Group Lotus : CEO Dany Bahar contemplates a future without Proton

Lotus Elan

Lotus Elan

Malaysia’s PROTON Holdings Berhad has been propping up Lotus cars for many years and has emerged as a key player in funding the British sports car company’s ambitious new product plans. Group Lotus plc’s parent company has put £100m behind the new Lotus models announced at last year’s Paris Motor Show, but Proton is unlikely to keep pouring cash into its British affiliate.

Group Lotus’ Chief Executive Officer, Dany Bahar, said: ‘Smaller companies will need to be associated with bigger groups to benefit from economies of scale particularly as emissions and safety legislation gets tougher. Will Proton be our long term partner? It’s unlikely because our products are too different.

‘Maybe someone like the VW Group which has performance vehicles such as Bugatti or Bentley, could benefit from synergies with a company like ours. Proton has spent a lot of money on Lotus, probably a lot more than they would have liked, and I am sure that one day they would like to see that money back.’

Will Proton be our long term partner? It’s unlikely because our products are too different. Maybe someone like the VW Group which has performance vehicles such as Bugatti or Bentley, could benefit from synergies with a company like ours. Proton has spent a lot of money on Lotus, probably a lot more than they would have liked, and I am sure that one day they would like to see that money back.” Dany Bahar, Chief Executive Officer, Group Lotus plc

Lotus stunned Paris showgoers last September by unveiling five new models, the Elise, Elite, Esprit, Elan and Eterne, as well as a concept city car, which will all be on sale by 2016. They will be the result of a £500m, Five-Year Business Plan and Bahar said that funding is now in place as of the end of March. In addition to Proton’s £100m, Lotus has taken £270m in loans from Asian banks while the rest will be funded from sales of existing models and Lotus Engineering.

The city car will be jointly developed with Proton which will give the Malaysian company a global small car and Lotus a sporty runabout, just like Aston Martin’s Cygnet, based on the Toyota IQ. Bahar said the Paris show car was also underpinned by the little Toyota but Proton and Lotus have now developed an all-new platform for the car which is due to be launched in 2014.

Bahar also admitted that feedback from Paris was behind the decision to drop one of the five cars revealed at the show. He said: ‘There were three main issues – two of the products, Esprit and Elan, were too close. Both two-seat, mid-engined sports cars but actually their performance was very similar. So, we have kept Esprit and moved Elan to a second cycle to be produced at a later date.’

Bahar revealed that there was also a lot of strong feeling about the engines the company planned to use. ‘Feedback told us the Yamaha-developed unit was just not ‘Lotus’ and so we embarked on a project to develop our own family of engines, V8, V6 and, eventually, an in-line four.

‘There is obviously a big cost involved in going down this route, but by putting back the Elan that has given us more capital expenditure headroom. We are developing something along the lines of the Ferrari V8. The project was started in November and we plan to have the first prototype running in July.’

A third issue highlighted by the feedback from Paris was whether Lotus needed a four-door model – the Eterne grand tourer. Bahar said: ‘We can argue about that forever. From my point of view, we are spending £130m on a front-engined platform and so we want to get as much out of it as we can, including variants such as a four-door.’

An additional consequence of Group Lotus’ Five-Year Business Plan is that, with a minimum of five new vehicles in the pipeline, the company will run out of capacity at its factory in Hethel, Norfolk and so talks are underway with Magna in Austria along with other contract assembly companies in Europe with a view to building some of the planned new models outside the UK.

We have been able to attract people from companies such as AMG and Porsche because we can offer a job where they can be hands-on and really make a difference in terms of rebuilding the company. We might not be able to match the wages of bigger companies but we offer the challenge of reviving a sleeping giant.” Dany Bahar, Chief Executive Officer, Group Lotus plc

However, Dany Bahar said Group Lotus has not given up on some sort of regional aid despite the recent rejection of the company’s application. He added: ‘We are continuing to hold discussions with local politicians because they can see the possibility of creating some 600 jobs in the area. But we have to make a decision by the end of summer if we are to meet our production deadlines.’

Group Lotus’ headquarters are set to remain in rural Norfolk, but would the company have a problem attracting top quality Engineers? Bahar said: ‘Not really. Norwich is not a bad place and it now even has a premiership football team. We have been able to attract people from companies such as AMG and Porsche because we can offer a job where they can be hands-on and really make a difference in terms of rebuilding the company. We might not be able to match the wages of bigger companies but we offer the challenge of reviving a sleeping giant.’

What about F1 aspirations? Bahar says that it doesn’t have to cost a lot of money. ‘We don’t have to run the show. We can provide the cars and the technology for an experienced team. Our job is to add value not finance the team. If we couldn’t afford it we wouldn’t do it.’

[Source: Headline Auto]

Posted in: AROnline News, Lotus
Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

14 Comments on "Group Lotus : CEO Dany Bahar contemplates a future without Proton"

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  1. James Riley James says:

    What a strange article – Dany Bahar openly suggests that Proton won’t be interested for much longer and it’s odd for the CEO of a struggling company to cast even further doubt over its future…

    I have to say it does all sound like a bIg pipe dream with regards to the model strategy – Lotus is almost insignificant these days so how on earth can they fund such a major Model Programme whilst at the same time talking about paltry sums of money and uncertainties over the company’s ownership?

