RE: PH Blog: follow the money

RE: PH Blog: follow the money

Wednesday 14th December 2011

PH Blog: follow the money

Like it or not, Eterniti and Bahar-era Lotus are going where the cash is



The Eterniti Hemera and debate raging following our Lotus story from our two swanky lunches in London this week reveal a degree of soul-searching among those who care for iconic brands like Lotus.

Not to your taste perhaps but to somebody's
Not to your taste perhaps but to somebody's
Eterniti is shamelessly satisfying a need it's identified in 'new money' markets like China. Bling is very much king and conspicuous automotive one-upmanship the name of the game among newly loaded car buyers.

It's a very different culture from that in Europe but one that high end carmakers need to cater to if they're to cash in. Porsche, for instance, has a vibrant 911 Cup in China according to Eterniti man Kenny Chen. But over there the race on Sunday, sell on Monday mantra takes a different twist. Inspired by watching 911s battling on track and reflecting decades of finely honed motorsport expertise your typical Chinese car buyer then goes to his Porsche showroom and expresses his admiration for what he's just seen by buying ... a Cayenne or Panamera.

Think about it. Here in Europe we've had over a century of motorsport and carmakers selling us cars off the back of it. It's a mature, sophisticated market steeped in history and tradition, the flogging of expensive cars to rich playboys on the back of racing success there from the very beginning. We - by which I mean PHers - watch 911s on track and we want to go out and buy a 911 GT3 RS 4.0. But, of course, it's only because the Chinese buy Cayennes and Panameras by the thousands that Porsche can indulge itself and build such a car.

And the generous assessment of Bahar's masterplan for Lotus follows this mould. If you believe him - and in person he is very convincing - all the celebrity flirtations, blingy supercars and hybrids are there to cater to the customer base with the money. Revered as Lotus might be it is - and always has been - a business. One that probably wasn't going to be sustained by endless Elise spin-offs. But the fact the more hardcore versions of the new cars are, apparently, referred to internally as 'GT3' cars has to offer hope.

Big money supercars for big money buyers
Big money supercars for big money buyers
Talking of following the money you only have to look at the team that's followed Bahar to Hethel to get an idea of how serious things are there. Fans of the brand remain deeply suspicious that it's all a pipe dream and Bahar's dream team will depart Hethel as dramatically as they arrived when the money runs out. But just think about how you convince a high-ranking Ferrari, Porsche or VW executive to relocate to Norwich. These aren't stupid people struggling to find gainful employment. And they sure as hell wouldn't leave jobs like that unless they really believed Lotus has a future.

Talking to design man Donato Coco I asked him how he'd been convinced to make the move. "When Dany asked me to join my first question was 'very exciting but ... oof!'" Bahar's powers of persuasion clearly worked though, even if Coco is vague about exactly how he was convinved. "It came to a few discussions and he confirmed it was all there and finally I agreed - I couldn't turn down an opportunity like that."

New PistonHeads recruit Chris Harris has a different view and one he'll no doubt be sharing come the new year. But it comes down to money and power in the end. For better or worse the one comfort we can take from it is that, whoever owns the business, British automotive expertise in all its forms is still viewed as a marketable commodity.

Dan

 

Author
Discussion

V8 GRF

Original Poster:

7,294 posts

209 months

Wednesday 14th December 2011
quotequote all
I'm not a fan of the big SUVs and similar but I guess if they appeal to another market other than the traditional one then it would be financial suicide for a company to ignore that market, especially when the 'traditional' market doesn't seem to be buying the existing product.

