Lotus : Havoc in Hethel

Chris Sawyer

Lotus Evora in Black and Gold

Lotus Evora in Black and Gold

Dany Bahar is lucky Lotus is an obscure British car manufacturer – the truth behind the recent goings on at Lotus might otherwise be more well known and be broadcast far more widely. However, the Wall Street Journal took a look at Mr. Bahar’s attempt to create concurrently a new image, new branding and new products for Lotus in the WSJ Magazine on the 25th February, 2011.  AROnline readers will, though, already know from my previous articles that all is not as it seems.

The relationship between Lotus and Proton has been off the rails since the death of Proton’s first CEO, Yahaya Ahmad, in a helicopter accident. His plans to unite the two companies and make Lotus Engineering the main design/engineering center for Proton died with him. After his death, the Malaysian car maker was at a loss as to what to do with Lotus and several sub-par Managing Directors attempted to put Lotus on its feet, sometimes while lining their own pockets or burning through capital on value-free programmes.

It wasn’t until Michael Kimberley returned to run Lotus that a reasonable Product Plan was put in place and a Marketing Programme designed to resurrect the Lotus image over time was devised. The only thing missing was money. Proton was reticent about spending money having had its finger burnt in the past. Nevertheless, under Kimberley’s stewardship, the Evora was designed, engineered and developed in under 33 months and the Esprit replacement was engineered concurrently.

A new Elise was started, as was less brutal Exige. For the first time in modern Lotus history a rational, comprehensive Marketing Programme was begun. Motor sport programmes built around the production lineup were outlined. Things were looking up but then Proton changed CEOs as capriciously as the new GM. After all, Proton, like the new GM, is partially Government-owned.

Gone were Kimberley and his crew and in came Dany Bahar, whose success at Ferrari was built on the pre-existing image of the brand, not one he proposed to create. Bahar initiated lavish spending on concept cars (the five proposed production cars), a broad-based motor sport programme (Le Mans, IndyCar, etc.) which eventually added a team for Formula 1, plans for a new test track at the company HQ in Hethel, England, which would be built to race specifications and the hiring of “name” advisers like Bob Lutz. Bahar even went so far as to build a Formula 1-style Track Day car for folks willing to plunk down the money and hire former F1 drivers to act as consultants. Then, on the spur of the moment, Bahar committed Lotus to designing and building an engine for IndyCar (it will actually be engineered by HWA, an off-shoot of AMG, not Lotus, according to my sources) and leased a corporate aircraft painted in the Lotus green and yellow. Forensic Accountants would have been combing through the receipts in any other company,

Bahar told the Wall Street Journal that Lotus founder Colin Chapman would have built heavier, more luxurious cars had he the resources at the time but he is only partly correct. Chapman always looked for the lightest method of construction possible so he said he would have used aluminum instead of steel had that been his only option, but chose fiberglass instead. (Let’s not forget that diminutive Lotus didn’t have the money to build the dies necessary to press steel or aluminum parts, and fiberglass―especially when used for a load-bearing structure―was an exotic material at the time.) He produced the world’s first all-composite unit body car in 1957 (the original Lotus Elite) and stuck with the material and its variants until he died.

Did Chapman want to go upmarket? Yes, disastrously so. Chapman’s attempt to chase Ferrari and Porsche upmarket in the 1970s nearly killed the company with debt. The move alienated the Lotus buyer base and did not seduce any significant number of buyers from Ferrari, Porsche, et al. Sales dropped dramatically. It took decades for Lotus to recover, a recovery that didn’t take hold until the arrival of the Elise in 1996. (The Elise is, by far, the highest selling Lotus model in company history and was designed, engineered, developed and brought to production for the princely sum of $7 million in 1995.)

Now, at a time when the car industry is coming back to Lotus and its ethos of building light vehicles powered by small, high-performance engines that together can beat the competition, Dany Bahar is going after Aston Martin, Ferrari, Lamborghini and Porsche etc. with cars that are just as fat and inefficient as their current offerings.

