RE: Dany Bahar: terminated

RE: Dany Bahar: terminated

Author
Discussion

JonRB

74,590 posts

273 months

Friday 8th June 2012
quotequote all
longblackcoat said:
By your own statement, that was the best part of a decade ago.
Yes, I realised that after I posted it, hence my edit.

DonkeyApple

55,350 posts

170 months

Friday 8th June 2012
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356Speedster said:
I'm not so sure.... a base Boxster is £37.5K, Cayman £39K, then Elise CR is £27K, Exige £49K and Evora £51K. Just using Porsche as the example, their pricing hasn't come down and squeezed Lotus (unless I've missed something).

In terms of competition, I'd say the Evora is a rival to the Cayman (and therefore, it looks a bit overpriced at £12K basic more expensive), but the Elise & Exige are too raw & focussed to rival the Boxster or Cayman.

In some respects it feels like Lotus has forgotten where the Elise & Exige fit into the car world as alternatives to cars like Caterhams, TVRs (juuust), Ariel, etc. Bascially properly fun hoon cars to put it bluntly. The happy hunting ground here is £20-£40K, IMO... anything north of that gives people too much choice and should only be reserved for properly range topping cars (e.g. Caterham R500).

I'd suggest that the Elise isn't a million miles away from it's ideal market price point. I'd say a CR should be around £23-24K (to tempt first time Lotus buyers away from Caterhams & the like), rising to mid £30s for the top models. The Exige I feel is massively overprices at £49K and is about £14K out of it's depth. Priced more realistically, I'd expect a more boyant core market for them that would allow diversity elsewhere later on.

These are my opinions on what the market (& punters) can bare for these current Lotus products and clearly, I don't know what they cost to build, however, if they can't make a unit profit on the Elise / Exige with their quite old platforms, then the business has deeper problems! (I suspect this is the case).
The problem comes when you just do some fag packet sums on the costs.

Just add up man hours, engine, chassis, electrics, body, dealer margin, etc and see what number you get to. Then add profit. And this only takes into account a mere fraction of the expenditure and costs.

Porsche can build cheap as it uses cheap foreign labour and had the money in the first instance to invest in smart build design etc. same with the MX5 and all other products from mass producers.

A tiny company in a country with huge labour costs cannot compete in the same way. They have to find a smarter solution.

Bahar backed a plan to raise public brand so enable a higher price bracket so better margins but he failed.

Noble have gone to one extreme to make a workable business model and kit car companies operate at the other end.

Look at Ginetta trying to operate in the middle ground, they haven't actually sold a genuine customer car yet and it's surrounded by rumours of debt issues.

It's a huge problem to build small numbers of cars in the UK at the kind of price that people want.

odyssey2200

18,650 posts

210 months

Friday 8th June 2012
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JonRB said:
longblackcoat said:
Lotus are famed amongst the cognoscenti for their lightweight, affordable cars, but simply don’t register on the public’s consciousness.
I don't agree. About 10 years ago, just after I got married, I bought my new wife a Lotus Elan SE Turbo for a wedding present for something like £8k, and I myself already had a £22k TVR Chimaera. All my wife's friends had up until that point criticised us spending "as much as a conservatory" on a convertible. Or had heard the ste about TVRs being unreliable or thought it was an MG or simply didn't care.

However, once she had the Elan it was "ooooh! You have a LOTUS!!!!" and "Oh wow! That must have been so expensive!" or "I wish my hubby would buy *me* a Lotus!"

Don't underestimate the cachet that the Lotus brand still has.

Edit: Mind you, I guess that was 10 years ago.

Edited by JonRB on Friday 8th June 15:11
But that Cachet doen't in any way translate into sales.
Its what I call the Baby Polar Bear Syndrome.

