Lotus Type 131 - The Rumour Mill

[jep]

A fellow TLF-er made a good point to me the other day. Lotus do not seem to offer attractive finance deals. He said it was a lot easier for him to buy a BMW M car or Porsche than a Lotus - so Lotus was never even a consideration. 

Lotus has to attract buyers who have no significant capital as a deposit. 

Emira needs to be a value price point and easy finance. The new modernised factory is I assume part of the process to lower the unit price of making (or rather assembling) cars. 

Justin 

 

[Likuid]

On 22/05/2021 at 09:06, brightoncorgi said:

Emira needs to beat the competitors when reviewers compare it to the competition during tests.

Bingo. Beat the competition. Its already very hard to beat them on price due to Lotus production capabilities and economies of scale, so you have to at least beat them in performance. Its easier to get away with being more expensive if you beat the competition while you are at it. One big issue with Lotus (IMO) is perceived value. Evora GT is a great car, but on paper its value doesn't seem to match up well against others in that price bracket and since your dealership network is poor you can't get anyone to come in to even test drive the car, so you have to entice them with some bait. Clearly beating a similarly priced Cayman in a track test is something that will help. I bet there are many people in the market for a sports car that watched an Evora GT review and once the price and performance were mentioned lost interest quickly. The remaining people still interested looked up the closest Lotus dealer and found out tis a 3 hour drive from their house.

[C8RKH]

I see a lot of McLarens and similar priced cars on the road, from listening to conversations with owners at track meets etc it seems that a lot of these are purchased on the never-never.

People put down c. £25k deposit, then sign up to £1.3 -2k per month on HP/PCP and keep the car for say 1-2 years. They then swap it in for something new and similar and repeat the cycle (so another £25-30k and another 12-24 months at £1.3-2k per month) and so it goes.  They never actually "own" the car and are effectively paying the depreciation charge (I assume the vast majority of these owners have the ability to net off the VAT through their business accounts).  It seems a lot of these cars are bought that way and it is why many of them end up with 3, 4 or even 5 owners in 4, 5 or 6 years.

Think about it, a £180k McLaren car will have around £36k of VAT in the price, so £144k net. Minus the deposit of say £25k and £15k of annual payments. That gives you a balance of what £90-95k after 2 years and these cars are priced for around  £105-110k on the forecourt. Sounds about right.  So for around £2.5k per month you can have a brand new £180k supercar, with full warranty etc, every 2 years.

Personally, a finance agreement like that would keep me awake at night. Scary stuff. But for a lot of buyers, £700 per month plus on a car finance deal seems to be the norm. Nuts.

So, finance deals is what gives access to the "brand". Celebrity helps to establish the brand (wonder how much it cost Audi for Tom Hardy for the latest etron GT adverts?).

The Evora did not sell not because it was not a great looking car. Not because it was too cheap or too expensive. Not because it was not a superb drivers car.  It did not sell in numbers purely because nobody knew a thing about it. They did not know it existed. The vast majority of people, even now, 12 years from its launch simply still do not know what an Evora is. End of.  The marketing was non existent almost, crap and therefore ineffective.  We can try to say it wasn't, but the reality is in the sales numbers. The brand awareness was nowhere.

Journo's loved it, but they were the only ones who drove it, along with diehard brand loyalists who had eagerly awaited its launch and jumped into their 2nd, 3rd, 4th or more Lotus of their ownership lifetime.

So for the Emira to be a success it needs to:

1. Be marketed so people understand what it is. How it goes. Why it is special

2. Be supported by a vastly improved dealer network (need more dealers and in some cases much better dealers - we all know the truly great dealers and the ones to avoid) 

3. Be available with a comprehensive warranty (if Ferrari can offer 7 years, why can't Lotus offer 5?) and an attractive set of finance options to suit all (large or small deposits, large or small monthly payments etc)

4. It needs to be better than a Cayman. Not as good as. But better. It needs, from a price and performance perspective to smash the Cayman out of the park from a driving, build quality and looks (the latter should not be hard let's face it as the Cayman is no "looker") perspective.  Every journo, "influencer" (god I hate that term) etc who drives it needs to be comparing it to the Cayman and proclaiming the Cayman is dead!  

