Lotus - A Cloudy Future?

[kach22i]

Lotus future questioned as losses speed past £167m
By Christian Sylt7:53PM GMT 10 Jan 2014
Lotus future questioned as losses speed past £167m - Telegraph

The future of motor marque Lotus has been called into question after the company made a £167.8m net loss in 2013 and breached its banking covenants.

The Norfolk-based manufacturer, famous for its Elise and Esprit models, saw car sales in the year to March 31, 2013, fall by 40pc to just 1,177. Engineering revenue also fell, by 37.5pc to £22m, giving Lotus a turnover of £89.9m, while costs increased 4.6pc to £250.6m.

It left the company with net current liabilities of £175m and a shareholders’ deficit of £111.4m, which drove the covenant breach.

During the year, Lotus secured a £270m bank loan that required it to maintain positive shareholders’ funds. The breach forced the management of Lotus’s owner, the Malaysian car manufacturer Proton, into negotiation with its bankers and the lead lender agreed to waive the covenant until March 31, 2014.

Proton is planning to re-finance Lotus’ debt to smooth the road ahead but its deputy chief executive, Lukman bin Ibrahim, said that until this has been competed, “there is a material uncertainty which may cast significant doubt over the group and the company’s ability to continue to operate as a going concern”.

He acknowledged that 2013 was a “challenging” year for the group, adding: “While it continued its plans for the development of new exciting future products, the performance of the group was restricted by the continuing weak market conditions, fragile consumer confidence, increased competition and cost pressures leading to increased operational cost.”

Despite its financial predicament, Lotus has been investing in the future and last year its research and development costs came to £96.2m, which, alone, was more than its entire revenue.

“Lotus Cars will focus on maximising sales of its current Evora, Exige and Elise offerings, which will be further enhanced by future variants,” said bin Ibrahim.
“The substantial investment needed to implement the strategies will impact the financial position of the group in the short term but, once the transformation has taken shape, the group will be on a much stronger footing operationally and financially.”

Lotus has a long way to go before it hits top gear. Last year it laid off 201 staff and burned through £2.6m of its cash reserves, leaving it with £15m. Some of the most badly hit were its suppliers, which include tool manufacturers, haulage firms and raw material providers.

Last year the company’s creditors were paid an average of 155 days late, up from 154 in 2012.

Last November, the company was awarded a £10.4m grant from the Regional Growth Fund to develop new models and train more than 300 new staff it hoped to hire. Since 1996 it has lost money in every year except one.

Earlier in the year, Proton’s Malaysian parent company, DRB Hi-Com, unveiled a £100m investment in Lotus and a plan to break even by 2015 but, to do this, it needs to sell 3,500 cars a year.

No new model development until the refinancing issue gets resolved.

I was hoping to see the two seat convertible/targa rumored back in 2011 by now.

At least a Photoshop of one superior to the blurriness below.

Dany Bahar confirms Evora convertible is on the way
April 29, 2011
Dany Bahar confirms Evora convertible is on the way | The Lotus Forums

The car still figures very highly on Lotus’ agenda as they continue to develop and engineer the New Era range of cars with the in house V8 development along with bespoke in house gearbox progressing well and according to plan.

I don't recall even seeing an Evora on the road, sat in one a few years ago at a dealership. It was much easier to get in and out of than the Elise/Exige.

[HardDrive]

That is a seriously boring looking car. It costs HOW much?!

[Tervuren]

Lotus should of stuck with using the engines/gearboxes of others. They had a good thing going on without even building their own engines. If they do build an engine, do it as a contract that is paid for by someone else - and they get the use of it.

[afterburn 549]

Bring back Offenhauser .
drop the Toy eng.

[slow&rusty]

I have always had a soft spot for Lotus, especially withe the development of the Esprit from a crude 4 cylinder on twin sidedrafts in the '70s to a fire breathing twin turbo V8 in the '90s. My interest waned when the Elise and Exige were announced, even though I know they are really capable cars. I hope they can turn around and make it, maybe the Germans need to buy them?

[onewhippedpuppy]

My neighbor has an Evora S. Great looking car with a decent exhaust note. I still need to drive it, he wants to trade off with my 996 sometime.

[MrBonus]

Hasn't Lotus been in financial trouble for what seems like ever?

[KNS]

perhaps they should be selling SUVs...

[kach22i]

Originally Posted by MrBonus

Hasn't Lotus been in financial trouble for what seems like ever?

From what I understand the engineering firm has always done great.

The break-off company assigned to making actual cars (starting with the Elise) was doing well until 2008 when like everyone else the bottom fell out of their world.

I would have thought that in the current economic climate they would be doing great. However the purse strings seem to be in a tangle.

EDIT:

Future of Lotus in "significant doubt" after £170m loss
11/01/2014
http://www.pitpass.com/public/print_article.php?fes_art_id=50718

There is a long-standing joke in the motor industry that Lotus stands for 'Lots Of Trouble Usually Serious' and that couldn't be a better description of its financial predicament....................................... ..........

In 2013 it laid off 201 staff and burned through £2.6m of its cash reserves leaving it with £15m. Some of the most badly hit were its suppliers which include tool manufacturers, haulage firms and raw material providers. Last year the company's creditors were paid an average of 155 days late up from 154 in 2012.

Despite its financial predicament, the car company has been investing in the future and last year its research and development costs came to £96.2m which alone was more than its entire revenue.

"Lotus Cars will focus on maximising sales of its current Evora, Exige and Elise offerings which will be further enhanced by future variants," says bin Ibrahim adding that "the substantial investment needed to implement the strategies will impact the financial position of the group in the short term but once the transformation has taken shape, the group will be on a much stronger footing operationally and financially." Time will tell whether that happens.

