT410 Sport

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Yes, they lost most of their Engineers and business under the last Team. It takes a while to get it back. Good to see Aslam has seen the benefits of this and has been building their portfolio! Looking forward to seeing next years figures (2013/14).

 

Maybe the reason you didn't get the gig is because of the "searching questions"? :harhar:

 

Seriously though, I do think they should look at our traffic figures and give you an interview. I assume you stressed the footfall on our news pages?

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"Underperforming suppliers" = "Unpaid suppliers"

2012: 168 million loss from about 1045 vehicles = 160,000 loss per vehicle! So does anyone want to stump up the near 200 grand required for Lotus to make any profit on an Elise?

2014: 40 cars per week = 2000 cars per year, so how come they think 45 - 50 cars per week = 1800 - 2000 cars per year?

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I'm not sure the figures for sales/PL can be taken so literally - in fact the financial year is April to Mar and car sales year Jan to Dec...

88 Esprit NA, 89 Esprit Turbo SE, Evora, Evora S, Evora IPS, Evora S IPS, Evora S IPS SR, Evora 400, Elise S1, Elise S1 111s, Evora GT410 Sport

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"Underperforming suppliers" = "Unpaid suppliers"

2012: 168 million loss from about 1045 vehicles = 160,000 loss per vehicle! So does anyone want to stump up the near 200 grand required for Lotus to make any profit on an Elise?

2014: 40 cars per week = 2000 cars per year, so how come they think 45 - 50 cars per week = 1800 - 2000 cars per year?

Spend 170 million  designing 5 cars that bet binned and break even on the ones you actually sell - you can't allocate the loss to the cars sold (otherwise Tesla would be losing millions on every car).

 

40 cars per week and 48 weeks (summer closure, Christmas,..) gets you to 1920 cars per year.

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"“a number of exciting new projects under development”... like a spares dept that keep headlights for current models? 

 

Saw a nice Aston on PH today... 

Currently having an illicit affair with another marque, be back in the fold one day... B-)

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Here's a press release from Lotus.

 

 

Lotus Announces Annual Financial Results

 

Lotus Group International Limited (LGIL) has announced its annual financial results, which recorded a loss of £167.8 million for the last financial year (01 April 2012 to 31 March 2013). 
 
Aslam Farikullah, Chief Operating Officer of Lotus, said, “This figure was one that was expected. We have a long-term vision for Lotus to be at the forefront of automotive technology and innovation, which is why we are laying the foundations for growth given the level of housekeeping that was carried out as part of our turnaround plan.” 
 
“The new leadership team at Lotus is committed to delivering positive returns to the Company’s shareholders and has a number of exciting new projects under development, in addition to improving the quality levels of process and production and the supply chain,” added Aslam.
 
For 2013, Lotus had made some substantial advances, including creating more than 100 new jobs to deal with an increased global demand for its sports cars and an anticipated rise in its engineering consultancy service. The Company also launched two new cars, the Exige S Roadster and the Elise S Club Racer, opened new dealerships in Singapore, Dubai, Germany, Italy and the UK and secured £10 million from the  Government’s Regional Growth Fund in recognition of Lotus’ plans, all of which will help Lotus grow over the coming years.

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Make that much more than 170 Million Thomas. I think the black hole was 300 million wasn't it?

 

Michael, Bibs is right, it can't be taken literally. The losses to that point were in such things as top heavy and high Management costs. Lack of project management. Cost controls were poor with Multi Million Pound Parties thrown for cars that hadn't even been developed or got past the design stage....I could go on and on, but I won't.  

 

Lets not forget that in 2008 under MJK the company made it's first profit in 10 years and that was done with tight cost control and planning, good Management and a profitable Engineering and specialist Sport's departments. All of which have been re-instigated under the current team! It took my old man 2 years + to get to that stage but it is possible to do and I think the current team can do it.

 

Lotus IS a viable company as it stands. The key will be what's coming down the line. The cheapest thing would be an Evora facelift and a more Extreme model, but that would just be a stop gap. All companies need constant product development and I really look forward to see what is happening over the next couple of years.

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I'm hoping to get a copy of the accounts shortly but a lot of the loss was on R&D costs. 

88 Esprit NA, 89 Esprit Turbo SE, Evora, Evora S, Evora IPS, Evora S IPS, Evora S IPS SR, Evora 400, Elise S1, Elise S1 111s, Evora GT410 Sport

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Well ithese are steps in the right direction but we are far from MJK 2008 achievements and goals which was to shift more cars thanks to Evora which was supposed to sell on its own about 2000 units a year.

