Future of Lotus

[NedaSay]

Wow!!! Proton is gunning for it this year!!!

Here comes the 2017 Lotus APX based Proton Extrema final production version :

 

http://paultan.org/2016/04/01/proton-extreme-suv-brochure/

It appears somebody at DRB hicom has decided to go it alone big time...  The Extrema looks a lot like the stillborn 2014 Youngman T5

 

That means that Proton got every IP back andThings are really kicking into higher gear at Lotus Parent company lets hope they follow suit and it's not all bravado and posturing.  Car's expected to welcome the 1.5 TGDI and probably the 2.0 E01 and AWD.

Great to see the APX design finally come to market, the Lotus SUV has its platform, good to go even if I expect it to be upgraded and updated compared to the Extrema. Looking at that update black APX on lotus website the Extrema is very true to its prototype.

 

 

APRIL'S FOOL!!!!!

Edited April 1, 2016 by NedaSay

[Jacques]

Looks like a Dacia (Romanian car with Renault engine) like already running on the roads in Eastern Europe.

So, for Lotus, what is this car supposed to do? Get Capital flow into Lotus, so they can develop and advertise, so they can sell more sportscars?

To he bonest, the above car could be anything from any company, and looks completely ordinary (read: dull and boring). Would I buy one? No.

Oh well, it's first of April, so no Money for Lotus anyway...

Jacques.

[Bibs]

Things are not looking rosy at Proton...

http://www.straitstimes.com/asia/se-asia/najib-mahathir-clash-proton-in-for-a-bumpy-ride

[Frickin_idiot]

Very concerning, my worry is that the holding company withdraw funding from Lotus to prop up their ailing operations within their home market.

[NedaSay]

Wait it may get worse before it gets better, if it ever does, the new transportation minister just destroyed Proton business model plain and simple...

http://paultan.org/2016/04/01/miti-releases-statement-on-the-current-state-of-proton/

Here's what the Minister said:

Quote

1. The decision made by the government to go into heavy industries, including the automotive sector, in the mid-1980s was a bold and courageous one. However, the government cannot continuously protect these industries.

2. Other countries such as Japan and South Korea have protected their automotive industry, but these measures were short- and medium term in nature and were eventually abolished.

3. Proton, which is our national car project, needs to graduate from this protection.

4. Since I became the MITI minister in 2009, I have been briefed by the senior management of Proton of the issues and challenges faced by the company on a regular basis. I have met with both the previous and current management teams and shareholders of the company.

5. In 2009, the company presented to me its restructuring plan which aimed to improve the quality of its cars, to boost exports and to make Malaysia a hub for the automotive industry in the region.

6. In 2012, following the takeover of Proton by DRB Hicom, the new owners came to see me and they presented another restructuring plan to make Proton more competitive. They also highlighted a number of ambitious plans to boost exports.

7. The National Automotive Policy in 2009 clearly stated the need for Proton to team up with strategic foreign partners. In this extremely competitive line of business, there is a need to set aside high capital resources for Research & Development (R&D). Scale is also crucial. Proton currently has neither of them.

8. The problems faced by Proton are very challenging. The company’s share of the domestic automotive market hit a peak of 74% in 1993, but currently hovers at 15%.

9. Since its establishment in 1983, the government has provided grants, various forms of assistance as well as taxes forgone to Proton to the tune of about RM13.9 billion in total. There has been intense discussion between MITI and the senior management of Proton on the future of this company in the past six months. Proton’s management has also made a number of presentations to the Economic Council chaired by the Prime Minister.

10. Our observations on the current state of Proton are as follows:

i. The company is a relatively small player in the global context and thus not able to compete with other foreign companies unless it can substantially increase its exports.

ii. Proton is suffering a problem of underutilisation – about 35% of the available capacity in each of its two production plants is being utilised. The decision to have two plants is probably one of the mistakes made in the past by Proton.

iii. About three years ago, Proton almost struck a deal with a renowned foreign player but at the last minute decided not to proceed with the proposal. Had this collaboration been realised, we may have seen an improved performance by Proton in the subsequent years.

11. Malaysia currently has two national car projects, namely Proton and Perodua. The latter turns out to be a more sustainable model. Perodua Manufacturing, which is 49% owned by Malaysian shareholders including PNB, has a joint-venture with Daihatsu and Toyota, and is a profitable company.

12. Last year, a number of Proton vendors came to see me on a few occasions and shared their problems. Following that, MITI injected RM100 million to provide soft loans to alleviate their burden. Even then, it has come to my attention that some of the vendors may face serious challenges if Proton continues to operate at the current level of production and sales. A few of them might be out of business in the next three to four months.