5. Lotus needs to make itself "cool" to the masses. It can be done. McLaren did it in what 12 years from nothing as a "road" car brand. But it did through launching with the MP4 a car that quite literally rewrote the rule book on cool, performance, etc. literally the bosses of Porsche, Audi, Ferrari and Aston Martin must have been shitting themselves when the pure performance of that thing became clear.  Who cared about the issues with build quality back then?  No one, the clamour to have a McLaren was unabated from launch for the first 2 years.

We'll get a good idea in a few weeks at Goodwood as to whether the car looks, goes and performs as it needs to to be a winner. But without fixes to the dealer networks, finance, warranty etc then will it really fly, or just be a glimmer of what it could have been, like the Evora?

 

 

 

 

 

[Frickin_idiot]

On 22/05/2021 at 14:17, jep said:

A fellow TLF-er made a good point to me the other day. Lotus do not seem to offer attractive finance deals. He said it was a lot easier for him to buy a BMW M car or Porsche than a Lotus - so Lotus was never even a consideration. 

Lotus has to attract buyers who have no significant capital as a deposit. 

Emira needs to be a value price point and easy finance. The new modernised factory is I assume part of the process to lower the unit price of making (or rather assembling) cars. 

Justin 

 

This 1000%.

When I look around the car park at work I see so many new Mercedes and BMW's driven by people I know wouldn't have 40K + available to purchase outright. 

 

A range of more affordable Finance options need to be available at launch to ensure that a momentum is built up.

[Gashead1105]

Actually, I think 50:50 0% finance is pretty great to be honest. That's what got me over the line with buying a brand new V6 exige. I'd like something similar for the Emira but the key thing would be 0% interest rate. Toyota have sold out the UK allocation of GR Yaris but no doubt were helped by a frankly stonking finance deal - 8k down, 299 per month on 0% interest. I'd take something along the lines of 25k down, 500 per month  for 3 years and 30k balloon. 

[jep]

And lower the price point, which I sincerely hope the new factory processes will allow. 

Elise at £35K-£40K would have been a consistent strong seller at decent volumes per annum. It is niche at £45K+. Base Evora would have done well in 2010 (credit crunch ignored) at genuine £45K to £50K with 276bhp AND low deposit finance.

Evora GT430 at showroom price of circa £120K with 430bhp is non-starter for anything but specialist sales. 

I have lost count of the passengers I have had in my 2010 Evora NA who don't believe I paid late £20k's for it.

Any 4 to 5 year old Lotus looks value (Evora circa £55K, Elise circa £32K) but new ones just sound expensive to the layman. That says it all.

Justin

 

[Bravo73]

1 hour ago, Gashead1105 said:

Actually, I think 50:50 0% finance is pretty great to be honest.

50:50 would still require the prospective Emira purchaser to have £30-45k in cash available. That is probably considerably more than the average BMW/Merc PCP/lease purchaser has kicking around. 

[C8RKH]

3 minutes ago, Bravo73 said:

50:50 would still require the prospective Emira purchaser to have £30-45k in cash available. That is probably considerably more than the average BMW/Merc PCP/lease purchaser has kicking around. 

Agreed. £40k Audi's are on something like £1500 down and £600 a month. No option to "own" the car either.

Where Porsche, Audi, BMW, Mercedes really do well is the leasing proposition:

Just checked and a £50k Cayman is £5k down and £560 per month for 4 years (maximum of 5k miles a year). 911S PDK is £9k down and £999 per month for 4 years (max 5k miles pa).  So that is £57k over 4 years on a £100k car.  Porsche would then look to sell that car for around £75k based on <20k miles and 4 years old (just checked Autotrader for 2017 911s under 20k miles).

So technically Porsche / Dealer would make around £20k cash on the deal.  Great for the dealer, not so the leaser or subsequent buyer.

