Lotus Cars has run into more problem with the spending on new models having been suspended as part of the process during which the Malaysian government will offload Lotus’s parent company Proton to a private conglomerate called DRB-Hicom. This company has yet to decide whether it wants to persevere with Lotus or whether it would be wiser to sell it and get on with the business of selling more practical machine for the Malaysian market. Lotus has been burning up money in recent months and while CEO Dany Bahar wants to be seen as the man who is firmly in charge, he is clearly not calling the shots when it comes to the money supply. The Malaysian government has guaranteed substantial loans to turn Lotus around and these need to be factored in to any deal that is struck.
Freezing all development work means that launch dates are being pushed backwards and thus the chance for Lotus to make more money is being delayed. The problem is that under the Malaysian regulations there is a necessary three-month lockdown period during which due diligence is done. At the end of this period DRB-Hicom will decide whether it wants to keep Lotus or whether it would be happier if it was put on sale. There are no guarantees. All this is profoundly worrying for the many teams that are Lotus-sponsored. If Lotus is left on its own it will need an owner with very deep pockets to pay for all of its ambitions. Some feel that the Lotus plan is completely unworkable and has little chance of success.
From a Formula 1 perspective, the financial health of Group Lotus is of great importance to Lotus F1 Team, which represents the brand in F1 and has a deal to soak up a large chunk of sponsorship every year for the next seven years. If Bahar takes an early bath, the team mauy need to start looking elsewhere for money.
joeblogsf1 
Best dust of the Brawn GP business plan..
The inherent problem with that idea is that Ross Brawn is otherwise employed, and Eric Boulier is not Ross Brawn.
I’m not glad to hear this story as I love Lotus the brand. However Joe you’ve been on the ball as regards to the (unrealistic?) Bahar plan for Lotus and it looks as if the move upmarket may be in jeopardy. Those at Group Lotus may now be wishing Tony Fernandes had been to able to convince Proton he was the man…
As you hint, this may not be good news for the myriad of teams sponsored by Lotus. However could this mean a route in for GenII?
No cos Genii dont have the cash to buy it. They have already done due dilligence on Group Lotus
To be fair I don’t think we know that for sure. Up to now its been more of a case of Lotus being up for sale only if a breathtaking offer is made. If DRB-Hicom decide they may lower the asking price (or give it away along with some or all of the debt that has been built up) to get rid of it off their balance sheet then Genii may be able to do a deal or be part of a deal.
I don’t know where I read it, but one article I’ve read included quotes from Gerard Lopez saying some of what has been achieved recently has been good (therefore some not so good?), and he would still be intrested in Group Lotus if the right situation occured (i.e. the asking price was currently too high).
We’ll need to see what happens but I suspect Genii could still end up owning more than the F1 team.
To be fair I don’t think we know that for sure either.
So Lotus join Marussia, HRT and Force India, who may have to find where they have tucked away the begging bowl, in order to do a proper season with developments. Otherwise most of them will again become mobile chicanes. Would it better to allow the grandees to run 3 car teams – I wonder.
Wilson
Oh Danny Boy – What have you done……
The irony! Having just re-united Team Lotus and Group Lotus, what odds the F1 team and car manufacturer will be split asunder again?
Joe,
Did you see that despite the Dragon Racing IndyCar team turning up to the spring test this week and announcing they would run Sebastien Bourdais, they have done no running because Lotus have not provided an engine.
Have you heard anything about the reason for this? My biggest fear for the Lotus IndyCar engine programme is the risk that problems with Group Lotus stop Group Lotus from paying Engine Developments Ltd (Judd) what they are owed, leading to supply problems later.
For everyone’s sake I hope that if that happened another manufacturer could step in to rebadge the engine developments engines.
On a separate note (sorry for going on!) It’s good to see Hyundai sponsorship on Barichello’s car – even if it is through their construction vehicles division – it’s a start…
Sorry for going on, I will renew my gp+ this week!
None of the reporters who regularly cover IndyCars has been offered an explanation for the delay in receiving a Lotus engine. I’ve checked Curt Cavin, Robin Miller, Jenna Fryer, Marshall Pruett etc. Randy Bernard promised an adequate supply but offered no reason for the delay to date.
This is really no surprise and sadly on top of “hours banking” at Hethel it must seem very gloomy there.
What is worrying is where the money will come from to pay the staff until Lotus Cars + engineering is sold. The turnover from car sales is but a few trowelfulls of earth in the open cast mine that Bahar has dug.
Of course it may be possible to sell the engineering side off separately and keep car production running.