Bahar was quoted in the article as saying: “We want to be the next Porsche. Not in terms of volume, but in the extent of their range.” That’s quite a statement – especially when you consider the mathematics behind it. Porsche is able to support its model line variation and innovation because of the number of vehicles it sells, not despite it. Lower the volume and the price of its vehicles rises rapidly. Raise it, and the price per unit drops while profits rise.

What does Bahar not understand about that equation? Might he, perhaps, be warning his keepers at Proton that he’ll be coming hat-in-hand for regular additions to the Lotus vehicle development fund? Whatever the case, Bahar was warned by Chapman-era managers who’d seen this train wreck before that his was a recipe for disaster. His answer was to force them out and bring in consultants like Lutz. Now, say my former colleagues, spending is well over budget, projects are slipping and the creditors are starting to ask questions.

Finally, I must argue with Bahar and the article’s author on one more point: Chapman did not care if Lotus was commercially viable. He was on the record as claiming that Team Lotus, the racing team he founded alongside but separate from the car company, was his main concern and he would retire to run it while Group Lotus lived or died on its own. [Chapman expected a larger car maker, possibly Ford, to buy the car making and engineering operations.]

Incidentally, Chapman got the idea for sponsorship in Formula 1 while running cars at the Indy 500 in the 1960s and brought the concept to racing in Europe. He was never one to turn his back on a quick buck and, as John DeLorean discovered, use that to his advantage.

Posted in: Essays, Lotus
Keith Adams

About the Author:

Created www.austin-rover.co.uk in 2001 and watched it steadily grow into AROnline. Is the Editor of Classic Car Weekly, and has contributed to various motoring titles including Octane, Evo, Honest John, CAR magazine, Autocar, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, Classic Car Weekly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, and the the Motoring Independent... Likes 'conditionally challenged' motors and taking them on unfeasable adventures all across Europe.

14 Comments on "Lotus : Havoc in Hethel"

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  1. Wingroad says:

    Sadly, how long will it be before Lotus follow Bristol Cars into administration?
    Bahar obviously does not understand Lotus’ USP of lightweight vehicles and differentiation from the competition.

  2. Mega, Liverpool says:

    The biggest problem for “New Lotus” is weight. The use of alloy is old hat now -Audi/Porsche/BMW etc. are sinking vast amounts of cash into new forms of weight reduction like injection-moulded carbonfibre parts.

    Lotus simply can’t match that investment so, in time, the Germans will have not only better build quality but a LIGHTER product. Chapman was my hero when I was a kid in the 1970s but I think he should have taken that offer from Toyota!


  3. Dr. Richard Croft says:

    Not for me the Lotus. Why is it today?

  4. Auntie Ian says:

    Anyone with half an eye can see where this is heading – it’s a shame Lotus’ bank balance isn’t as big as this Baja bloke’s ego.

    The future of Lotus lies in ensuring that they can build a profitable Elise alongside a more practical sister car rather like the Evora, but with attractive styling and a more attractive price tag.

    Simple, lightweight cars are Lotus’ USP – the kind of cars the big lads at Fiat and VW can’t build. It’ll be a tragedy if the company is finally destroyed just because Danny boy was thwarted in his career at Ferrari.

  5. Ian says:

    The other thing that Porsche has (and most other long-lived motor makers) is a connection to the family that founded it. Lotus doesn’t have that steadying hand…

  6. Baz says:

    “Porsche is able to support its model line variation and innovation because of the number of vehicles it sells, not despite it.”

    Porsche has survived for the last 20 years not just by building cars. Their masterstroke was to set up an investment arm which is, in effect, a substantial hedge fund. This has generated around 5x more revenue for Porsche than its motor manufacturing.