 

[Gashead1105]

Personally I'd rather have a larger deposit and smaller monthly payment - BMW M3 on 48months(!) pcp finance is 7.5k down but almost 1k per month - so basically 50k over 4 years - and no doubt an enormous balloon, which is flipping ridiculous although I guess that's what people who buy these cars want. Not for me, thanks. I guess the numbers I give above get to a similar position but personally I can't stomach the thought of 1k per month going out of current cash flow. 

[C8RKH]

29 minutes ago, Gashead1105 said:

I can't stomach the thought of 1k per month going out of current cash flow

I agree!  But then that is the only way many people can afford to drive these cars. It is why you see so many new £30k+ german cars on the roads all the time. People put the deposit on the credit card then "find" the monthly payment.  Great right now whilst credit is quite cheap, but if inflation goes up and interest rates follow you are going to see an awful lot of people in the shit as their mortgage and other monthly bids rocket and then that £1k a month on the car becomes a real issue....  But people don't think ahead - you know, put £1500 a month in an ISA for 3 years and you have £54k+ cash to buy a car outright!  Oh no, but I'd have to wait for three years and I NEED it now yadda yadda....

 

[exeterjeep]

1 hour ago, C8RKH said:

Agreed. £40k Audi's are on something like £1500 down and £600 a month. No option to "own" the car either.

Where Porsche, Audi, BMW, Mercedes really do well is the leasing proposition:

Just checked and a £50k Cayman is £5k down and £560 per month for 4 years (maximum of 5k miles a year). 911S PDK is £9k down and £999 per month for 4 years (max 5k miles pa).  So that is £57k over 4 years on a £100k car.  Porsche would then look to sell that car for around £75k based on <20k miles and 4 years old (just checked Autotrader for 2017 911s under 20k miles).

So technically Porsche / Dealer would make around £20k cash on the deal.  Great for the dealer, not so the leaser or subsequent buyer.

 

But sometimes when the car gets handed there is extra to pay if you have exceeded the mileage or if the car has some minor damage/marks etc.

I was overhearing a conversation at a Jeep dealer, the service guy was talking to a customer and suggested that the person returning the car get any repairs done before bring the car back, as this would be cheaper than letting the car come back and then the finance company charging for the repair.

[brightoncorgi]

Pointless to bring US financing as it is dramatically different than in the UK.  If you had a 25% down and -3% interest; you'd never sell a car in the States.  Never mind the 50-50 financing promoted in the this thread.

[C8RKH]

1 hour ago, brightoncorgi said:

Pointless to bring US financing as it is dramatically different than in the UK.  If you had a 25% down and -3% interest; you'd never sell a car in the States.  Never mind the 50-50 financing promoted in the this thread.

What sort of deals sell cars in the US Moses?

2 hours ago, exeterjeep said:

But sometimes when the car gets handed there is extra to pay if you have exceeded the mileage or if the car has some minor damage/marks etc.

Absolutely!  Just another way of making money after all, how many stone chips on the bonnet is wear and tear, and how many is not?  However, you get told all of this when you take the deal out - 5k miles pa and xx pence per mile for each mile over the total allowed mileage.

[LotusLeftLotusRight]

Yes spending so much on the never-never just doesn’t sit comfortably with me. I guess we’re all products of our upbringing. If you’ve never had to live through high borrowing rates, then you won’t be so averse. People like me are definitely in the small minority nowadays though. Just ask any new car dealer. Many of them put the monthly payment price in the windscreen these days, rather than the “buy-it-now” price of old. I suppose you at least know that the rate will be fixed for the duration of the deal, so as long as your personal finances remain OK, then you can enjoy a flash new car every three years or so. 
I would only buy a new Emira if I had enough money to buy it outright, either from savings or part exchange plus cash. Oh and the 50:50 makes sense too.

[C8RKH]

I'm with you @LotusLeftLotusRight.  I have less of an issue with the 50:50 or 0% interest rate offers.  3 years interest free gives you 3 years to save the balloon to buy the car outright, which builds your deposit for the next one etc.