13. In view of the very serious nature of the problem, the government believes that the current business model adopted by Proton is not sustainable. The government has been seriously deliberating Proton’s request for assistance for grants and soft loans. It is a major request and the government needs to be thorough with its evaluation as a lot of public money is involved. We need to be particularly prudent in allocation of resources at this time when our national revenues have been seriously impacted by falling oil and commodity prices.

14. Having said that, I would like to assure Proton employees, vendors and the Proton ecosystem that their interests will be taken into consideration before we make any decision on its request for assistance.

15. If the Government decides to assist Proton, this would be made subject to several conditions including:

i. Proton needs to immediately identify a strategic foreign partner.

ii. The company must be professionally managed.

iii. There must not be any interference in its business.

iv. Some tough but necessary measures must be put in place for the long-term sustainability of Proton.

16. I have been informed that there were instances when Proton appeared to be unprofessional in its decision-making process. In order for the government to consider providing financial assistance to Proton, it is important that a competent leadership team be appointed in the company.

17. We note the decision made by Tun Mahathir to relinquish his position as the chairman of Proton. While we recognise the contributions made by Tun Mahathir throughout his chairmanship of Proton, we must not turn a blind eye to challenges faced by Proton and its inability to establish a solid financial footing.

18. In this regard, we hope that the new chairman and senior management of Proton will help towards enhancing the true potential of Proton and pave the way towards a better future for the company.

19. The government remains committed to ensure the continuous growth and development of the domestic automotive industry which would include the transformation of Proton and its ecosystem.

Datuk Seri Mustapa Mohamed
1 April 2016

This will hurt a lot. I'm kind of happy DRB is in the picture as DRB Hicom being the new parent company for both Lotus and Proton and Proton being at best a proxy. Still DRB Hicom will need to align their subsidiaries with a major player... Honda realistically. DRB Hicom is well respected with deals with some major OEM ( Mercedes, Honda...) for manufacturing or distribution.

Proton has always been the pet project of Tun Mahatir, Proton better revised everything now business model, product lines and shelve some upcoming product. I do hope for them that they had their new engine project fully financed and vetted by DRB HICOM before this.  

DRB HICOM has no reason to be displeased with Lotus progress, However this new development may send the SUV project tits up which would be a huge step back for Lotus. 

 

 

Edited April 3, 2016 by NedaSay

[Chris J]

Ouch, you know things are bad when Perodua are held up as a better example than you...

[DaveC72]

Am I the only one that is finding this worrying...? 

For all the positives that Lotus has recently achieved, it's still a likely area for new management to look at and possibly divest. 

 

[NedaSay]

It is worrisome, However the good news or the not so bad news is that Proton is effectively part of DRB-Hicom which is a much more solid player and Malaysia getting rid of their protectionist policies is a good thing, It should push Proton to become much more competitive. DRB-Hicom was the driver behind the arrival of JMG at Lotus and have been doing a fair amount of piece shuffling around at the top of Proton Bhd. The question being how long will DRB-Hicom be willing to float their biggest subsidiary - money pit - without government soft loans...  

Proton has invested massively in new products and R&D of late, they seem to be willing to go the full independent route with a slew of new products coming to market in the next 24 months: the Persona, the Saga which will be based on the Proton very first homegrown platform and already underpins the recently launched Iriz and the Perdana which is based on the Honda accord.  If you add to that the new 7 products engine line ; that's a lot. Launching that many models in quite a short period requires a lot of funding.

 

Now back to Lotus, provided JMG can stay the course and doesn't require additional funding from DRB-Hicom they could be fine for the foreseeable future. However they can just as well be sold as they have have been working hard on shoring their losses and making the company presentable for suitors. The company has been on a diet, the fundamentals are being addressed. The question being, are there any would be suitors for Lotus out there? 

 

 

Edited April 5, 2016 by NedaSay

[NedaSay]

Hot of the Malaysian press: http://www.thestar.com.my/business/business-news/2016/04/05/govt-to-ensure-resilient-auto-sector/

With Tun Mahatir out of the picture Proton could be set for a new lifeline provided they respect their commitment and 5 year plan.

I find it funny that a country like Malaysian which was once considered a tiger does not follow the exemple of South Korea Kia was Purchased by Hyundai and both companies are now in rude health. Malaysia could find incentive for Perodua and Proton to merge...   

[NedaSay]

Well it appears that all will be well at Proton they were just granted another soft loan by the Malaysian government, there are some tiny little strings attached to it but really nothing bad for a $390M payday that will help the company put no less than new 3 cars this year.   

http://paultan.org/2016/04/08/government-approves-proton-rm1-5-billion-soft-loan-special-task-force-set-up-to-oversee-turnaround-plan/

 

[TBD]

With Lotus Cars probably at or near break even this year, I wouldn't worry anyway. For the first time in many years Lotus would actually be worth something and I'm sure the lineup of potential buyers woult be there anyway.

