By Dawn’s Early Light

As China’s Geely acquires a controlling stake in Lotus, we ask whether this could mark the end of the sportscar maker’s struggles?

Lotus’ Jean-Marc Gales with the current Evora 400 model. Image: automotiveworld

Last year, we reported on Jean Marc Gales’ progress at arresting Lotus’ decline following the Bahar debacle. At the time, the auguries were positive, if somewhat finely balanced. If not entirely profitable, losses had been stemmed and Lotus’ order book was looking a bit less bare, but real financial health still looked some way off.

Since then, events have moved rather swiftly with several larger motor companies showing an interest in taking Proton and therefore Lotus Cars off private equity firm, DRB-Hicom’s hands – PSA initially believed to have been favourite to do a deal. But with PSA acquiring GM’s Opel, it stretched credulity that Carlos Tavares would try to incorporate another car business simultaneously, so having previously denied an interest, Geely quietly put another piece of the automotive consolidation jigsaw together last month.

Subject to regulatory approval, later this year will see the Chinese car manufacturer control 51% of the Lotus business, with DRB-Hicom retaining the rest, although it is said they are looking to divest themselves of the remainder. Now while it’s clear that Geely has sound expansionist reasons to acquire Proton, the reason for their interest in Lotus is less obvious.

Several businesses have owned Lotus in the past, and few if any have returned anything apart from losses and bruised knuckles. What makes Geely different? Well for one thing, they are buying Lotus at a point when they are no longer loss-making, Jean-Marc Gales having ruthlessly cut costs and streamlined the business so that the Hethel sportscar maker is about as lean and fighting fit as it’s ever been.

Geely also has a track record of non-interventionist management. In the case of Volvo, it does appear that having ensured that a strong management was in place with a clear plan for the future, they provided the financial security Volvo required and allowed the Swedes get on with it. Assuming Gales’ plan holds water, it seems feasible Geely will do likewise. Donghui Li, Geely’s executive vice-president told journalists a few weeks ago, “Reflecting our experience accumulated through Volvo Cars’ revitalisation, we also aim to unleash the full potential of Lotus Cars and bring it into a new phase of development by expanding and accelerating the rolling out of new products and technologies.”

A speculative render of Lotus’ forthcoming Elise. Image: Autocar

If nothing else, the tie-up will potentially allow Lotus to borrow in order to fund its new model programme. Work on a new Elise is believed to be under way, and with Chinese support, this programme may well be accelerated. Leaving aside what one may think about such a project, the Lotus SUV is said to have stalled with insufficient resources to go ahead with it. (Gales told journalists there is a styling mock up, but little else at present). Being part of Geely’s empire could see a Volvo-derived platform being sent Lotus’ way (a la Lynk & Co), which again could see this programme gaining momentum, if not necessarily further skilled employment in Norfolk.

This vehicle horrifies enthusiasts, but it’s clear Lotus needs a car they can sell outside of their core market of track-day aficionados. It’s also worth recalling that amongst the Great Bahar’s fabled unicorns there was an oft-forgotten three door city car proposal, a car that appeared to obtain a pass from Lotus traditionalists amidst the feverish excitement in 2010, so in some ways a precedent has been set. Lotus-tuned Volvos? It isn’t beyond the bounds of imagination to envisage a more hardcore variant of their Polestar line, but is this really Volvo’s end of the market?

The littlest unicorn. Dany’s Lotus City car concept from 2010. Image: headlightmag

Another positive from this announcement is that it could help halt the flow of engineers who have departed Hethel for more secure berths elsewhere. Lotus, if it is to survive will need to rebuild its engineering strength, not only for its own projects, but for the consultancy work it will likely be doing for Geely’s growing automotive empire and for the Far East clients their acquisition could possibly attract.

There remains a sticking point however: Toyota. Having been rudely rebuffed by the Great Bahar in his pomp, the relationship with Lotus’ engine supplier has been painfully rebuilt under his successor. But surely it would make more sense to source engines and drivetrains from Volvo, once they become part of the same family? Especially as the Swedes are well advanced in hybrid and electric drive. A sticking point here could be the fact that Volvo doesn’t make a suitable engine to power the upmarket Evora, so in the near term at least, the relationship with Toyota will have to be maintained. As for autonomy, Lotus would be well advised to stay aloof. Even a semi-autonomous Lotus misses the point entirely.

However, for now, this all remains purely within the realm of the theoretical. Until the ink is dry on the contracts and until such time as a clear path is formulated for Lotus’ future, it will have to remain business as usual for Jean-Marc Gales and his shrunken team at Hethel. However, for now at least, the first light of dawn has perhaps never held so much promise. We await developments.