Mr Boullier needs to get his Sunday best on and nip round to the bank, there’s one in Germany that seems a good bet.
phew – dragon have an engine today – only 2 days late…
It would seem that Lotus Cars really are in a ditch. However, Bahar has attracted an amazing team of designers from all over Europe for his big project to get Lotus up to the likes of Ferrari’s level. He must be doing something right, but has perhaps misjudged the amount of time its takes for a car manufacturer to grow.
One can’t say that he isn’t doing the right things trying to get publicity, but one could also say that he is spending outside of his budget.
Just hope that they can keep it going – would be great to have another proper car manufacturer in Britain, producing interesting and good cars.
I would not be at all surprised to learn that most of that amazing team of engineers is on monthly contract. Things may have changed since I retired, but in the uk at least half and possibly a lot more, of the motor industry was run by contract engineers.
So no suprise here then Joe, been coming for a long while and it looks to me like the final chapter in the DB saga is being written. I hope it is not the end of Lotus Cars too. Shame to sink that for one mans ego trip.
I’ve just returned from THE pub near THE factory. Five green and yellow polo shirts at bar. All Joe reports here fully accurate. Chris Evans BBC Radio Two DJ just visited the factory (disclaimer, it is alleged) and ordered 3 of the “new” cars.
Hope he paid his deposit by credit card, ‘cos like that it’s protected.
Paint shop busy with limited editions but claims they can’t shift Evoras are interesting.
Keep up the good work Joe.
Sources are not much cop.
Evans bought a Evora at a charity auction and was at Hethel specking it, then promptly put it up for sale LOL.
Lets see, Evora or 250GTO ……….. DOH
Maybe Imperial Tobacco will lend them a hand, can’t see them covering all sponsorship’s though.
Dear Joe,
sometimes I think you are the Marc Faber of the F1 world!
(he infamously of The Gloom Boom & Doom Report, and generally giving ruddy good verbal smackdowns to know-nothing reporters)
I have taken to reading (or re-read, imagining his style of speech) your business reports on DB and VJM in his voice, and they sound wonderfully the more ominous 🙂
– j
In the future we’ll remember Mr. Bahar as the one that sank Lotus Cars and took it away from the market and into history.
What a shame…
It is so sad but was inevitable, there was a reason why Lotus had failed to make money but moving out of its recognised market never made sense. Engineering is where Lotus has strength so what will the company do with the engineers who were? developing the new cars.
I can’t remember where I read it, but I’m sure the management of Lotus F1 Team have stated that even if Lotus is sold off and the new owners don’t want any involvement with F1 that Genii won’t change the Team’s name.
Could cause trouble down the line.
NIcely predicted Joe. You’ve been pointing the way on this story for a while.
could Genii afford to buy group lotus ?? is tony fernandes still interested in buying it now he’s set up with caterham??
The main obstacle would be to negotiate away the sporting obligations and the massive debt owed to Proton and the Malaysian Banks.
It would possibly make financial sense to close Hethel production or reduce it to a trickle to match car sales, but keep Lotus Engineering going.
Then if a stable profitable operation ever emerges, to resurrect the pre Bahar car development programme and forget the “Woolorths to Harrods dreams of Mr Spangler.”
what about dany bahar himself could he get the money to buy it??
I love lotus cars and i love the history of lotus f1, im not happy to read this story, that man danny bahar has a lot to answer for, ”WHAT HAVE YOU DONE DANNY BOY”.Know, we all know lotus is in deep trouble, i thought all this sponsorship was to good to be true, and a silly move, joe your research is spot on. It is now a time a new investor to come in and ditch bahar and make turn the company around and make successfull cars like we all know the factory can… there are more billionaires than ever now, hopefully one of them will have the vision to see it as colin chapman did all those years ago…
This might well explain why they were so fast in testing. Running low fuel in order to impress in the hope that they may be able to adorn that faux nostalgic paint job with some more sponsor stickers
looks like Tony can reunite Caterham and Lotus names now. I was a bit curious why we kept the colour scheme.
The problem with all of this – the stalled production, the stalled design, the stalled supply-side design, manufacturing, logistics etc, the apparent massive over-reliance on the Malaysian government, the lack of any new cars, the lack of decent marketing in the UK and abroad…
…I can’t see them selling any more cars in the next 12 months than over the past 12 months and hence…will their financial position improve? The cashflow projections must be very interesting indeed – they’re blowing cash left, right and centre on marketing without apparently having a financial footing to fund it.
This is where Lotus confuses me – they already have a good brand with strong appeal that could work well with good cars. They already have very well regarded cars in their inventory. However, their cars are not selling and their marketing seems to be just to splash logos everywhere and not link it to the products they’re trying to sell.
Also, as history dictates, whenever a company’s success is in question and the board or the investors repeatedly mention ‘new models’…you can be sure they’re ducked.