Gorbyrev

1,160 posts

153 months

Wednesday 14th December 2011
quotequote all
The Cygnet will bring Aston emissions to the point of meeting EU regs, the Cayenne / Panamera mean the Cayman & 911 stay in production. If companies need to chase the cash there is always the possibility of making an enthusiast's car (GT-86 / BRZ anyone?). So there will be 2 Esprit's - a blingtastic one and a stripped out R. Makes sense to me. The old Esprit had a foot in both camps too. What if Lotus had made a successful luxury car that made the money to engineer their own gearbox for the Esprit instead of relying on the Renault 25 or headlining that didn't peel off like wrapping paper? Marque purity is a hiding to nothing. What we need are car manufacturers who understand what will make a profit and then invest some of that in the kind of machines that increase the blood flow IMHO. The only exception is if the enthusiast's motor ends always ends up costing GT3 money. Then we will be in trouble.

randomcash

9 posts

147 months

Wednesday 14th December 2011
quotequote all
Still think Lotus is chasing an even more niche market than before with it´s ´Swizz Beatz´ endorsement.

Happy with the idea of a new direction, but I think they should´ve grabbed Ferrari´s marketing dept too, not just their designer. Whoever selected their US target segment is clueless IMO.

Mr Gear

9,416 posts

189 months

Wednesday 14th December 2011
quotequote all
Don't kid yourself that the British market is any more "sophisticated" or "mature" than the Chinese or Russians: There are plenty of Cayennes and Panameras over here to prove it.

Neither appeal to me in the slightest, but there must be some domestic and European demand, and Porsche are probably kicking themselves that they didn't think of it before.

I bet if Lotus released a 4x4 or an SUV (whatever one of those is) it would be snapped up by the same sort of people from Essex to Edinburgh and everywhere in between.

PhilJames

233 posts

192 months

Wednesday 14th December 2011
quotequote all
Lotus marketing have been destroying the integrity of the brand through the alienation of their existing customers and failing to have a coherent marketing plan. Do Lotus know their market? I don't think so and with so many U turns brash and clumsy announcements from the CEO over the past 2 years, even Lotus owners don't seem to know who Lotus is aiming their cars at.

Lotus entered a new Era, abandoned the current market because 'it doesn't make money' yet there was no product for the 'new era' customer to buy, Lotus are in limbo and their Engineering is 2nd to none but with no product and bad marketing the ambitions seem just too far for Lotus to reach in what is essentially a recession.

I think Lotus should have built their product line one car at a time and spent the media budget wisely on marketing the new cars at the new customers without - trying to reinvent the brand whilst playing on it's heritage.

There is a glimpse of hope in what Lotus engineering can do and if the Lotus management can learn from their very public mistakes they stand a better chance than any of being successful in their new era of cars. If Lotus cars are a bigger customer to Lotus Engineering with their new era cars, then the R and D that Lotus Engineering is capable of, could dominate the industry to supply it's own customers with Lotus Engines and technology and hopefully both Lotus Cars and Engineering will fly the flag once again for Group Lotus.

Hellbound

2,500 posts

175 months

Wednesday 14th December 2011
quotequote all
This thing is so much bigger than Swizz Beatz, please lets not waste any more time on that particular story.

I was watching the Euro News channel earlier. They were reporting on the troubled Portuguese economy, and how many young people (graduates and non-skilled) are considering moving to Brazil where there appears to be far more opportunities.

The reporter was chatting to a middle aged shop keeper who'd just sent his son to Brazil to finish studying dentistry. The guy had himself returned from Brazil in the 90's when the economy there had tanked, Europe was booming and it made sense to stay here. But now everything has changed.

His view was that Europe, or 'Old' Europe, offered very little room to build and create things. Here, every new opportunity, new idea and new market has been exploited to death. However Brazil is seen as an open place in which to do business, implement ideas and create wealth. A country ripe to build things in, a country where you can dream. Similarly China has an abundance of wealth creators, from owners and managers to low level employees. We've gone from selling to our neighbours within the UK and in Europe, to selling on a global scale. The formula is the same.

I think a lot of PHers are like that chap in his shop, holding on to old memories. Lots of talk about Chapman and what he'd be doing.

It makes perfect sense for any business in Europe to chase growing foreign markets. There could come a time when for every car Lotus sells in Europe, they end up selling 1000 outside of Europe. If that ever happens, foreign customers will have more of a say when it came to the direction Lotus chose to go than us. I'm not saying they'll lose their identity, I'm just saying they'll have to adjust their model line-up according to new trends. In my experience, those who fail to adapt to change, fail to capitalize on it.

