Investors encourage Proton to sell Lotus

[USAndretti42]

$200k for a Lotus! Really? Good luck with that one.

That's precisely what the company is up against and why so many up-market race series are seeing Lotus sponsorship in order to raise the perceived level of Lotus. How many of us have been asked by people, "A Lotus, heh? Who makes those?" With the efforts being put in by the company nowadays, people will know Lotus as a brand in itself and the kit-car past will be consigned to history.

[TBD]

Build high quality sports cars for less than 50K and earn money doing it? Not possible in todays world. You're competing against robots and chinese suppliers dictating todays market costs.

Going upsclae ist the only chance for Lotus an, luckily, DB recognized this early.

Of course, Lotus could also cut the staff salaries by 50%. I'm sure that would get great apraise in Hethel.

[DarrylV8]

£50k base & 1,100kgs?

If only it was 1100kgs but i agree with TK £50K for the base model is cheap

[Guest surferphil]

Build high quality sports cars for less than 50K and earn money doing it? Not possible in todays world. You're competing against robots and chinese suppliers dictating todays market costs.

....

Not at all in reality.

It is possible and Chinese suppliers don't dictate anything, I don't think they make much at all when it comes to new cars.

[Gus82]

Not at all in reality.

I'm not so sure about that. When VW, Audi and Porsche all cancel a joint sportscar project as they can't make the figures add up, I can't see how Lotus will manage it.

The only car ready to launch that would be of similar price and volume to the Elise is the Alfa Romeo 4C, and I expect that car to be replaced by something more conventional and Chrysler based in the longer term. Fiat can afford to take a small hit on this car or just break even as it will help re-launch Alfa in the US and China. However Lotus need to start making significant money on everything they invest in, at least until the business is in a more secure position.

[Guest surferphil]

I doubt you have the full truth about the Germans joint effort, they cant make much add up between them and they never could.

Couldn't make an F1 car either. Most of their decent tech is outsourced, look at the Bugatti Veron engine, German? nope! They just know how to hide it and their marketing is brilliant. I'd rather pay for a decent car than a car that was built with whats left over from their marketing budget.

Why did the MX5 sell so well? because it was advertised on prime time TV every day.

VAG are cheap because their cars are designed to be made by robots not designed to be good, I have never driven a decent VW and owned and driven a lot. The most overrated car was the VW golf and the biggest disappointment I have ever bought.

Utter crap. Fiat have been loosing money for years I will be surprised if Italy is allowed to even keep its currency its so badly in debt.

Expect everything from these dinosaurs to be old crap in drag.

If Jaguar can make the XF and Range Rover can make the Evoque for £30k then whats the Germans/Italians excuse!

Lotus have the engineering VAG, Porsche, Alfa, Fiat only dream of!

Watch out for the new Jaguar CX-16 when it becomes the X-16, £50k and you will be amazed at what they will deliver for that!

[simonb]

Alfa 4c is slipping big time, a year ago they were promising a production version in Paris 2012, they are now talking Detroit 2014

Agree that the small jag could be really interesting (especially a cheaper non hybrid)

[ramjet]

I went on a drive today with the VIc Lotus club. One guy there had a 1,000k demonstrator that was on the flor for $138k. He made an offer of $130 and got it. Had the rear seats as well. Not his choice, but too good a deal as he said. I can't tell you what else it had other than the IPS box. He said that the dealer said he can not sell the Evoras here and is just about taking any offer for them.

How can such a good car, not sell?

I am sort of failing to understand how a company that can turn out such good cars keeps getting bought then sold, then bought then sold again.

It must be depressing for the people that work there and have been through numerous onsales.

And I think China does have a large influence on car prices in the world. Possibly not in the class that Lotus is aiming at, but certainly in some of the others because Joe Citizen doesn't look past price sometimes. I know quite a few people in WA that have bought Great Wall 4x4's (Hilux copy) as work vehicles. They don't really care how long the car lasts as they use them for business, depreciate them and replace them with another once the one they have throws a rod or whatever.To sel their cars, other companies are going to have to start offering more features at the same price. They just can't. China not influencing the worldwide market?

Think again.