Everybody goes "AHH! isn't that cute" but nobody ever buys one. smile




kambites

67,580 posts

222 months

Friday 8th June 2012
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356Speedster said:
kambites said:
The problem isn't that Lotus have pushed their prices up, but more that their competitors have pushed them down. The Elise costs about the same in real terms now as it did when it was first released; however more mainstream competitors like Porsche have managed to improve their economies of scale in a way that Lotus just can't compete with.

I'm not convinced it's possible to produce cheap(ish) low-volume cars any more.
I'm not so sure.... a base Boxster is £37.5K, Cayman £39K, then Elise CR is £27K, Exige £49K and Evora £51K. Just using Porsche as the example, their pricing hasn't come down and squeezed Lotus (unless I've missed something).

In terms of competition, I'd say the Evora is a rival to the Cayman (and therefore, it looks a bit overpriced at £12K basic more expensive), but the Elise & Exige are too raw & focussed to rival the Boxster or Cayman.

In some respects it feels like Lotus has forgotten where the Elise & Exige fit into the car world as alternatives to cars like Caterhams, TVRs (juuust), Ariel, etc. Bascially properly fun hoon cars to put it bluntly. The happy hunting ground here is £20-£40K, IMO... anything north of that gives people too much choice and should only be reserved for properly range topping cars (e.g. Caterham R500).

I'd suggest that the Elise isn't a million miles away from it's ideal market price point. I'd say a CR should be around £23-24K (to tempt first time Lotus buyers away from Caterhams & the like), rising to mid £30s for the top models. The Exige I feel is massively overprices at £49K and is about £14K out of it's depth. Priced more realistically, I'd expect a more boyant core market for them that would allow diversity elsewhere later on.

These are my opinions on what the market (& punters) can bare for these current Lotus products and clearly, I don't know what they cost to build, however, if they can't make a unit profit on the Elise / Exige with their quite old platforms, then the business has deeper problems! (I suspect this is the case).
Yet the current V6 Exige is cheaper than the original S1 Exige, once adjusted for inflation; and the current SC Elise is almost exactly the same price as the original S1 with half the power was?

20k in 1996 is damned nearly 40k in today's money; even if you take the government's (very conservative) inflation figures, it's over 30k. Cars have, as a whole, got continuously cheaper pretty much every year since their invention; Lotus haven't.

Edited by kambites on Friday 8th June 15:32

Harji

2,200 posts

162 months

Friday 8th June 2012
quotequote all
Nobody but the hardcore fans wants a Lotus. It's too pro/serious driver focussed for the average driver, has a track day car image which will put off those who have the dosh and are buying their first toy.

I know it's traditional appeal, but you have to move with the times and they have not. Rich Russians, Chinese/Brits are not buying them but they are butying everything else. And don't get me on the Toyota engines/gearboxes.

Put it this way, unlike 90% off the people who think they wanted a white Lotus esprit because they saw it in a Bond movie. I recall when I watched it, and where, and pestering my dad for one (of course eveything is affordable when you are 8!)

But since then I've wanted one Lotus, an Esprit and unless I didn't read car mags eveything has passed me buy, none of their cars really appeal to me.

If you grew up wanting a Porsche or Ferrari or Lambo, you could probabaly name a few models straight away that you'd happily buy and for that reason you will stil be interested in any new model they come out with. In my case, the Testarossa to the 458, Countach ---> Diablo and current models

This does not apply to Lotus, it was an Esprit, and that was about it! it never stayed in the publics eye or imagination, no one I knew grew up wanting an Lotus (apart from a white Esprit).


SeanyD

3,376 posts

201 months

Friday 8th June 2012
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longblackcoat said:
they have to offer a really good USP, and at present they don’t do that.
A fairly well balanced post, but I dont agree with this bit. I had a previous Elise, moved to a more practical hot-hatch when we had a little'un, but yearned to be back in another Elise. In terms of USP, name any other car which meets the following

a) Supercar looks/handling/performance on a family car budget (purchase cost (used) and maintenance costs)
b) 0-60 sub 6 seconds
c) Returns a reasonable 35ish mpg
d) Can be used daily, and keeps you warm and dry (well 99% dry)
e) Exclusive/rare enough to stand out.
f) Is equally happy on the road or on track.

