Get the car, get the life (just make it a Lotus)
PUBLISHED: 10:02 09 March 2011 | UPDATED: 10:12 09 March 2011
To the outsider, Lotus may appear a company on hold.
It has a high court battle looming over the use of the Lotus name in Formula 1 racing.
Its bid for £27.9m of cash from the government’s over-subscribed regional growth fund to help expand manufacturing in Norfolk is also up in the air until the end of this month.
And, apart from the development of the first of its range of five new cars, the Esprit due out in March 2013, it is still yet to decide where it will build its future vehicles.
But, for the firm’s Swiss-born chief executive, Dany Bahar, these are minor issues. He is a man on a mission to, as described in the Wall Street Journal, “sell you a lifestyle (car included)”.
The hype started in September, when the firm launched its five new cars, including the four door Eterne, and a concept city car under Lotus Engineering.
This was the biggest unveiling of new cars since the 2008 launch of the Evora – then the first all new car in 15 years.
It has also launched itself into F1 through a major sponsorship deal with the Renault F1 team, now called Lotus Renault GP.
In has been on a recruitment drive for engineers, is opening an office in Germany and is investing heavily in making its Hethel test track FIA race standard.
Work on pit facilities with a viewing gallery is due to start at its Hethel headquarters in April and a motorsport centre, approved by councillors just last week, will follow.
There is a new line of Lotus merchandise, plans for a London flagship store this year, a new Lotus magazine, involvement in multiple levels of motorsport and an elite race experience programe under way which has already been endorsed by former F1 drivers Nigel Mansell and Jean Alessi.
It sounds like a lot – as well as being a lot of cash. But for Mr Bahar, it is all part of a plan to put Lotus on the international sports car map alongside the likes of his former employer Ferrari.
2011 is year two of a five year turnaround plan backed by its owner, Malaysian car maker Proton, and £480m planned investment.
The idea is not to sell more of its existing cars, but to sell a wider range of cars – from the new range – at higher prices with the ultimate aim of selling 6,000 to 7,000 of four to five models a year.
“We believe the Lotus brand has strength and capacity,” said Mr Bahar. “Porsche in 1991 was nearly bankrupt and it started doing cars out of its core competancy, the four door, and it turned around.
“It will put Lotus back in profit by selling more cars at a higher price. Selling only small volumes of low priced cars doesn’t sustain the operation.”
The wholescale move into motorsport, from F1 to GT2/GTE, IndyCar, GT4 and GP2/GP3, is a major branding and marketing exercise in place of normal forms of advertising.
But, although Lotus currently does not have any engineering input into the Renault F1 team, it serves to influence research and development at Hethel of its road cars, he said.
But there will be pain.
“Every turnaround starts with losses,” he said. “There will be losses for three years and then we will start to break even.”
The business, which will for a period be running two programmes, one for existing cars and another for the new cars, will also need a level of “right-sizing” in the next year.
The firm, which had 1,400 staff when Mr Bahar joined in 2009, now has 1,700 staff globally, including contractors, he said.
So, where will the new cars be built?
There is potential to outsource production, said Mr Bahar. The regional growth fund cash would help fund an expansion of production at Hethel, which could mean more are built in Norfolk.
Work on the Esprit, the first to be developed of the five new cars, is already under way at Hethel.
Its mid-engine design will form the basis of one of two cars which will then both be the models for the rest of the stable.
“The first car we need to get right,” he said. “Mid-engine is where our core competancy is. It is a must that we build it here. All the others, we do not have to decide.
“If there is a split it would make sense to keep the mid-engine cars here and build the front engine cars (the Elite and Eterne) somewhere else.”
However, he added: “But it doesn’t exclude that we go somewhere else with everything. It doesn’t exclude that we stay here.
“It doesn’t only depend on the money. The money the government is offering would never fill the gap we need to meet.”
And the 10 year plan? It involves another £300m investment but, “we want to be in the same situation as after five years”, said Mr Bahar.
“We want to sell as many cars per model as we do today. We just want to multiply the number of models. If we reach 6,000 to 7,000, that is a big jump. Once we reach these volumes we do not have to grow. We don’t have an ambition to be mass market.”
The firm has acknowledged not everyone has approved of Lotus “going premium”.
Mr Bahar has said: “I’m a realist. Something had to change, though – it couldn’t continue the way it was, and we’re doing our best to return Lotus to its righful place”.
He said: “Our cars will always be lightweight, we will always use a lightweight design for that customer group.
“But I don’t think it hurts if, in a new car, you can find features like getting in and out easier.
“Lotus is about so much more than smart engineering, lightweight design, and an intense driving experience.
“It’s a lifestyle choice. That’s what we’re building.”