[TBD]

Just start with some simple math:

• Lotus is spending 200 M on developing the Esprit, which is actually a real bargain. Remeber, that has to cover engineering, tooling, pototypes, testing and certification, including crash testing. If we say Lotus builds 10.000 units of the new car that's 20 K on every car sold.
  
• Add direct 3rd party supplies, like seats, ECU, ICE, Instruments, etc. for another 10 K. Remember, the big manufacturers get much higher discounts. In fact the 1000 ICE-units Lamborghini needs costs them nothing,they are just a Bonus for the 500.000 units Audi buys p.A.
  
• Add at least 50 M over the life cycle for marketing, which doesn't get you far in today's world. Makes another 5 K per car.
  
• Next add the dealer commission (15%), or another 7.5 K per car.
  
• Lastly add 5% for guarantee service and reserves, another 2.5 K per car.
  
• Now that you have spent 45 K on every car you can start manufacturing. Iwould be amazed if you get this done within 200 work hours, but already then you are spending no less than 10K on per unit labor cost.
  
• Then add office and plant costs, overheads, interest, taxes, etc., which take at least 15%, or 7.5K per car.
  
• Now try to make a profit of 5% (which won't excite your investors), so add another 2.5K.
  

Add it all up and you have a price of 65K per car. That should get you through 5 years, then start all over again.

Even the big car makers don't earn money on their low volume models. For example Audi never earned a cent on the RS-models. They are just marketing vehicles to extended the life-cycle of the basic A-models by at least one year. It won't be any different for Fiat with the Alfa Romeo 4C.

Want to make money on a 50K car? Build at least 200.000 units over all per year, reuse the major components across all models, better yet, get bought by one of the big manufacturers and share engineering, components and plants with all your sister brands.

[Iconic Ride]

And so we come full circle to the inherent difficulties of a "niche" marque trying to stay alive in a mass volume world. Hand built (or even partially hand built) vehicles are at an intrinsic disadvantage in a largely automated environment. The very cachet that attracts certain buyers (guilty as charged) is a manufacturing albatross when directly competing with the robotic assembly lines of mass market options. The "secret," then, is to continue to produce a product that has so much appeal (to a limited group of aficionados) that a purchaser can justify (rationalize?) the extra cost of procuring a unique vehicle that likely is intended to "make a statement" about the buyer's life style. And, let's be honest, satisfy ego needs. Those needs include a strong desire for "performance" statistics that match the visual aesthetics of the car, and this is, of course, where Lotus have always shined. Their ability to survive all these years has been a direct consequence of their engineering prowess. And much of that effort was devoted to other marque's offerings, as a means of generating more profit....some would even say to offset losses on in house sales.

Well, now that yet another "principals" shakeup is in progress, the waters have muddied up a tad more than we'd like. The new owners seem quite focused on ensuring that the component parts of their organization each "pull their own weight" in profit generation. That should not come as a surprise. The Malaysian government's historical somewhat laissez-faire approach to Proton/Lotus is over. For good, it seems. DRB-Hicom is in "take no prisoners" mode, and I would venture that Group's future is now highly dependent on the rapid appearance of a deep pocketed entity that has a real interest in esoteric sports cars and their following.

[mdavies]

Those needs include a strong desire for "performance" statistics that match the visual aesthetics of the car, and this is, of course, where Lotus have always shined.

Albeit from a limited perspective in comparison to the primary contributors to this discussion, imo a specific illustration of where Lotus' has failed to shine and follow this pretty obvious rule is the inadequate performance of the Evora. It was launched in a below par state, and though just about every otherwise rave review also said "could use more power" Lotus has failed to pump up the oomph, even over three years. It should have been done for MY11, let alone MY12, for both the NA and the S. How different might Evora sales and consequent finances have been. Third parties are now showing what can be done, perhaps with Lotus at last tagging along behind. Pretty basic for a specialist expensive car: "stats that match the visual aesthetics".

Edited February 19, 2012 by mdavies

[Nelly]

Hindsight is a wonderful thing. I think its acknowledged that the Evora was ignored at the expense of the new era models, but thankfully thats been addressed now.

The megafactories programme on Nat Geo this week was a fascinating glimpse into the Evora, and i was really inpressed.