Author: Eóin Doyle

Founding Editor. Content Provider.

8 thoughts on “By Dawn’s Early Light”

  1. It’s a struggle to see how Lotus fits into the Geely empire. Their custodianship of Volvo looks entirely successful so far, but they are using this investment to launch a new brand and there may be further technology sharing along the way.

    Perhaps Geely wants to make some sort of electric supercar as a prestige project? Perhaps the Chinese track day market is about to explode?

    As it is, I can see a Lotus-brand SUV coming out of this, but little else.

  2. In how many years since inception did Lotus ever return a profit?
    They are at best an engineering firm. It might be a nice idea for them to make one model, as a sort of haute couture excercise, but really they should be only consultants. If there is one firm more consistently “about to come back” than Alfa, it’s Lotus.
    The problem with Geely or anyone owning Lotus is that they lose their perceived independence and maybe thereby the plausibility of their confidentiality.

    1. Colin Chapman was it appears rather similar to Enzo Ferrari, in that his heart was on the racetracks and the commercial arm of the business came a rather distant second in his affections. It’s doubtful Lotus Cars has made money over its lifespan, but then looking at the product, it was either too small to be made at a profit or too ambitious to be made well. The Elise remains perhaps the most commercially successful Lotus ever, but the margins on it can’t be brilliant. The Evora is brilliant, but nobody seems to care.

      Perhaps the biggest question for Gales, Geeley and Lotus is whether its already too late? The car market is contracting and buyers are coalescing around brands they aspire to – in this sector, Porsche. It’s a similar problem to the one Jaguar faces. People like the product – (or the idea of it at least), but they go out and buy the default (German) option.

      In my view, Gales needs to work out exactly where Lotus should position itself and focus relentlessly upon that. Digressions like mid-engined supercars is a fools game, a pratfall he seems unlikely to make. A possible future for Lotus (if they survive that long) is to focus on a purely analogue driving experience and market themselves as the anti-autonomy choice.

    2. Eoin – as far as I can tell, Gales is indeed focusing on Lotus’ core strengths.

      The Evora was, in my view, poorly conceived. It was pitched as a sporting ‘daily driver’, as wealthy car owners say, and in that market got predictably walloped by Porsche. Not to mention M3s, AMGs, RS Audis etc which all compete for the same attention.

      Really, they should have dropped any pretence of rear seats, teased out the proportions a bit (I think the Evora has got a great stance but the design has never been wholly satisfactory) and launched it as the new Esprit. A lightweight sports / supercar that cares little for the daily grind.

      Lotus cars tend to hold their value very well. The used market for the Elise is very healthy. This makes them a viable purchase as an occasional car – a treat for weekends and holidays.

  3. I would be pleased if Lotus helps Volvo developing a RWD platform for the flagship cars (I’m old-fashioned and I think large cars must be RWD or RWD-biased AWD). but of course it won’t happen, it’s just a dream.

    talking corporative terms, some synergies and possibilities are worth being considered: Lotus is (or at least was) specialised in adding lightness. Volvo has some expertise in electric powertrains, as Eóin states. so Lotus can help Volvo in the production of light (no pun intended) hybrid parts, receiving Volvo engines to power its small sports cars.

    another good thing is the lack of overlapping between the brands: Geely is focused on cheap cars for developing countries. Volvo is the semi-mainstream brand to be present in the US/CA/EU markets and has no sports cars (sorry, S60 Polestar). Lotus is the niche brand with racing heritage that makes small sports cars. it’s the opposite the PSA acquisition of Opel, where there are three mainstream brands with not much presence outside Europe and a fourth that sells Citroëns with better leather and harsh Peugeot suspensions.

    Lotus can also work together with Polestar to develop special versions of the V40 and the S60. Lotus V40, anyone? like the Cortina and the Carlton? or a Lotus-tuned Geely model, like the ill-fated Isuzus and Kias of the 1990s? I don’t think Lotus will be required to return a profit, just as long as they don’t lose hundreds of millions and the core brands of the Geely group do well.

    1. That’s a better concept: Lotus as the engine/suspension division of Geely. The ointment has a fly though. Volvo’s own engineers probably think they are quite good at their job. Whereas Lotusness got bolted on the Carlton after Opel designed the standard car, you seem to suggest Lotus is there from the start at Volvo and Geely. Will that work?
      Consultants can help if a client has low self-esteem and where the in-house people know that taking advice is sensible. Volvo’s engineers are, I expect, quite confident they do a good job. Why do they want to listen to blokes in Norfolk whose firm’s name stands for Lots of Trouble Usually Serious.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s