But then, why should Proton even think about selliing?

 

[auRouge]

Spot on. We're in a rapidly growing market and an era where modern interpretations of iconic cars is fashionable! Lotus is now proving itself. 

Really hoping JMG has access to the funds he needs to realise his vision for Lotus. If he doesn't then I'd raise a glass to a bigger fish allowing him to do what's needed. 

Hopefully the Lotus SUV plan works and they capture some of the 500,000 SUV market which will then hopefully bolster up the books and move things forward.

Its going to be tough when you look at the competition. Maserati is about to launch the Levante... It looks really good and is in the £53-55k market.. I guess this is where Lotus will be?!? Against the Audi Q3, Q5, BMW X3, Mercedes GLA, GLE, Jaguar F-Pace, Range Rover Evoque, Porsche Macan (easily the best.) Volvo XC60... It had better be good! 

 

[Advantage]

Surely the past few years have only ever been about making Lotus look attractive to a new investor/buyer? 

[NedaSay]

The fair question being are there any suitable investor out there?  When Proton got an offer for MV Agusta they jumped on it and it was not a great offer. Yet, they haven't sold Lotus, there are multiple possible and obvious reasons.

First, Lotus is of value to Proton and DRB-Hicom as Lotus could embody their progress as "bigger" player in the automotive world and Proton is poised to make much better use of their engineering arm as it is going to produce more self made cars from now (Iriz, Saga, Preve and Exora) as the Satria, Suprima are going to be phased out and only the Perdana is going to use other manufacturer platform (the Accord platform from Honda) Proton is also set to codevelop small cars with Suzuki. So keeping Lotus would be of value considering they can help with ride and handling set up and also engine tuning which they are doing alongside Ricardo on the Proton new engines. However keeping Lotus would be much easier if Lotus was healthy and self sustainable, hence all the work done by JMG since he was drafted in. 

Second, if some companies have informed DRB-Hicom of their intent to buying Lotus they probably did not come up with a suitable number in the eyes of DRB-Hicom.

Third, China, Proton wants in on it, but they arguably don't really have a brand able to cut it over there.  Lotus however  is a known enough brand. So they signed that JV with Goldstar Heavy, a company solid enough - on paper - and willing to get a new 100,000 car able factory built, Lotus only needs to build between 10,000 and 20,000 cars that leaves a lot of capabilities for other cars... Other Proton developed, Goldstar produced, and hopefully not Lotus badged cars. And now that Proton is finally producing its own IP they have something to offer.  

I'm pretty sure if a solid investor, as lets say InvestIndustrial, showed up at Hethel with a meaningful amount of cash and a plan, DRB-Hicom would take notice and offer equity but I'm not so sure they would sell the company out right as they have invested steadily in the past 3 years and probably want to recoup some of this investment.

[auRouge]

Agreed. It's an interesting time. It's now got value and as you say DRB-Hicom wouldnt sell cheap knowing the world loves an iconic British motoring brand. 

JMG from what I've read and seen with my own eyes (FOS 3-11) is passionate about Lotus and hasnt made a mistake yet. He's got everyone focused on what the company stands for and deleted all the BS.

This management is worth investing in this time and will do justice. I'd imagine his "5 year" plan is SUV and money in the bank with derivatives popping out frequently and then when there's cash a replacement for the Elise and hopefully an Elan and Esprit! If the cars had the benefit of some investment who wouldn't by one of your bored and want something different? Jag and Aston are demonstrating the world loves British cars.

Who might buy it? (Just don't say the Germans!?)

[NedaSay]

28 minutes ago, auRouge said:

Who might buy it? (Just don't say the Germans!?)

That's a good question indeed over than VW Group which has been all about collecting brand under Piech and FCA which have their own bizarro we want to merge with everyone strategy... None would be suitable in my very personal opinion. Which major OEM would be a likely buyer: 

Not any german as in my eyes they just don't need it.

The Americans (Ford and GM) have significantly reduced their brands portfolio to focus on their key core brands, Ford has even been rumoured a while ago to put Lincoln on the chopping block as it did very little for the company bottom line. GM (Chevy, Cadillac, Corvette, buick and Opel/Vauxhall/holden) still has too many but is stuck with them even though they tried to offload Opel.  

The Japaneses, Honda has Acura in the US and the NSX ; Nissan has Infinity and the GTR and is part of the Renault Alliance which is about to prop Alpine ; Toyota has Lexus, they've been there and done that. As buying a small car maker is not an altruistic thing at all I don't really see them, That leaves Mazda the smallest of the big four which is rebuilding itself and doesn't seem to fit the bill in my book. 

