Under China’s Geely, sports car maker Lotus looks to add to its pedigree and enter new markets
Chinese carmaker’s deep pockets and hands-off management of acquisitions, combined with British marque’s engineering excellence, point to a rosy, and possibly electric, future for the car company
An assembly hall sits rusting on a 22-hectare factory complex in eastern England, surrounded by an expanse of green farmland. The forlorn structure is a reminder of the latest failed attempt to revive Lotus Cars, a specialist sports car maker and engineering powerhouse.
In its heyday, Lotus was revered for lightweight racers favoured by James Bond and Mario Andretti. The company’s engineering talent was so well respected it developed a successful consulting firm, with clients including General Motors (GM), Aston Martin and Tesla.
But consumer tastes changed. When sports cars gave way to SUVs, Lotus suffered.
Under an ambitious plan hatched in 2009, Lotus started building a new assembly hall in anticipation of producing an expanded line-up of five new models. But the financial crisis and a global recession got in the way, and Lotus’ foreign bankroller didn’t want to plough any more cash into the project. No new cars appeared, and sales continued to plunge. Work on the hall stopped dead.
In a sign of how bad things had become, Lotus’ British network of dealers sold an average of just 11 cars per month in 2012.
Now there are signs that its fortunes are changing. Over the past three years, Lotus has been selling closer to 30 cars a month in its home market. Revenue is up, thanks to a combination of cost-cutting and sales of higher-priced, limited edition models.
Last month, the company said it was on track to be profitable for back-to-back years for the first time since the late 1990s. Chief executive officer Jean-Marc Gales has nursed the company back into the black, if barely, and he has reason to be optimistic.
Lotus is about to be rescued by the same Chinese billionaire who bought Swedish vehicle maker Volvo Cars. This comes just in time to help the British company manoeuvre through the challenge of trading after Brexit. A controlling stake in the company – 51 per cent – has been sold for £51 million (US$66 million) to Li Shufu’s Zhejiang-based Geely, giving Lotus some deep pockets.
“This is fantastic, the best thing that could have happened to us,” says Gales, who joined Lotus in 2014. The deal, announced in June, is expected to close this month.
Lotus was founded in 1952 by an engineer, racer and frenetic entrepreneur named Colin Chapman. It has teetered on a knife’s edge for much of its 65 years. Early on, the company turned out a string of successful racing cars, including seven Formula 1 world championships and Indy winners, with such drivers as Jim Clark, Ayrton Senna and Mario Andretti. A procession of groundbreaking road cars followed, including the fibreglass-bodied Elite in the 1950s, the Elan roadster in the ’60s, and the mid-engined Esprit in 1976.
In the British TV hit series The Avengers, Emma Peel drove an Elan, an early example of product placement. In 1977, Roger Moore’s James Bond roared through a tiny Italian seaside village in an Esprit in The Spy Who Loved Me. The white Esprit outraced a motorcycle, car and helicopter on a winding road before launching off the end of a pier and transforming into a submarine ready for underwater battle.
Behind the glitz and reputational success, the company bled cash and was rarely, if ever, on sound financial footing. Chapman was constantly juggling money between the car business and his other projects. A bevy of ventures into yachts, microlight aircraft and bicycles rose and sank on his watch, while Lotus continued to attract a following for the cars’ excellent handling.
Then, in 1982, Chapman died of a heart attack aged 54 at the height of a scandal: Lotus had been hired by the DeLorean Motor Company for engineering input, but DeLorean collapsed amid accusations of defrauding the UK government – with Chapman’s help. Lotus’ chief financial officer would go to jail for three years.
Despite the turmoil, Lotus was still revered for engineering, aerodynamics and innovation. GM took over the company in 1987, only to lose interest and offload it in 1993 to Italian entrepreneur and Ferrari dealer Romano Artioli.
Three years later, a bestseller arrived to save Lotus and support its business for the next two decades: the Elise. Named after Artioli’s granddaughter, the car was admired for its feather weight, bonded aluminium chassis and superior handling. Thanks to the Geely deal, a new Elise could arrive in 2020 for sale in the US, says Gales.
In 2009, a new showman was brought on board to try to move Lotus from a cult favourite to the mainstream. Dany Bahar, a former Red Bull and Ferrari marketing executive, announced an ambitious plan he later admitted was a complete stretch: five new models. For the November 2010 Los Angeles auto show, he hired actress Sharon Stone, the Baldwin brothers, and other celebrities to pose with models of the new cars. After yet another ownership change, Bahar was fired in 2012. He sued and later settled out of court. Through a spokeswoman, Bahar declined to comment.
Geely, little known outside China, has surprised analysts with its careful husbanding of engineering and executive talent at Volvo and at other acquisitions. There have been much bumpier mergers over recent decades, including GM and Saab, BMW and Rover, and to a lesser extent, Ford with Jaguar and Land Rover.
Volvo has been thriving under Geely, which appears to operate on the seemingly revolutionary principle that the parent company provides cash while the existing engineering and design teams get on with what they do best. The Swedish brand set a sales record in 2016 and made a splash in July when it announced a move to an all-electric or hybrid line-up. In just two years, all its new cars will come with an electric motor, the auto industry’s most aggressive target yet in the march toward the internal combustion engine’s demise.
After the Volvo deal, Geely purchased the London Taxi Company in 2013, which manufactures London’s distinctive black cabs from its base in the English Midlands. The company plans to release an electric version of the black cab this autumn.
Lotus could be next on the electric list, providing essential engineering skills as Geely ramps up production at home and abroad. Under such a benign owner, quirky Lotus could thrive.
Lotus has a longstanding association with electric vehicles. The company built and helped engineer the first Tesla, the Roadster, in 2008. The Roadster was based on Lotus’ groundbreaking Elise.
It was Lotus’ reputation for great engineering and innovative design, as well as skill in using materials once considered exotic – aluminium, fibreglass, and carbon fibre – that saw its consulting business boom. The company contracted with larger manufacturers to reduce weight, tune suspensions, curb emissions and improve aerodynamics. The aluminium chassis of the Aston Martin DB9, for instance, was substantially engineered by Lotus.
Electric cars could be a fantastic opportunity. But, says Gales, it still has to be a Lotus – lightweight and able to handle corners alongside any great sports car following Chapman’s original credo – “To add speed, add lightness”.
“In two or three years, battery cars will be much higher performing than they are currently because technology moves on,” he says. “It could be a really good thing to be the first one to do an electric car that doesn’t weigh two tons.”
Lotus could also reissue classic models, or get into the business of restorations or certified old car sales, a lucrative sideline already explored by Jaguar Land Rover, Mercedes, Porsche, Ferrari, and other luxury carmakers.
Gales hinted that with Geely’s funding, Lotus could even produce an SUV.