I’m as confused as you about some of the sponsorship deals, Lotus road car derived GT cars, a unique Lotus badged Indycar engine and working with an F1 constructor are all good, but some of the deals that basicallt involve Lotus giving cash to a company and asking them to paint their cars black and gold is embarrasing frankly.
The problem with Lotus is that they are well regarded for manufacturing a product with a very small market, so the only option for the cars division is to reduce investment and overheads (i.e. no in house design team, small handful of dedicated engineers and limited production facilities to produce 10’s or a few hundred cars like Caterham does) or move back up to the supercar market they were almost in for a couple of decade (mid 70’s to mid 90’s). As someone who became an enthusiast of the marque through F1 and the Esprit in the 80’s, I like aspects of the Bahar plan. However the scope and promised timescales are ridiculous and I’m not entirely convinced that Lotus needs to be building its own engine at this point in time. The Evora is a great a car but the interior looks a bit cobbled together unfortunately (compared to a Porsche Cayman which is cheaper) so as an everyday car it falls short which is a shame.
Hopefully Genii can buy the company and launch the Esprit and a closely related and more useable second generation Evora, and ditch the immediate obsession with growing the company too quickly using borrowed money and dodgy sponsorship deals. I don’t necessarily think its over but I am starting to fear the worst….
TIme for the Third Coming (or fourth or fifth if you count Ligier or Minardi) of Flavio Briatore?
Lotus F1 will only have a problem if Group Lotus goes belly up. Any new owner of Group Lotus will still be contracted to pay Lotus F1 a chunk each year until at least there comes a point when they can exercise their break clause. OR if they want to break the contract early there will be a financial penalty for doing so – all in all Lotus F1 is fine.
Joe – I thought this as well – that a contract has already been signed for a multi-year deal. Is that wrong? Or are you expecting Group Lotus to seek protection from its creditors?
It seems to me it’s either that, or overt debt forgiveness from the Malaysian government.
Of course, if Genii could find a new title sponsor for Enstone, they could buy Group Lotus on the cheap, (offsetting their Lotus sponsorship contract against purchase price), then sell the space again to the new sponsor. No wonder they’re so desperate to attract some deep pockets.
tell tony if he wants to go up market to buy a triumph car licence, would be a nice brand revival he could build from scratch !
“Some feel that the Lotus plan is completely unworkable and has little chance of success.”
Are you suggesting,by implication,that someone (barring Bahar) actually thought the plan workable?
I’m wondering if the F1 sponsership deal is backed with Group Lotus shares.
What if Malaysian government ask Fernandes to buy up Lotus debts with more Malaysia Airlines shares to give away? Government still has enormous influence on DRB-Hicom. Nothing is impossible in my lovely home country. Fernandes won’t lose out that’s for sure.
Bahar has shown time and time again that he excels at spending other people’s money. He hasn’t shown that he can run a company anywhere but into the ground. The LotoGhini Supercar project and all these smoke and mirrors sponsorships will thankfully be the end of him and the Lotus Phoenix will rise yet again.
My opinion is that Fernandez has a finger on the pulse and is ready once the opportunity comes to pick up Lotus for sen on the Ringit. There is a management team in place with Caterham and with news reports of continuing purchase interest from Naza and photographs from last years Sepang GP with Riad Asmat and the Perodua management team together I think, believe, hope, that they will be able to finally exorcise the Proton and Bahar demons and get back to the business of proper Lotus cars and engineering. Especially with the composites ops integrating at Caterham and the aerospace angle.
It will seem quick when it happens, but it’s already happening backstage. Another year.
And, so, we now see the wax on Icarus bahar’s wings start to melt. Who’d of thunk it??
Cheers
MarkR
Dear all
On further reflection-
It is all looking like tears before bedtime, doesn’t it.
In Proton, you have a brand with as much prestige and desirability as herpes.
No profit in the last decade, but, perhaps planty of fat to trim (being Govt owned, as it is).
In Lotus, a brand with some mystique- but, not a lot of profit, and a grand plan to move its model range up market,. to the point that its cheapest model will cost far more than its current dearest model, thus alienating a hell of a lot of loyal customers. As Europe heads for potential financial meltdown, and the US is struggling, Lotus decides to take on the world’s most profitable (per unit) car manufacturer- Porsche, along with a plethora of others- Mercedes, Lamborghini, ferrari, Audi, etc etc.
All the ingredients for a disaster.
If they were your sponsor, you’d have to be worried, wouldn’t you.
Especially if you’d just forked out Kimi size money.
The malaysian Govt MUST be sweetening the pot in some way, shape or form.
An unholy mess already, and, getting worse fast.
If DRB Hicom buy it, after due diligence, I will be amazed.
Cheers
MarkR