Same with 50:50, it gives you the two years to "save" the 2nd payment to cover the bill.

It's the £2k plus £500 a month for 36 months with no chance to "own" the vehicle that gets me. Bonkers

[Likuid]

7 hours ago, jep said:

And lower the price point, which I sincerely hope the new factory processes will allow. 

Elise at £35K-£40K would have been a consistent strong seller at decent volumes per annum. It is niche at £45K+. Base Evora would have done well in 2010 (credit crunch ignored) at genuine £45K to £50K with 276bhp AND low deposit finance.

Evora GT430 at showroom price of circa £120K with 430bhp is non-starter for anything but specialist sales. 

I have lost count of the passengers I have had in my 2010 Evora NA who don't believe I paid late £20k's for it.

Any 4 to 5 year old Lotus looks value (Evora circa £55K, Elise circa £32K) but new ones just sound expensive to the layman. That says it all.

Justin

 

I think Windle said Lotus was selling 1k - 1.5k cars (total) a year. I would hardly call that strong selling. If the Elise was doing so well for Lotus at this point they would have tried to figure out a way to continue it and get it U.S. approved.

If I were Lotus I would go for performance over price. I don't see how it makes business sense for such a small car manufacturer to fight for the sub £90k scraps with companies that have the ability to produce the amount of cars in a day that Lotus can in a year.

I do agree though. If you are offering a 430HP car then you are going to have need much more competitive pricing.

Edited May 24, 2021 by Likuid

[jep]

25 minutes ago, Likuid said:

I think Windle said Lotus was selling 1k - 1.5k cars (total) a year. I would hardly call that strong selling.

At over £50K price tag for Elise. That is my point. At £35K to £40K, Elise I think would be a strong seller - in Lotus terms, that would be 1500 to 2500 units per annum. S1 used to sell 3000 per annum.

Since the turn of the century, Lotus have not been able to make cars cheaply enough. I am hoping this will change with the Geely investment.

Lotus have never been in the power game - it almost flies in the face of ACBC DNA. Sure, no reason to do the same as the past but in reality, Lotus have little hope of finding stonking BHP at a reasonable price. I may be very wrong and they reveal a 600bhp weapon but I very much doubt it.

Justin

[chipp]

Definately clocked a road going Evora bodied mule just now.

The arches were extended and may have had twin exhausts.

Didn't realise until it passed me that it looked different.

[brightoncorgi]

3 hours ago, C8RKH said:

What sort of deals sell cars in the US Moses?

Zero down leases are common as are leases with like $1500 down.  Auto financing at under 2% up to 72 months with just like 1-2K down.

11 minutes ago, jep said:

Since the turn of the century, Lotus have not been able to make cars cheaply enough. I am hoping this will change with the Geely investment.

Automation where needed will drive the price down and quality up.  Their presentation really made it out to sound like this will be the best manufactured production Lotus ever. 

[62dave]

Just to chime in from the perspective of a low deposit, high monthly “buyer”... this is the approach I took as I’m not a good saver and I’ve invested what savings I had into doing up my house. I could try and save for a few years to buy the car I want but I’m greedy and impatient!

I know this is not the most financially responsible approach and it does bug me when I look at what I owe verses the value of the car!...

However as others have pointed out this is how the vast majority of people finance their vehicles these days and Lotus need to embrace that. When I’ve been to lotus dealers I feel a bit embarrassed that I’m not in a position to put tens of thousands down against the car I want. Other brands actively encourage and embrace that sort of buyer and make it very easy to buy a new car (easier/cheaper than buying a nearly new one!)

 

 

[DaveC72]

36 minutes ago, 62dave said:

Just to chime in from the perspective of a low deposit, high monthly “buyer”... this is the approach I took as I’m not a good saver and I’ve invested what savings I had into doing up my house. I could try and save for a few years to buy the car I want but I’m greedy and impatient!

I know this is not the most financially responsible approach and it does bug me when I look at what I owe verses the value of the car!...