    Where that fund is now, given all the goings-on with VW since 2008, I have no idea…

  7. Paul Evans says:

    Porsche is one of, if not THE, largest distributors of vehicles in the world. They distribute VW, Audi, Seat and other brands in many markets. All the profit from that operation helps to support manufacturing in addition to the Design and Engineering consultancy.

    Unfortunately, Lotus has never understood distribution and the vital importance of a professional, well-funded network.

  8. Marinast says:

    Lotus should keep to two or three different models and concentrate on making them as good and reliable as possible, then sell them for realistic money.

    With rising fuel prices we could be seeing another mid ’70s moment when expensive to run cars became almost unsellable. What Lotus really need is a small sports car, MX-5/TF-sized, priced at around £15-18k which returns high mpg and low emissions.

    One idea is that they could use Fiat TwinAir units, boost performance to around 140bhp and fit in a cheap to make chassis and body. A sports car with under 100g/km of CO2 would, if priced cheap enough, sell like hot cakes.

  9. Christian says:

    Lotus have big problems. It’s going to be really hard to push upmarket when the likes of Aston Martin, McLaren and Porsche are making such fine cars. However, it’s equally hard trying to stay where they are. The profit margins are so tough.

    Lotus could really do with being aligned with another brand such as Vauxhall -souped up Vauxhall’s wearing the Lotus brand name make sense. May I, in this respect, suggest an obvious partner? VW anyone? A Lotus Golf sounds good to me.

  10. Chris Sawyer says:

    Actually, VW did take a good look at Proton when Lotus was making the three-wheeled GX3 concept into a road car. Impressed by how quickly the project moved from a hard-to-drive semi-motorbike to a very nice sports, uh, vehicle, the folks at VW began to investigate what it would take to add Lotus to its growing list of automakers.

    However, it didn’t take long for them to realize it would require purchasing Proton, which appealed to VW. It would give them a production facility in Malaysia, entre into a market where it has little in the way of sales and a innovation-minded,(relatively) low-cost sports car maker which would slot beautifully below Porsche.

    Proton blew VW off by insisting that it, like all the previous suitors, could not own a majority stake, but would nevertheless have to teach it how to build fully competitive modern cars while “enjoying” a minority stake.

  11. Dr. Richard Croft says:

    I agree that’s best way forward. It’s hard to make money selling cars – ask Ford and GM.

  12. The Rockabilly Red says:

    There are two simple truths about Lotus:

    1) As a manufacturer, they have always wandered from crisis to fiasco. Their cars have never been properly developed prior to release. They are, and always have been, best regarded as a (poor) assembler of (under-developed) kit cars.

    2) As a Design/Engineering house, they are universally unpopular with Engineers. Pretty much every job they have been contracted to do in the last ten years has ended up badly done, over budget, and late. They have a VERY restricted pool of talent in house and simply top up numbers with short/very short term contractors.

    Like it or not, Lotus are not (and never were) much of a company, regardless of how much potential the cars may have seemed to have.

  13. Brian says:

    Lotus’ relationship with Proton and the chassis and suspension development is interesting.

    According to Yahoo! Cars, Proton sold 25 cars in February, Aston Martin sold 39.

    Would MG Rover have been able to sell Rover-badged Proton Gen-2s as once forecast by Auto Express ?

    I think that, on this evidence, the answer is no.

  14. Wilko says:

    Brian :
    According to Yahoo! Cars, Proton sold 25 cars in February, Aston Martin sold 39.

    Would MG Rover have been able to sell Rover-badged Proton Gen-2s as once forecast by Auto Express ?

    I think that, on this evidence, the answer is no.

    That depends on the reason for the low sales. You seem to be assuming that the quality of the car is the reason, but I would say it’s more likely to be a combination of Proton’s relatively small Dealer Network and the traditional perception of it as an FSO/Lada-style cheapo brand.

    Actually, from what I’ve heard, the Gen-2 isn’t actually a bad car and it certainly has a distinctive look about it. They may have sold well under a different guise. Not, of course, that I would have liked the idea of them wearing Rover badges…

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