Although I do agree whilst this list is my criteria when choosing an Elise, and possibly similar for other owners, whether the market is large enough for sustaining the business, probably not, and probably part of the issue.

356Speedster

2,293 posts

232 months

Friday 8th June 2012
quotequote all
DonkeyApple said:
The problem comes when you just do some fag packet sums on the costs.

Just add up man hours, engine, chassis, electrics, body, dealer margin, etc and see what number you get to. Then add profit. And this only takes into account a mere fraction of the expenditure and costs.

Porsche can build cheap as it uses cheap foreign labour and had the money in the first instance to invest in smart build design etc. same with the MX5 and all other products from mass producers.

A tiny company in a country with huge labour costs cannot compete in the same way. They have to find a smarter solution.

Bahar backed a plan to raise public brand so enable a higher price bracket so better margins but he failed.

Noble have gone to one extreme to make a workable business model and kit car companies operate at the other end.

Look at Ginetta trying to operate in the middle ground, they haven't actually sold a genuine customer car yet and it's surrounded by rumours of debt issues.

It's a huge problem to build small numbers of cars in the UK at the kind of price that people want.
I didn't make any claims / assumptions on profit margins and clearly stated that I didn't know what it costs Lotus to build cars (I doubt anyone on here can), I only stated what IMO, the market wants to pay for Elise, Exige & Evora products. While this is again an assumption, I've based that on the price of other cars and the evidence of a massive drop in sales over the last 12mth (again, not helped by the Bahahahar effect).

To your point on UK manufacturing costs, given that Lotus have been using the same platform since the 90's with a few minor tweaks here & there (yes, the Evora would have needed more serious development, but it's the same adaptable core platform), should an Elise / Exige really not be able to make a profit at sensible market money? As I said, if it can't then Lotus' problems are much deeper and non of us here will be able to comment on the actual root cause.

While I agree with you that Ginetta are struggling to make it work (let's not open that can of worms here!!), there are other firms that seem to be doing alright. Ariel, Caterham, Westfield, being the obvious ones, then if you cast the net wider JLR have turned themselves around and Morgan have a health balance sheet. I'm not suggesting the latter are Lotus competition, they're just examples of companies that have recognised their markets and turned robust plans into sales & full order books.

Lotus' UK base is not a reason for their troubles, it's potentially their best asset, along with thier name & history. Their issues lie elsewhere and need resolving first.... and by God, I hope they do resolve them and get back to health, because they are a great wee company and we'd all be worse off if they weren't there any more.

JonRB

74,590 posts

273 months

Friday 8th June 2012
quotequote all
Harji said:
Put it this way, unlike 90% off the people who think they wanted a white Lotus esprit because they saw it in a Bond movie. I recall when I watched it, and where, and pestering my dad for one (of course eveything is affordable when you are 8!)
I was lucky enough that my dad did own one. A white S3 complete with black metal slats on the rear window round about 1982. Bloody fantastic being regularly dropped off at school in James Bond's car. cloud9

Here's a pic taken just before he sold it.


Lotus Esprit by JonRB, on Flickr


Can't get over the comedy off-road ride height and balloon tyres. hehe

356Speedster

2,293 posts

232 months

Friday 8th June 2012
quotequote all
kambites said:
Yet the current V6 Exige is cheaper than the original S1 Exige, once adjusted for inflation; and the current SC Elise is almost exactly the same price as the original S1 with half the power was?