However as others have pointed out this is how the vast majority of people finance their vehicles these days and Lotus need to embrace that. When I’ve been to lotus dealers I feel a bit embarrassed that I’m not in a position to put tens of thousands down against the car I want. Other brands actively encourage and embrace that sort of buyer and make it very easy to buy a new car (easier/cheaper than buying a nearly new one!)

 

 

I'm with you.  Right now, having just taken a chunk of the mortgage, an affordable finance deal is what will clinch the Emira for me.  I really don't doubt I will want one at launch  - but it would be a new car purchase which, if we're brutally honest here, is what Lotus desperately needs.  Most of us here (no, not all) are serial used buyers of Hethel's output.  That won't help the Emira at launch and so the finance deals are what will get people to buy new, where in normal circumstances they will be stalking the soon to be launched "EMIRA market watch thread" routinely talking down prices if they're on the hunt and talking them up if they're selling.

Genuinely I seem to approach this from a less lofty point of view, and I can tell you now that most of my peers do, too.  Leasing/PCP or whatever has probably kept the innovation in the automotive industry going.  There is certainly no other way that we would not have seen the constant replacement of models by  manufacturers without it.  It allows people to buy what they don't need, but want.  I'm not saying it's right.  Just that it has allowed the volumes for new car sales to stay artificially (maybe, maybe not) buoyant.  Incidentally, as I buy most of my cars after someone else has taken the hit, I'm kind of okay with it.  More importantly, I'm not above taking the hit to be in the car I want

 

[C8RKH]

I don't think it is being lofty to not want to have a huge amount of debt around your neck. I guess we all have a different PoV, what is good for one, is not the other. I personally just don't like having a large amount of debt. I appreciate others are happier to deal with it. The point is, it's down to individual choice. That's it really.

[jep]

1 hour ago, 62dave said:

Just to chime in from the perspective of a low deposit, high monthly “buyer”... this is the approach I took as I’m not a good saver and I’ve invested what savings I had into doing up my house. I could try and save for a few years to buy the car I want but I’m greedy and impatient!

I know this is not the most financially responsible approach and it does bug me when I look at what I owe verses the value of the car!...

However as others have pointed out this is how the vast majority of people finance their vehicles these days and Lotus need to embrace that. When I’ve been to lotus dealers I feel a bit embarrassed that I’m not in a position to put tens of thousands down against the car I want. Other brands actively encourage and embrace that sort of buyer and make it very easy to buy a new car (easier/cheaper than buying a nearly new one!)

 

 

Exactly the point my pal was making, hence Lotus was not on his radar.

He now has a Lotus - courtesy 'track 2' of The Beatles best selling studio album.

Justin 

[brightoncorgi]

If interest is near 0%, why even pay cash for a car if you could so say?  Certainly it's a weight of the shoulders knowing you don't owe anyone anything, but one could argue that the money in your account could make more than 1-3% in some kind of investment.

If I finance a new car, I like to have it paid off around the time the warranty ends.  Not a fan of an auto repair out of pocket and a big monthly payment.

[Likuid]

20 hours ago, jep said:

Lotus have never been in the power game - it almost flies in the face of ACBC DNA. Sure, no reason to do the same as the past but in reality, Lotus have little hope of finding stonking BHP at a reasonable price. I may be very wrong and they reveal a 600bhp weapon but I very much doubt it.

I agree, my only point is, if you want to attract new buyers you have to give them something that will attract them. Better prices than the competition is one way of doing it. However, again, Lotus has a lot of hurdles already in their way. Matching your competition in price and performance doesn't completely solve those issues. You have to beat them at least in one of those categories (preferably both). So unless this new production facility allows Lotus to sell cars for so much cheaper than the same in-class competition, then I feel the better approach would be beating them in performance.

However, in the end, I agree with you. Based on what we know at this time it sounds unlikely the Emira will not be over 500HP. So unless Lotus pulls a rabbit out of their hat in July and either shows off some performance numbers we weren't expecting or great pricing I think the Emira may suffer a similar fate as the Evora. Might sell a bit better, because I do expect at least better tech and more modern looks.