 

 

Not being able to sell 2 out of 3 models in North America does hurt plenty has the "Elige" sold in significant numbers here. 

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There's really nothing new here.

 

 

 

"Lets not forget that in 2008 under MJK the company made it's first profit in 10 years and that was done with tight cost control and planning, good Management and a profitable Engineering and specialist Sport's departments. All of which have been re-instigated under the current team! It took my old man 2 years + to get to that stage but it is possible to do and I think the current team can do it."

 

Kimbers, without wanting to take away the achievement of making Lotus actually turn a profit, it wasn't enough, unless you don't consider it important to be able to generate enough cash to fund significant investment in future models that would drive growth. 

 

Building Eliges didn't work and won't work. They can't sell enough of them at enough profit-per-car to generate enough capital to invest in tomorrow's vehicles. We know this because they've been trying to do it for decades now.

 

It hasn't worked.

 

 

There was no mention of the future of Lotus in the article because there is no story there. They do not have the investment they need to make the future, only to try to stabilise the business of stabilising the sale of the current line-up, and IF they turn a profit, it's going to be few million a year at best - 15? - a tiny fraction of what they need to earn in profit to be in the business of designing the future.

 

 

So what now? Someone is going to have to stump up a seriously eye-watering amount of capital to turn Lotus into a car company that can fund its own future, and that will take substantial volume AND profit-per-vehicle changes.

 

 

If I really thought Lotus could flourish by following the failed business model of the past, believe me I'd be cheering from the rafters. I really want them to survive the next decade!

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Call me a sceptic.

When the shareholders fire senior management, cut costs and demand that the business tidies up its P & L accounts...

It's positive news! the brand will live on... but in who's hands, that's the question!

Cheers,

A ;-)

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That's soon to be zero Lotus cars available in the US once the current exemption expires - maybe someone should remind good old Aslam about this, but I fear his focus is more on China than the US

 

 

Not being able to sell 2 out of 3 models in North America does hurt plenty has the "Elige" sold in significant numbers here. 

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I've asked and been told many times that Lotus will still be selling the Evora us the USA after the exemption expires in March. They've not explained how, just said it won't be an issue.

88 Esprit NA, 89 Esprit Turbo SE, Evora, Evora S, Evora IPS, Evora S IPS, Evora S IPS SR, Evora 400, Elise S1, Elise S1 111s, Evora GT410 Sport

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Buddsy, I'm not jumping to Lotus' defence without thought, but are there 2 sides to the story? We hear that suppliers are being asked to up their game and improve and that DRB have put £100m into Lotus and suppliers are being paid. Would you pal say he'd be asked to improve quality but didn't and now he's not being paid or would he just say he's decided to ditch a customer after 30 years to save face to you instead? Just sayin'.

88 Esprit NA, 89 Esprit Turbo SE, Evora, Evora S, Evora IPS, Evora S IPS, Evora S IPS SR, Evora 400, Elise S1, Elise S1 111s, Evora GT410 Sport

Evora NA

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Yeah, I wouldn't worry about the suppliers too much. In the past Lotus has always paid a severe premium on all parts compared to the "big boys" (for the same parts), but gotten poorer quality. DRB has much more intense relations to parts suppliers and probably does know how to put the thumb screws on (as everyone else does).

If you have the choice between a Stairway to Heaven and a Highway to Hell don't forget the Nomex®!

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Lotus have always paid net 2 monthly eg the end of the month 2 months after the month the invoice arrives in. If I invoiced them today, it would be paid at the end of March (Jan invoice), if I invoiced them on Monday (Feb invoice) it would be paid at the end of April. 

 

What are they making out of steel in-house? 

88 Esprit NA, 89 Esprit Turbo SE, Evora, Evora S, Evora IPS, Evora S IPS, Evora S IPS SR, Evora 400, Elise S1, Elise S1 111s, Evora GT410 Sport

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Wasn't something official posted on here that said their average payment dates had "improved" from 155 days to 152 days LATE!

 

So you invoice something to Lotus Cars today the likelihood is you won't get paid until end March + 152 days! In fact today being 31st of Jan, they'd probably consider it a Feb delivery any pay you a month later than that!

 

I can fully understand why suppliers refuse to put up with that. Lotus is a tiny player in the automotive world, so why should suppliers do them any more favours? 1200 cars per year is hardly a strong bargaining position for Lotus.

 

EDIT: just checked in "Lotus in 2014" thread. Telegraph article: actually worse than I said: payments in 2013 average 155 days late, compared to average 154 days late in 2012.

Edited by LotusLeftLotusRight
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