  2. Simon Woodward says:

    Well that’s as clear as mud, so what is happening a Lotus? What’s happening to the Elise/Exige now the current Toyota engine has been dropped? When are these new cars coming out? Is Proton pulling the plug and, if so, when?

    It’s all a bit vague and starting to sound like someone went to the same business school as the Phoenix Four.

  3. Richard Kilpatrick Richard Kilpatrick says:

    Why isn’t the vast space at Longbridge being leveraged as a contract assembly plant for third parties? This is, in essence, what the MG factory is doing for SAIC’s models – so why not Lotus or other short-run manufacturers?

    The European short-run firms are not exactly in low-cost employment regions, either…

  4. Steve G says:

    Right, so Bahar causes an untold stink in the F1 world with his Lotus branding of the Renault team on Proton’s behalf and then announces that Proton are likely to want to offload Lotus to someone else at the earliest opportunity because they’ve spent too much on it and want their money back?!

    All he needs to do now is claim all Lotus cars are “crap” and he’ll have done the full Ratner.

  5. DaveH says:

    Is this guy for real? This is the worst interview I have ever read and his ideas seem like a pipedream.

    Lotus has tried and failed to go up market before. They need to develop a range of sports cars which are affordable and use proprietary equipment that is repackaged – the same as Aston Martin has done with Ford and Volvo parts.

    Ford learned the lesson that a Fiesta keyfob for an Aston Martin was wrong but use the same stuff and repackage it, and, hey presto, no one moans!

  6. Dave P says:

    Group Lotus’ plan to make its own engines from scratch is a wonderful idea but it can’t make economic sense – it has got to be a money pit.

  7. Simon Woodward says:

    @Dave P
    Group Lotus has tried that before with the V8 which was used in the Epirit. I reckon that something reworked would be the right way to go or, alternatively, buying something mainstream and already sporting like the Ford/Volvo 5 cylinder unit or how about a Subaru Boxer unit? Now there’s a thought, a ‘Scubby Elise’!

  8. Richard Kilpatrick Richard Kilpatrick says:

    DaveH :
    Is this guy for real? This is the worst interview I have ever read and his ideas seem like a pipedream.

    Lotus has tried and failed to go up market before. They need to develop a range of sports cars which are affordable and use proprietary equipment that is repackaged.

    What, like the Evora? A car which I want SO MUCH, but naturally can’t afford at nearly £50K. However, despite the logical choice there being the Cayman, I’d really want the Evora a lot more.

    I don’t understand Dany Bahar. He seems capable of coming out with the most unbelievably poor phrasing and opinions from a PR point of view. However, I think he has a very sensible point courting larger manufacturers. VW isn’t right – it has Seat for the small sporty things as well as the premium marques – but there will be a larger group that can benefit from Lotus’ engineering talents and reputation, as well as a brand to apply to sports cars.

    Proton’s made no secret of its reluctance to press ahead with funding Lotus since a change of leadership at the Malaysian firm, so Bahar may as well openly court interest from other groups.

  9. TerryG says:

    Bahar’s got a gem in the Evora, why doesn’t he develop it? Instead, by announcing the five Lambo look-alikes, he’s effectively saying: “Don’t buy it, we’re dumping it soon.” Madness… Tony Fernandes must be rubbing his hands together and waiting to pick Lotus up for a song and add it to Caterham when Bahar’s crazy plans finally scupper the outfit.

  10. Tim_Burgess Tim Burgess says:

    This guy reminds me of a certain BMW CEO who stood up at the launch of their British subsiduary’s most important model for 30 years and announced that they were thinking of closing it down unless the Government wrote them a cheque.

    Point gun at foot and pull trigger…

  11. Robert Leitch says:

    The confirmation that Lotus are set to develop their own engines puts me ever more in mind of TVR at their maddest when the Melling-designed AJP engines took the place of the near-bulletproof Rover V8 and product proliferation ran amok.

    The Daily Telegraph’s obituary of Terry Playle makes interesting reading:

    “But a run of good profits encouraged a ruinously over-ambitious expansion plan which could not be fulfilled, leading to the announcement of a £43 million loss in 2001 — when Playle was called in as Chairman and Chief Executive.

    He immediately scrapped the M250 – a brand-new model, intended to rival the Porsche Boxster, that was costing a fortune to develop — and refocused the company on efficient production and marketing of the successful Elise.”

    Playle saved the company by ditching the Evora, only for the next regime to revive it.

  12. M. T Prommis says:

    @Steve G
    Ironically, if you had been a fly on the wall at Lotus recently, you would have heard a presentation which confirmed the complete Ratner.

  13. Fritz Stoddler says:

    Well, I think we are now witnessing the unveiling of Bahar’s hidden agenda: it is not about building up the Lotus car brand and putting it on a sustainable and successful track.

    Bahar is (and has always been) about finding the quickest and most profitable exit in the short run for HIMSELF only. He has options and shares in the company received for almost nothing. By selling Lotus to a bigger group like VW he would make nice money for himself for having spent something like only two years at the helm.

    Additionally, he would almost certainly reap a nice “changing-hands” premium on the sale of the company and then leave. His father-in-law is the most prominent head-hunter in Switzerland. He knows how to extract the most from corporations with clever employment and incentive contracts.

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