GEELY PLOTS RESCUE OF U.K. CARMAKER

Thanks to Chinese takeover, new Lotus Elise could arrive for sale in 2020

AN assembly hall sits rusting on a 22.25ha 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 favoured 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 line-up 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 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 manoeuvre the challenge of trading after Brexit. A controlling stake in the company — 51 per cent — has been sold for £51 million (RM277.5 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.

Thanks to the Geely deal, a new Elise could arrive in 2020 for sale in the United States, said Gales.

Geely, little known outside of China, has surprised analysts with careful husbanding of engineering and executive talent at Volvo and other acquisitions.

Volvo has been thriving under Geely, which appears to operate on the seemingly revolutionary principle that the parent company provide cash while the existing engineering and design teams get on with what they do best.

The Swedish brand set a sales record last year and made a splash in July when it announced a move to an all-electric or hybrid lineup. In just two years, all its new cars will come with an electric motor, the automotive industry’s most aggressive target yet in the march towards the internal combustion engine’s demise.

After the Volvo deal, Geely in 2013 purchased London Taxi International, which makes London’s distinctive black cabs in the English Midlands. The company plans to release an electric version this fall.

Lotus could be next on the list, providing essential engineering skills as Geely ramps up production at home and abroad. Under such a benign owner, quirky Lotus could thrive.

Lotus has a longstanding association with electric vehicles. The company built and helped engineer the very first Tesla, the Roadster, in 2008. The Roadster was based on Lotus’s groundbreaking Elise.

Electric cars could be a fantastic opportunity. But, Gales said it has to be a Lotus — lightweight and able to handle corners alongside any great sports car.

“In two or three years, battery cars will be much higher performing than they are currently because technology moves on,” he said.“It could be a really good thing to be the first one to do an electric car that doesn’t weigh two tonnes.”

Lotus could also re-issue classic models, or get into the business of restorations or certified old car sales, a lucrative sideline already plumbed by Jaguar Land Rover, Mercedes, Porsche, Ferrari, and other luxury carmakers.

Gales hinted that with Geely’s funding, Lotus could even produce an sport utility vehicles, as anathema as that may sound to enthusiasts. Bloomberg

BLOOMBERG PIC Lotus Cars has sold a 51pc stake to Zhejiang Geely Holding Group for £51 million, giving it a deep-pocketed parent that will help it to survive the United Kingdom’s leaving the single currency.