20k in 1996 is damned nearly 40k in today's money; even if you take the government's (very conservative) inflation figures, it's over 30k. Cars have, as a whole, got continuously cheaper pretty much every year since their invention; Lotus haven't.
I take your point, but now we're getting into economics and all that this proves is that other manufacturers have managed to adapt and work with the changing times, better than Lotus have. Lotus prices have gone up the way, to the degree that they're now playing in some very tough arenas. Better mgt would have seen them adapt their business, as others have had to, in order to protect their margins and market positions.

otolith

56,161 posts

205 months

Friday 8th June 2012
quotequote all
longblackcoat said:
the performance the Elise offers is massively outclassed by the hotter versions of standard hatchbacks
Which hotter versions of standard hatchbacks massively outclass the performance of the current supercharged Elise S? The recent 1.6 Club Racer model only had mid range hot hatch pace, true, but the supercharged models with 60 in around 4.5 seconds and 100 in around 11.5? Even my naturally aspirated 111R has about the same 0-100 time as a MK2 Focus RS.

Studio117

4,250 posts

192 months

Friday 8th June 2012
quotequote all
Could anyone suggest a business plan to turn things around?

Apart from massive layoffs and possibly separating the engineering part of the company, what options are there?

Why would toyota invest? They have only just released the gt86, why take on massive debt and responsibility and potentially create a competing product?

To me Lotus just seems a bit naff, they still haven't shaken off the built in a shed image.




kambites

67,580 posts

222 months

Friday 8th June 2012
quotequote all
356Speedster said:
kambites said:
Yet the current V6 Exige is cheaper than the original S1 Exige, once adjusted for inflation; and the current SC Elise is almost exactly the same price as the original S1 with half the power was?

20k in 1996 is damned nearly 40k in today's money; even if you take the government's (very conservative) inflation figures, it's over 30k. Cars have, as a whole, got continuously cheaper pretty much every year since their invention; Lotus haven't.
I take your point, but now we're getting into economics and all that this proves is that other manufacturers have managed to adapt and work with the changing times, better than Lotus have. Lotus prices have gone up the way, to the degree that they're now playing in some very tough arenas. Better mgt would have seen them adapt their business, as others have had to, in order to protect their margins and market positions.
Well some have managed to adapt, a large number of others have gone out of business. With a few notable exceptions, those that have survived are generally either big companies with huge economies of scale; or produce very, very expensive cars. I think Lotus either need to get into the tens of thousands of cars a year; or into the hundreds of thousands of pounds a car, if they're going to survive. Bahar went for the latter, and seems to have failed.

The only other option seems to be to go down the Caterham route, producing extremely low-tech cars in very small numbers with very low overheads, but that market is awfully full.

Edited by kambites on Friday 8th June 16:00

longblackcoat

5,047 posts

184 months

Friday 8th June 2012
quotequote all
SeanyD said:
longblackcoat said:
they have to offer a really good USP, and at present they don’t do that.
A fairly well balanced post, but I dont agree with this bit. I had a previous Elise, moved to a more practical hot-hatch when we had a little'un, but yearned to be back in another Elise. In terms of USP, name any other car which meets the following

a) Supercar looks/handling/performance on a family car budget (purchase cost (used) and maintenance costs)
b) 0-60 sub 6 seconds
c) Returns a reasonable 35ish mpg
d) Can be used daily, and keeps you warm and dry (well 99% dry)
e) Exclusive/rare enough to stand out.
f) Is equally happy on the road or on track.

Although I do agree whilst this list is my criteria when choosing an Elise, and possibly similar for other owners, whether the market is large enough for sustaining the business, probably not, and probably part of the issue.
I take your point, and largely agree with you. However, I'd take issue with (a) above; Lotus are now offering their most basic car at £29k, which is hardly family car money. For something that's increasingly out of date - I defy you to drive a brand new one and a four year old low-miles good secondhand one at half the price and notice any significant difference - it's just too expensive given the lack of development over the years.


kambites

67,580 posts

222 months

Friday 8th June 2012
quotequote all
The thing is, 30k is family car money these days - you can pay that for a well specced up Golf, let alone a 3-series.