Edited by Hellbound on Wednesday 14th December 17:06

RoySlater

7 posts

147 months

Wednesday 14th December 2011
quotequote all
A few points that until answered I remain unconvinced

- Current very poor car sales (no revenue stream)
- No new products until 2013/2014 (I am lost on the date the story changes all the time, but I expect 2014)
- Massive spend on Motorsport activities (GP2, GP3, GT4, GTE, GT3, F1, IRL, Rally car... F1 alone will need large investment in excess of £70million per season?, Kimi must be €10million! who is sponsoring the team, Petrov and Sennas money has gone...)
- The expense paying someone to design and then manufacture your new engine (it was not designed in house, believe it or not)
- The expense to develop new cars (US type approval, EU emissions, etc...)
- The expense to improve the facilities and factory at Hethel
- Marketing expense (the Paris Motor show last year, 5 models launched, £18million)

So lets say that come 2015 they are still around and down to the tune of £800million. They have the new model/s which have the quality needed (they hope). They then have to take market share from Porsche, Ferrari, Lamborghini, McLaren, Aston Martin (along with others). Because those manufacturers will just take it lying down and will not (in 3-4 years) develop new and better products. Oh and then start paying back (at a good rate) the money spent and bank loans etc

Its possible I know (Man Utd FC dept when the Glazers bought them, CVC and F1), but it will not be easy and the competition is massive (with established revenue streams)

The sad thing is that lots of people have been at Lotus longer than 2.5years. They don't fly around in helicopters like DB and friends, but have families, mortgages etc. I just hope Lotus do make it through this for their and the UK motor industries sake...

JS100

221 posts

156 months

Wednesday 14th December 2011
quotequote all
RoySlater said:
A few points that until answered I remain unconvinced

- Current very poor car sales (no revenue stream)
- No new products until 2013/2014 (I am lost on the date the story changes all the time, but I expect 2014)
- Massive spend on Motorsport activities (GP2, GP3, GT4, GTE, GT3, F1, IRL, Rally car... F1 alone will need large investment in excess of £70million per season?, Kimi must be €10million! who is sponsoring the team, Petrov and Sennas money has gone...)
- The expense paying someone to design and then manufacture your new engine (it was not designed in house, believe it or not)
- The expense to develop new cars (US type approval, EU emissions, etc...)
- The expense to improve the facilities and factory at Hethel
- Marketing expense (the Paris Motor show last year, 5 models launched, £18million)

So lets say that come 2015 they are still around and down to the tune of £800million. They have the new model/s which have the quality needed (they hope). They then have to take market share from Porsche, Ferrari, Lamborghini, McLaren, Aston Martin (along with others). Because those manufacturers will just take it lying down and will not (in 3-4 years) develop new and better products. Oh and then start paying back (at a good rate) the money spent and bank loans etc

Its possible I know (Man Utd FC dept when the Glazers bought them, CVC and F1), but it will not be easy and the competition is massive (with established revenue streams)

The sad thing is that lots of people have been at Lotus longer than 2.5years. They don't fly around in helicopters like DB and friends, but have families, mortgages etc. I just hope Lotus do make it through this for their and the UK motor industries sake...
Absolutely agree with you Roy - good post. Can't knock the ambition at Lotus, but can knock the execution, and can knock the logic.

JS100

221 posts

156 months

Wednesday 14th December 2011
quotequote all


Quote PH 'Not to your taste perhaps but to somebody's'

Yeah, someone who is taste(less)!

j123

881 posts

191 months

Wednesday 14th December 2011
quotequote all
Missing from perception in this article: the elephant in the room...Who wants to wait years for what is basically a heavier re-bodied evora with a v8?

