While Dany Bahar has told a Swiss newspaper that he is taking legal action against Group Lotus for wrongful termination of his contract, the word from up in Norfolk is that the legal firm Olswang is now in residence at Hethel, going through all the contracts that were signed by the firm since the new management took over in the middle of 2009, looking at what was done.
Group Lotus’s ultimate parent, DRB-HICOM, continues to say that it is not going to sell the British car company, but it is unlikely that the Malaysian conglomerate has the desire (or the cash) that would be needed to turn the business around, given that it has to find a way of getting rid of a rumoured $420 million in borrowing from a number of Asian banks. Unless that can be done, it is going to be hard to find a buyer. The word is that in the short term all contractor contracts are not being extended and the firm is cutting costs wherever it can. This would to suggest that the plan is to polish the company up a little and then put it on the market and see what can be got for it.
While there are some of Bahar’s flunkies who believe that his brand-building strategy would have worked and that in a few years Lotus would be selling 8,000 cars a year, others in the industry believe that DRB-HICOM was wise to put a stop to the spending. It is fashionable at the moment to suggest that Lotus was a failure before the new people took over, but the reality was that after former CEO Mike Kimberley returned in 2006, the company did very well, given the limited resources available. It produced the Evora, the company’s first new model in 12 years, and in 2007-2008 made a profit of £1.5 million, while also registering a 300 percent increase in its technology business. A poor exchange rate in 2008 meant that the firm lost £1.2 million for the year ending March 2009.
Kimberley was then taken out of the equation because of serious back problems early in 2009, and the-then parent company Proton took the decision to put Bahar into the role as his replacement. The theory was to spend large amounts of borrowed money in the hope of turning Lotus into what Bahar called a “British Porsche”, with the brand built up through motorsports activities (a la Ferrari) and on a raft of new models. The industry watched sceptically as money flowed here, there and everywhere. Bahar said that the firm would get into operating profit in 2014 or 2015, but the losses were dramatic, with £12 million in the year ending March 2010 and an even more spectacular £20m loss in the year ending March 2011. This year’s figures are expected to include further losses.
It remains to be seen what can be saved. Bahar and his people did a number of deals to allow others to use the Lotus brand in different ways, either geographically or in different racing series, but while these may continue and become brands in their own right, the future of the core company remains in doubt. In Formula 1 terms GenII has the right to use the Lotus name, although it is not clear whether this includes merchandising. In the World Endurance Championship it seems that there are similar rights that have been sold to Colin Kolles’s Kodewa GmbH, which is reportedly in the process of building a Lotus LMP1 car which will be offered to customers in 2013.