That said, I would have one over its competitors without thinking twice if I could afford one. I chopped a Merc C Class (well built, solid etc) for an Alfa GT (not so well buit, rep for unreliability) and never regretted it. The Alfa had "something" the Merc never had, and I would suspect the Evora would too over a Caymen.

I hope this is all a storm in a teacup as the doubting about the new era did seem to be fading away.

Edited February 19, 2012 by Nelly9000

[mdavies]

..... every otherwise rave review also said "could use more power" Lotus has failed to pump up the oomph, even over three years ......... pretty basic for a specialist expensive car: "stats that match the visual aesthetics".

Hardly "hindsight" today, I suggest - should have been set in initial concept studies!

[simonb]

interesting figures from Ferrari, make Bahars numbers seem credible - "all" they have to do is sell ferrari quality at ferrari money, without the backing of FIAT

http://joesaward.wor...s-in-maranello/

words are

Ferrari was able to report that it has increased its sales from 6,573 in 2010 to 7,195 in 2011, an increase of more than nine percent. This included a mammoth leap in the Greater China market of 62 percent, jumping from 478 sales in 2010 to 777 in 2011. US sales also climbed dramatically from 1,576 in 2010 to 1,958, a hike of more than 24 percent. The British market jumped by a similar percentage to 574. Overall the company recorded revenues of €2.2 billion, compared to €1.9 billion in 2010, an increase of 17 percent. Profits were up as well to round € 209 million.

Revenue includes much more than cars though (unless average ticket price is over €300K)

Edited February 20, 2012 by simonb

[Gus82]

I don't think we have to be too downbeat about all this. I recognise that a lot of people on this forum are dedicated to the current line up and what these fantastic light weight cars represent. However even if Lotus sell 4000 - 5000 £60,000 plus sports and supercars that bring in decent profits and are the main profit generators, I'm sure they will still retain something in the market below this aimed at the trackday market.

It may be that the Elise becomes a bit more of a sub-brand however, aiming to produce fewer of these cars and reducing development funds might ensure that the car is even purer to drive and moves towards what the original Elise represented and not away from it. A real life version of that Hot Wheels toy concept from a few years ago with a stripped out interior and racing harnesses would be brilliant and could be developed seperatley off the current platform quite easily I would have thought.

In the even longer term who knows who might own Lotus, or who will want to enter a joint venture to produce an entry level sportscar and F1 engine (Kia??) or what game changing technologies might be created that make such cars more viable. The bottom line is I would rather that they didn't pursue that Elise concept from the 2010 Paris Motorshow if its going to drag down the company, and the alternative might be better for the real enthusiasts too.

[Gus82]

Well unsurprisingly it looks like the Ethos has been canned!

Everything else is still on the table however according to this article by Georg Kacher: http://www.automobilemag.com/features/news/1204_sneak_preview_lotus/index.html.

Two interesting points are that the Elite is now scheduled for 2015 (I think it has always been slated for late 2013 before), with other new products in 2016 (Elise?) and 2017 (new Evora?).

Whats really interesting though is that the Esprit will be offerred not only as a hybrid but a plug in hybrid too!

[Gus82]

Found this article. Was considering not posting it given the negative title, but there are two interesting points raised in it:

1. The first is an analyst saying that Proton need Lotus as much as the other way around

2. Lotus agreeing a joint venture on product develoment is taking longer than expected

Could the joint venture involve Caterham (remember the press release when the F1 resolution was agreed)?

http://biz.thestar.com.my/news/story.asp?file=/2012/3/2/business/10838107&sec=business

[Kimbers]

Hardly "hindsight" today, I suggest - should have been set in initial concept studies!

You mustn't forget that the Evora was designed as a half way model from Elise to the New Esprit which (before current management) was a more evolved sportier and agressive version of the Evora with a V8 and more performance and a £75-90,000 price tag. It was meant to be a natural stepping stone. However, because of the canning (or redesign) of the Esprit project and all the delays since the new team arrived, its ended up almost as a stand alone model which it was never meant to be.

[Iconic Ride]

Hey, Dany. What say we blow the roof off this puppy?

You make big joke, no?

Nooooooo! It would muss my hair. Fingers in my ears, fingers in my ears.......

Roofs are for wimps.

You got this month's vigorish ready yet, bro'?

Very funny, John. Now when did you say you expected those cam belts to arrive?