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]
Latest posts by Clive Goldthorp (see all)
- History : Brand ownership - 21 November 2016
- Blog : Will MG’s slow boat to Europe hit Hinkley Point or the Brexit rock? - 29 August 2016
- News Analysis : Making the business case for a new UK-built MG sports car… - 28 February 2016