The article doesn't come out and say it, but as others in this thread have hinted, Lotus would have been better off using other people's engines. I suspect most of this research spending is on the new engine.

[kach22i]

Earlier in the year, Proton’s Malaysian parent company, DRB Hi-Com, unveiled a £100m investment in Lotus and a plan to break even by 2015 but, to do this, it needs to sell 3,500 cars a year.

For Lotus to make it, they have to sell 4x's as many Evora's world wide, than Porsche sells 911's in the USA (please check my math).

If I recall correctly at least half of all Porsche sales are in the US, meaning the Evora would have to outsell the 911 by 2:1 world wide..........................anyone else see a problem here?

Is the picture as dark as I've painted it, or are my numbers really that far off?

Going off the chart below for reference numbers. Note that Lotus is not even on the chart.


05/05/2013 - GOOD CAR BAD CAR

[HHI944]

I love their cars.....but they've been on the edge of this cliff for a while.
The design budget for my Elan was roughly $55,000,000......they sold shy of 5,000 cars which works to roughly $12,000 in each car before it even began manufacturing. Original price was only ~$20,000
Add in actual materials and labor cost for construction then transit and various related fees and I suspect the took a decent loss on each car.

[kach22i]

Here are the actual Lotus sales figures.


Lotus Elise / Exige U.S. Production Figures 2005 to 2011 - LotusTalk - The Lotus Cars Community


They plan to do as well as they did back in 2005 with the introduction of the Elise.

Maybe not so far fetched.

However, I don't know enough to even start guessing why the sales dropped like a rock from Mars.

[sammyg2]

1) When I first say their newer line of cars, my first impression was that some 5th grader drew them on his notebook while daydreamnig in english class.
They look like toys, like some strange hot wheels car, too over the top to be taken seriously.

2) The 2 passenger sports car market is tiny and competitive, you can't base an entire company on just that market. It is suicide, it is asinine.
It all adds up to "gee, who coulda seen that coming "

3) Tell em to make a decently reserved 2+2 GT car and maybe they'd sell enough cars to stand a chance.

[kach22i]

Originally Posted by HHI944

I love their cars.....but they've been on the edge of this cliff for a while.
The design budget for my Elan .........

My understanding from watching a 2-hour long on-line video several years ago is that the current company is a new entity, and started just to build the Elise (post-Elan).

Originally Posted by sammyg2

1) When I first say their newer line of cars, my first impression was that some 5th grader drew them on his notebook while daydreamnig in english class.
They look like toys, like some strange hot wheels car, too over the top to be taken seriously.

2) The 2 passenger sports car market is tiny and competitive, you can't base an entire company on just that market. It is suicide, it is asinine.
It all adds up to "gee, who coulda seen that coming "

3) Tell em to make a decently reserved 2+2 GT car and maybe they'd sell enough cars to stand a chance.

1. The styling is a subjective issue, I counter your dislike with a big like (one for one).

2. All car companies started in my lifetime that I know about have been single model, and most of them sports cars, I recall one being a Land Roverish SUV though. Many car companies have sustained themselves for years on a single model, although I would not say they flourished in the long run.

3. The Evora is a 2+2 and intended to compete directly with the Porsche 911. On-line articles I've read featuring an Evora comparison to the 911 show both cars have their strengths and weaknesses. I haven't polled all the articles out there but my impression is that in the end it's a win win with either one.

Somehow I'm not too surprised by sammy's posts, but I am disappointed.

[intakexhaust]

Originally Posted by sammyg2

1) When I first say their newer line of cars, my first impression was that some 5th grader drew them on his notebook while daydreamnig in english class.
They look like toys, like some strange hot wheels car, too over the top to be taken seriously.

2) The 2 passenger sports car market is tiny and competitive, you can't base an entire company on just that market. It is suicide, it is asinine.
It all adds up to "gee, who coulda seen that coming "

3) Tell em to make a decently reserved 2+2 GT car and maybe they'd sell enough cars to stand a chance.

[afterburn 549]

So no one else cares they have a Toyota engine in there line up?
Now i am not saying its a bad engine...it just fks the pedigree up.!
I looked at buying one..its a a lot of cash then to have a Toy engine in there was a deal breaker for me.
A Cayman makes more sense !

[HHI944]

It may be Toyota at the core, but they tweak the snot out of their engines.

George, yeah, they 'restructured' when bugatti bought them, but nothing substantive changed.

[kach22i]

Originally Posted by afterburn 549

So no one else cares they have a Toyota engine in there line up?

I care, and I suspect at least half the people (the males) considering a Evora over a 911 would also care.

An engine of their own is the only way they could even come close to reaching their projection numbers. I for one don't want a Toyota engine in my sports car. I could live with a Subaru engine though, not sure if I can explain my perception or preference differences.

The Evora has already been out several years, it needs a game changer to keep pace with Porsche and a new engine may do that.

I'm not saying it was money well spent or well invested (the research funds), but if they were shooting for the 911 as reported, then they better be using some darn good ammo.

In for a dime, in for a dollar is an expression which comes to mind.

Play to win or don't show is another.

[afterburn 549]

It needs at least a BMW engine , not one from japan! It is like mixing dehydrated water with sand, not a very fresh drink......

[kach22i]

Oh, I can think of a few other appropriate power plants.

Jaguar F-Type - Wikipedia, the free encyclopedia

The entry-level F-Type uses Jaguar’s new 3.0-litre V6 supercharged petrol engine, good for 340 PS (250 kW; 335 hp), 0 to 60 mph (0 to 97 km/h) in 5.1 seconds, and a top speed of 161 mph (259 km/h).