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Lotus CEO Dany Bahar on the crisis at Lotus Cars
17 April 2012 09:34
Lotus chief executive Dany Bahar has laid bare the business position at Lotus Cars since the takeover of parent company Proton by Malaysia's DRB-Hicom. Norfolk's sports car maker has been buffeted by rumours of financial crisis and looming collapse since development was frozen by the new owners (click here for our coverage of the crisis at Lotus.
CAR scored an interview with Bahar at the Hethel headquarters yesterday afternoon. He was abroad at the time of last week's media maelstrom, when rumours and slurs flew around about the state of Lotus's finances. Now he's back from 10 days in China, Lebanon and the UAE and keen to tell CAR Lotus's side of the argument.
Click here for the full transcript of our Bahar interview. He reveals:
• Why Lotus lost £25m last year
• A planned return to profitability some time after 2015
• How Lotus struggled to pay suppliers over the winter
• Why the Esprit has now been postponed to 2014
• That Lotus is not on the cusp of administration
• How the four-strong product line-up revealed at the Paris motor show 2010 hangs in the balance
So is Lotus Cars about to collapse?
Definitely not, according to Bahar. Production and development of new models was paused this winter, as Malaysian owner Proton was bought by DRB-Hicom, one of Malaysia's biggest conglomerates involved in everything from property to infrastructure to assembling cars for Honda and Daimler. Bahar said the new owners had already been over to visit Lotus Cars.
'I think they need to first understand what they have bought,' said Bahar. 'It’s something that’s outside what they normally do in their day-to-day business. They need to understand what animal they bought in terms of Proton, which is a very large company with 11,000 employees and subsidiaries, and one bit of that is Lotus, so you need to give them time to go through every single company to see what they’re doing.
'There were speculations from the beginning that Lotus was going to be sold one day, that it was too expensive, that it was too unrealistic, too nonsense, blah, blah, blah. But then Proton got sold, that was a bit of a surprise, especially when Proton was starting to do well, and their future product line-up is really exciting, so the next five to six years for Proton has a very bright future.'
Bahar said the new owners had not yet committed to Lotus's planned new model replacement programme. 'They still need to understand whether the plan which we started two years ago is something they want to support, or modify it… all we can do is to show what we have done in the last two years and that’s it, that’s all we can do. It’s not up to me to discuss shareholder matters.'
What of the rumours that Lotus is facing administration?
Bahar denied Lotus was on the brink of collapse. 'That is nonsense. That would be silly from any buyer to buy a company, spend a lot of money and then put it into administration. And there are certain moral and ethical obligations that I’m very sure our Malaysian shareholders – the current ones and the previous ones – will respect for sure.'
However, although DRB-Hicom's due diligence period is over, the long-term future for Lotus remains unclear. Bahar was unable to confirm when Lotus's future strategy will be announced by its new owners.
'The future of Lotus doesn’t look as bad as the media speculates,' he vowed. 'We had some issues in this takeover period, during 90 days where the funds were a bit, I’ll say, restricted, because we would only receive funds for the ordinary course of business, and that is simply selling cars. But since we are in a turnaround plan we are heavily dependent on bank loans and equity injections from our shareholders, which was the plan from the beginning, so that brought us into difficulties. But we have resumed the development programmes already, we started two or three weeks ago.'
Project Fuji - the new Lotus Esprit - is advanced and test mules are already circulating, said Bahar. But he admitted the development freeze had caused delays to the programme. 'If you lose your development activities for three months, you have to ramp up your supplier base again, so for sure there’ll be a delay.'
That means the new Lotus Esprit supercar now won't see the light of day until 2014 - with repercussions for Lotus's lofty plan to spin off a whole family of derivatives, from Elan and Eterne to Elite and a new Elise.
Bahar admitted that Lotus Cars had been unable to pay suppliers for a while this winter. 'We had some difficulties to pay some suppliers, but I think we are catching up now as we speak. Every week we are getting better and I am sure we will resolve this issue very soon. The fact that we have resumed production, that we have resumed development, shows that we start now to come back.'
Lotus Cars: the business story
The Norfolk car maker made a £25 million loss in 2011, Bahar confirmed. 'Our business plan projects a four-year loss – nearly making a profit in year four – then profitable from year five – that would be 2015. But now since we’ve postponed the first project, we have postponed a little bit the profitability.'
Lotus has already shaken up its original Paris motor show 2010 plan, axing the Elan and settling on an in-house V8 instead of a Toyota-sourced lump. 'So we end up with Esprit, the four-door Eterne and the Elite, and one day we’ll replace the Elise, because it’s already 15 years old. So the only discussion now is if we stick to that four-car programme but, as I said, I believe we are so far advanced with the Esprit project that it would be a shame for everybody and a lot of sunken investment if somebody would stop that and I strongly believe that the Esprit will make it.
'But, after that, we will have to see. From the beginning, we were only able to actually choose this route because there was a commonality strategy, but even if we choose to modify the plan, I still believe we need a multiple product line-up, rather than just one, in order to share the costs and distribute the responsibility.'
Click here for the full transcript of CAR's interview with Lotus Cars CEO Dany Bahar.
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