And I don't understand in what way it's "out of date"? That's not the same thing as old. An aluminium tub and composite body certainly sounds a lot more "modern" than any of the steel monococques that make up most of the market.

Edited by kambites on Friday 8th June 16:07

356Speedster

2,293 posts

232 months

Friday 8th June 2012
quotequote all
kambites said:
Well some have managed to adapt, others have gone out of business. With a few notable exceptions, those that have survived are generally either big companies with huge economies of scale; or produce very, very expensive cars.
To be fair more have adapted than have gone to the wall. Sure JLR have got strong backing, but they're profitable now thanks to a major turnaround. As I stated above, many niche UK makers are doing well and have kept their business plans sound.. again, Ariel, Caterham, Westfield, Morgan, Ultima immediately spring to mind.

Strong & sound management is needed at Lotus now.... None of us here know what their answer to profitability is, as we don't have sight of the books to know exactly where the problems are and how deep the rot it. The only thing we can say is that mgt have taken their eye off the ball, let's hope it's fixable.

Edited by 356Speedster on Friday 8th June 16:07

kambites

67,580 posts

222 months

Friday 8th June 2012
quotequote all
Lotus need sound management and a completely different business plan. There is no market for the products that they current produce at the prices that they can realistically produce them, IMO.

Personally, I don't think I can see Lotus Cars ever turning a profit unless it's simply as a badge in a major multinational.

Dodgey_Rog

1,986 posts

261 months

Friday 8th June 2012
quotequote all
I think the phrase, 'run before you can walk' is very apt here?

He should have concentrated on bringing the Esprit to market working with an off the shelf engine, like the Jaguar V8 or such like. At the same time, Wolf could have been developing the in house V8 which would have gone into the next model to launch, then introduced that MY Esprit with that option?

If Lotus want my phone number, I'll take half DB's salary with a similar share option etc and performance related pay, I can start next week......??

I'd even leave New York and move 'nearer' to Norfolk. Hell, I'd even take Ketteringham Hall if they convert it back to a residence.....

otolith

56,161 posts

205 months

Friday 8th June 2012
quotequote all
kambites said:
Lotus need sound management and a completely different business plan. There is no market for the products that they current produce at the prices that they can realistically produce them, IMO.
I think giving their current customers a compelling reason to upgrade by buying a new(er) Lotus rather than sticking a Honda/Audi/Duratec into what they already have would be a good start - and then perhaps some marketing effort into selling what they have got rather than what kind of lifestyle a future Lotus owner ought to have.

kambites

67,580 posts

222 months

Friday 8th June 2012
quotequote all
But given what their current customers want, what can they change? I think part of their problem is that the kinds of people who want a car like the Elise are probably the least likely to particularly want to buy it new (hence the strong residuals).

I just don't think the market for Elise-type cars is big enough to run a "mass production" car company on. If you look at other car companies, they either make no pretence at mass production; produce massively more cars; or produce massively more expensive cars.

Edited by kambites on Friday 8th June 16:21

SeanyD

3,376 posts

201 months

Friday 8th June 2012
quotequote all
longblackcoat said:
I take your point, and largely agree with you. However, I'd take issue with (a) above; Lotus are now offering their most basic car at £29k, which is hardly family car money. For something that's increasingly out of date - I defy you to drive a brand new one and a four year old low-miles good secondhand one at half the price and notice any significant difference - it's just too expensive given the lack of development over the years.
Good points, and I do agree, hence I had purchase price (used). As said, a 4 year old 'half-price' one brings it in line with family car prices (albeit a aparkly new family car)

Lotus have improved build quality, technology, specifications etc over time, but I'd tend to agree they've moved slowly compared to other manufacturers. Without getting into the whole 'lightweight' and 'hardcore' ethos, simple creature comforts like central locking, air bags, electric windows, have been taken for granted by other manufacturers for decades now, even on many base models.

Fingers crossed for Lotus, the cars, and the staff.