Chinese billionaire plots rescue of a great British carmaker
AN ASSEMBLY hall sits rusting on a 55- acre factory complex in eastern England, surrounded by a vast expanse of green, productive farmlands. The forlorn structure is a reminder of the latest failed attempt to revive Lotus Cars, a specialist sportscar maker and engineering powerhouse.
In its heyday, Lotus was revered for lightweight racers favored by James Bond and Mario Andretti. The company’s engineering talent alone was so well respected it developed a successful consulting firm with clients that included General Motors, Aston Martin, and Tesla. But consumer tastes changed. When sports cars gave way to SUVs, Lotus suffered.
Under an ambitious plan hatched in 2009, Lotus started building the new hall in anticipation of producing an expanded lineup of five new models. But the financial crisis and global recession got in the way, and Lotus’s foreign bankroller didn’t want to plow any more cash into the project. No new cars appeared, and sales continued to plunge. Work on the hall stopped dead.
In a sign of how bleak things had gotten, Lotus’s British network of dealers sold an average of just 11 cars per month in 2012.
Now there are signs that things are turning around. Over the past three years, Lotus has been selling closer to 30 cars a month in its home market. Revenue is up, thanks to a combination of cost cutting and sales of higherpriced, limited edition models. Last month, the company said it was on track to be profitable for back-to-back years for the first time since the late ‘ 90s. Chief Executive Officer Jean Marc Gales has nursed the company back into the black, if barely, and he has reason to be optimistic.
Lotus is about to be rescued by the same Chinese billionaire who bought Volvo Cars, just in time to help it maneuver the challenge of trading after Brexit. A controlling stake in the company- 51 per cent-has been sold for US$ 65 millio( RM292 million) to Li Shufu’s Zhejiang Geely Holding Group, giving Lotus a deep-pocketed parent.
“This is fantastic, the best thing that could have happened to us,” said Gales, who joined Lotus in 2014. The deal, announced in June, is expected to close this month.
Founded in 1952 by a scrappy engineer, racer, and frenetic entrepreneur named Colin Chapman, Lotus has teetered on a knife’s edge for much of its 65 years. Early on, Lotus turned out a string of successful racing cars, including Formula 1 and Indy winners, with such drivers as Jim Clark, Ayrton Senna, and Andretti.
A procession of groundbreaking road cars followed, including the fiberglass-bodied Elite in the 1950s, the Elan roadster in the ‘60s, and the mid- engined Esprit in 1976.
In the British TV hit “The Avengers,” Diana Rigg’s Emma Peel drove an Elan, an early product placement. In 1977, Roger Moore’s James Bond roared through a tiny Italian seaside village in an Esprit in “The Spy Who Loved Me.”
The white Esprit outraced a motorcycle, car, and helicopter on a winding road before launching off the end of a pier and transforming into a submarine ready for underwater battle.
Behind the glitz and reputational success, the company bled cash and was rarely if ever on sound financial footing, with Chapman constantly juggling money between the car business and his other projects. A bevy of ventures into yachts, microlight aircraft, and bicycles rose and sank on his watch, while Lotus continued to attract a following for the cars’ handling excellence.
Then, in 1982, Chapman died of a heart attack at 54 at the height of a scandal: Lotus had been hired by the DeLorean Car for engineering input, but DeLorean collapsed amid accusations of defrauding the UK governmentwith Chapman’s help. Lotus’s chief financial officer would go to jail for three years.
Despite the turmoil, Lotus was still revered for engineering, aerodynamics and innovation. GM took over the company in 1987, only to lose interest and offload it in 1993 to Italian entrepreneur and Ferrari dealer Romano Artioli.
Three years later, a bestseller would arrive to save Lotus and undergird its next two decades in business: The Elise, named after Artioli’s granddaughter, admired for its feather weight, bonded aluminium chassis, and superior handling. Thanks to the Geely deal, a new Elise could arrive in 2020 for sale in the US, Gales said. — WP-Bloomberg