The Indians: Tata or Mahindra, well Tata owns JLR so I don't see the point for them, however Mahindra would be interesting but they seem rather focused on establishing themselves and right now they are all about utility vehicles and subcompact cars.

The Frenches, why would they do that, Renault is focussing on alpine and PSA Group is focussing on DS and a potential return to the US with their french Je ne sais quoi...

The Koreans, Hyundai group... they appear to be busy coming up with their own premium/luxury/sporty brand called Genisys it should keep them busy however they have the cash and have used Lotus engineering services many times in the past but again which company hasn't?!   

That only leaves the Chineses which except for Geely who owns Volvo and SAIC who owns MG are focussed on eating each other to be among the few left standing in a  few years time. However It would make sense for some of them as the Chinese are realizing that it is better to own a true BMW X5 than a cheaper homegrown knock off, it appears the electronics on the X5 are less finicky...  And Goldstar Heavy just signed a joint venture with Lotus parent company so I guess that's a dead end for any other Chinese company except if they decide to gulp Goldstar Heavy group in the process.  

 

The most likely suitor may indeed be a non OEM player willing to buy some equity in exchange for tech or marketing know how or an Emiraty fund, these company would probably rather keep Proton in the picture as they are mostly interested in stability than control. In this regard Aston Martin shareholding structure and McLaren shareholding structure are very interesting and are possibly the model for Group Lotus in the future.            

[NedaSay]

Things appears to be moving fast on the Proton's side of business. According to the Malaysian newspaper The Sun discussions are ongoing between Proton and Suzuki. Proton is reported to possibly open Shah Alam factory to Suzuki for local assembling as the factory is underused. While DRB-Hicom is already a distribution partner for Suzuki in Malaysia. Both companies signed a licensing agreement in 2015 regarding the possible rebadging of cars but now things seem to be going much further.

It is interesting that two companies that have been linked to the VW group before opting out of their respective deals are now rumoured to commit to R&D agreement. It is also interesting because Suzuki's current situation ; the brand has pulled out of North America and the company was also overlooked by Toyota in favour of Daihatsu to manufacturer their small car platform. Suzuki has been looking for a tie up for a while. So working with Proton would somehow work as Suzuki is too small to deal with all its R&D needs, splitting cost on R&D and manufacturing in still relatively lower cost Malaysia could be good for this smaller Japanese company.  As for Proton and its need for a strategic partner, Suzuki is a global car maker even though they have no presence in the US any longer, this carmaker footprint is still quite large with presence in Europe, South America, Africa Asia and big licensing deal in India with Maruti. Suzuki does specialize in small cars and compact crossover, they have AWD tech and a proven track record at helping other car maker as proved by their successful deal with Maruti.

 

 

   

[Bibs]

New Chairman for Proton, the catchy named Datuk Seri Syed Faisal Albar Syed Ali Rethza Albar.

http://www.theedgemarkets.com/my/article/syed-faisal-albar-proton-chairman

[DaveC72]

Where's Nico?

He's usually first to the punch on these articles...

[Barrykearley]

Bob for short ??

[21gg]

Just rolls off the tongue doesn't it lol!

Boss..........I think.

Gav

[LotusLeftLotusRight]

# You can call me Al #

as Paul Simon once warbled.

[NedaSay]

On 5/6/2016 at 03:57, DaveC72 said:

Where's Nico?

He's usually first to the punch on these articles...

I was working round the clock on a symposium over the last few days, so not much time to keep track of what's going on at Proton...

The new chairman is a DRB-Hicom company man so not that much to report, Harvard Business School alum, former PWC,  he's collected executive positions in a bunch of Asean corporation... By all account a safe pair of non-controversial, apolitical,  and rather young hands is now at the helm of the company, he's 49. And he's now collected a fair amount of honorific titles...   DRB-Hicom is tightening their grip on the Malaysian "national" carmarker, the new boss.  Considering JMG is getting the job done  and Proton needs to complete their own turnaround plan, SFA and JMG should be able to work in good intelligence provided JMG keeps the both going steady and finds way to finance the company that have no negative impact...    

 

[NedaSay]

http://www.autoexpress.co.uk/car-news/best-of-british/95600/best-of-british-lotuss-tough-turnaround

Considering this article:

http://www.nst.com.my/news/2016/05/145556/protons-lotus-suv-plant-china-likely-start-construction-later-year

It looks like JMG was efficient enough for DRB to sign and seal the SUV... For the sake of Lotus I really hope the fit it with AWD a high rider will cut it with some but some demanding client will demand/exige an all weather vehicle.  

[Bibs]

http://www.edp24.co.uk/business/remarkable_turnaround_sees_car_maker_lotus_profitable_for_the_first_time_in_its_history_1_4586996