- No new hi-tech = no new customers = no plan = failure.

baycats

5 posts

147 months

Thursday 15th December 2011
quotequote all
Too many nattering nabobs of negativism! I enjoy my Elise on a daily basis and only hope the company is around for many years to enable many more to enjoy the ride. The team seems massively talented and I do not care where they get the money from or who they get to help. The fun of driving my Lotus is something best shared! Don

Annal606

12 posts

148 months

Thursday 15th December 2011
quotequote all
Ahh! I stand corrected then, Thanks for clearing that up.

Frimley111R

15,490 posts

233 months

Thursday 15th December 2011
quotequote all
I don't understand why people don't understand why this is all happening. There's so much fking whining and moaning. If this company were a US one you'd have so many people saying 'Yeaahhh! We're gonna show you Porsche/AM/etc. guys!!' and yet in the UK we're flooded with long negative posts, probably from the same people who have had to STFU after whining about AM and Jaguar and LR and RR and Bentley becoming world class companies.

British Beef

2,183 posts

164 months

Thursday 15th December 2011
quotequote all
Frimley111R said:
I don't understand why people don't understand why this is all happening. There's so much fking whining and moaning. If this company were a US one you'd have so many people saying 'Yeaahhh! We're gonna show you Porsche/AM/etc. guys!!' and yet in the UK we're flooded with long negative posts, probably from the same people who have had to STFU after whining about AM and Jaguar and LR and RR and Bentley becoming world class companies.
100% agree with you mate!!

I see a really exciting episode in Lotus history being made, which will either elevate the marque to a new level or (as everyone on this forum would have you believe) break the company. No big gains are made in any industry without taking risk, for this I have admiration for Lotus and its ambition.

Would most pistonhead subscribers rather another 20 years of Elise spin offs (probably not sustainable) or the company takes a leap of faith into emerging markets with brand new products, which could rival the like of Ferrari and Porsche?

izzag

13 posts

200 months

Thursday 15th December 2011
quotequote all
British Beef said:
100% agree with you mate!!

I see a really exciting episode in Lotus history being made, which will either elevate the marque to a new level or (as everyone on this forum would have you believe) break the company. No big gains are made in any industry without taking risk, for this I have admiration for Lotus and its ambition.

Would most pistonhead subscribers rather another 20 years of Elise spin offs (probably not sustainable) or the company takes a leap of faith into emerging markets with brand new products, which could rival the like of Ferrari and Porsche?
Agree with you and any whining is merely caution of people preserving a favoured British marque.

However quoting PH in the reasoning for minimising caution - "But just think about how you convince a high-ranking Ferrari, Porsche or VW executive to relocate to Norwich. These aren't stupid people struggling to find gainful employment. And they sure as hell wouldn't leave jobs like that unless they really believed Lotus has a future." - Let's get this into perspective - Bahar's name is Maranello is not thought of highly. To say he left out of his own will ignores the pushing efforts of the senior management in Maranello.

donna180

627 posts

160 months

Thursday 15th December 2011
quotequote all
RoySlater said:
A few points that until answered I remain unconvinced

- Current very poor car sales (no revenue stream)
- No new products until 2013/2014 (I am lost on the date the story changes all the time, but I expect 2014)
- Massive spend on Motorsport activities (GP2, GP3, GT4, GTE, GT3, F1, IRL, Rally car... F1 alone will need large investment in excess of £70million per season?, Kimi must be €10million! who is sponsoring the team, Petrov and Sennas money has gone...)
- The expense paying someone to design and then manufacture your new engine (it was not designed in house, believe it or not)
- The expense to develop new cars (US type approval, EU emissions, etc...)
- The expense to improve the facilities and factory at Hethel
- Marketing expense (the Paris Motor show last year, 5 models launched, £18million)

So lets say that come 2015 they are still around and down to the tune of £800million. They have the new model/s which have the quality needed (they hope). They then have to take market share from Porsche, Ferrari, Lamborghini, McLaren, Aston Martin (along with others). Because those manufacturers will just take it lying down and will not (in 3-4 years) develop new and better products. Oh and then start paying back (at a good rate) the money spent and bank loans etc

Its possible I know (Man Utd FC dept when the Glazers bought them, CVC and F1), but it will not be easy and the competition is massive (with established revenue streams)

The sad thing is that lots of people have been at Lotus longer than 2.5years. They don't fly around in helicopters like DB and friends, but have families, mortgages etc. I just hope Lotus do make it through this for their and the UK motor industries sake...
Lotus have poor sales but the old guard didn't update the Elise/Exige or introduce a more upmarket car off the back of the Elise and the Evora was a sales failure for whatever reason. Just to be clear: none of that is the fault of the current management.....

The new team's developing the current range: New Exige, Elise S, Evora S, MY12 updates for Evora.... And planning exciting new models. Sure there's risk but there wasn't any real alternative...

I think the new Esprit looks brilliant.


JS100

221 posts

156 months

Thursday 15th December 2011
quotequote all
baycats said:
I do not care where they get the money from or who they get to help.

Don
Just like the Rooney's did wonders for Burberry!!

JS100

221 posts

156 months

Thursday 15th December 2011
quotequote all
Frimley111R said:
I don't understand why people don't understand why this is all happening. There's so much fking whining and moaning. If this company were a US one you'd have so many people saying 'Yeaahhh! We're gonna show you Porsche/AM/etc. guys!!' and yet in the UK we're flooded with long negative posts, probably from the same people who have had to STFU after whining about AM and Jaguar and LR and RR and Bentley becoming world class companies.
AstonMartin and Jaguar were sold by Ford because they were destroying their balance sheet. Rolls Royce has always been world class. Bentley has sold its soul and become the chav brand of choice. Couldn't be further away from the Bentley boys if it tried. Don't follow a trend, create it, that's Britishness, not this crass, tasteless cr*p, which is currently in abundance!

JS100

221 posts

156 months

Thursday 15th December 2011
quotequote all
donna180 said:
RoySlater said:
A few points that until answered I remain unconvinced

- Current very poor car sales (no revenue stream)
- No new products until 2013/2014 (I am lost on the date the story changes all the time, but I expect 2014)
- Massive spend on Motorsport activities (GP2, GP3, GT4, GTE, GT3, F1, IRL, Rally car... F1 alone will need large investment in excess of £70million per season?, Kimi must be €10million! who is sponsoring the team, Petrov and Sennas money has gone...)
- The expense paying someone to design and then manufacture your new engine (it was not designed in house, believe it or not)
- The expense to develop new cars (US type approval, EU emissions, etc...)
- The expense to improve the facilities and factory at Hethel
- Marketing expense (the Paris Motor show last year, 5 models launched, £18million)

So lets say that come 2015 they are still around and down to the tune of £800million. They have the new model/s which have the quality needed (they hope). They then have to take market share from Porsche, Ferrari, Lamborghini, McLaren, Aston Martin (along with others). Because those manufacturers will just take it lying down and will not (in 3-4 years) develop new and better products. Oh and then start paying back (at a good rate) the money spent and bank loans etc

Its possible I know (Man Utd FC dept when the Glazers bought them, CVC and F1), but it will not be easy and the competition is massive (with established revenue streams)

The sad thing is that lots of people have been at Lotus longer than 2.5years. They don't fly around in helicopters like DB and friends, but have families, mortgages etc. I just hope Lotus do make it through this for their and the UK motor industries sake...
Lotus have poor sales but the old guard didn't update the Elise/Exige or introduce a more upmarket car off the back of the Elise and the Evora was a sales failure for whatever reason. Just to be clear: none of that is the fault of the current management.....

The new team's developing the current range: New Exige, Elise S, Evora S, MY12 updates for Evora.... And planning exciting new models. Sure there's risk but there wasn't any real alternative...

I think the new Esprit looks brilliant.
Are you going to buy one? I'm not. Going to keep my Scura and run my Gallardo alongside until Aventador arrives. Would love to have owned an Esprit, but not what is proposed.