RE: Lotus jobs at risk

[Ozzie Osmond]

Nohedes said:

2) Make sure the business is profitable with current volumes (and have a good plan for maintaining volumes over the next 5-10 years).

I don't think that's possible. As Donkey Apple has pointed out, the company has huge borrowings and needs substantial sales just to generate enough income to pay the interest.

Unlike Caterham, Morgan, Noble and the other barn-builders Lotus' cars are properly engineered for sale in global markets, including North America. You can't access those markets without massive R&D costs.

[k-ink]

I wonder if Caterham are keeping an eye on this situation. I suspect an owner like them would be able to knock out low volume elise models as a sideline. At least they have the experience of running a small efficient company. I hope we will continue to see the elise made, even if Lotus does sink.

[wemorgan]

Nohedes said:

It seems like the restructuring is in the engineering side of the business, so hopefully the car business will be ok with current volumes. Does anyone know if the engineering profits were being used to support other business activities in recent years?

Historically it was Lotus Engineering making money, whilst Lotus Cars lost money. Are some departments names being lost in translation in this debate I wonder? Lotus Engineering offers consultancy services to OEM etc. In these automotive boom times this should be able to make a profit.

[John145]

Ozzie Osmond said:

Nohedes said:

2) Make sure the business is profitable with current volumes (and have a good plan for maintaining volumes over the next 5-10 years).

I don't think that's possible. As Donkey Apple has pointed out, the company has huge borrowings and needs substantial sales just to generate enough income to pay the interest.

Unlike Caterham, Morgan, Noble and the other barn-builders Lotus' cars are properly engineered for sale in global markets, including North America. You can't access those markets without massive R&D costs.

Actually all of Dany's debts were written off by DRB.

[DonkeyApple]

John145 said:

Ozzie Osmond said:

Nohedes said:

2) Make sure the business is profitable with current volumes (and have a good plan for maintaining volumes over the next 5-10 years).

I don't think that's possible. As Donkey Apple has pointed out, the company has huge borrowings and needs substantial sales just to generate enough income to pay the interest.

Unlike Caterham, Morgan, Noble and the other barn-builders Lotus' cars are properly engineered for sale in global markets, including North America. You can't access those markets without massive R&D costs.

Actually all of Dany's debts were written off by DRB.

Do you know which debts in particular? They were running a huge deficit prior to DB, obviously DB racked this up during his $850m plan to build a few more cars and since DB they restructured and borrowed another £100m from Proton as they breached banking covenants.

If Proton, post March 14 have wiped all of Lotus' operating debt then this is significant, especially after last years' losses of £160m and having less than £20m sitting on their balance sheet.

[Ozzie Osmond]

John145 said:

Actually all of Dany's debts were written off by DRB.

That's interesting if correct. Thanks.

[SpudLink]

Ozzie Osmond said:

Unlike Caterham, Morgan, Noble and the other barn-builders Lotus' cars are properly engineered for sale in global markets, including North America. You can't access those markets without massive R&D costs.

Today I've read that the Evora will fall foul of US airbag legislation by the end of the year.
If so, that would mean more expense reengineering them, or pulling out of the market.
Not good news.

[Impasse]

SpudLink said:

Today I've read that the Evora will fall foul of US airbag legislation by the end of the year.
If so, that would mean more expense reengineering them, or pulling out of the market.
Not good news.

Lotus say:

"We would like to comment upon the rumours that are circulating on social media and online, Lotus is committed to the North American market and will indeed produce a 2016 Model Year Evora that will be fully U.S. compliant. We will not be producing a 2015 model year Evora, therefore, there will be limited availability of 2014 model year cars over the next few months."

Funny how prospective Bad news circulates so much more quickly than real Good news.

[Nohedes]

Impasse said:

Lotus say:

"We would like to comment upon the rumours that are circulating on social media and online, Lotus is committed to the North American market and will indeed produce a 2016 Model Year Evora that will be fully U.S. compliant. We will not be producing a 2015 model year Evora, therefore, there will be limited availability of 2014 model year cars over the next few months."

Funny how prospective Bad news circulates so much more quickly than real Good news.

Sorry for being a thicko, but doesn't the quote you have posted say that they aren't selling the Evora in the US in 2015? Or does it mean they will continue to sell the 2014 model in 2015?

[Impasse]

Nohedes said:

Sorry for being a thicko, but doesn't the quote you have posted say that they aren't selling the Evora in the US in 2015? Or does it mean they will continue to sell the 2014 model in 2015?

They will continue to sell the 2014MY during 2015 until the 2016MY are available probably towards the end 2015. It's the rumours of withdrawal from the US market which they're keen to scupper.
The lack of smart airbag problem has been resolved and will be introduced in the 2016MY. Geneva next year will most likely see an Evora refresh announcement which will probably form the basis of the 2016MY model.

[Nohedes]

Impasse said:

They will continue to sell the 2014MY during 2015 until the 2016MY are available probably towards the end 2015. It's the rumours of withdrawal from the US market which they're keen to scupper.
The lack of smart airbag problem has been resolved and will be introduced in the 2016MY. Geneva next year will most likely see an Evora refresh announcement which will probably form the basis of the 2016MY model.

Ah, I wasn't sure of they could sell the older model compliantly in 2015, but it seems they can. Thanks for clarifying

[otolith]

Interview with the Lotus CEO discussing the restructuring and model range plans.

http://www.telegraph.co.uk/motoring/car-manufactur...

[kambites]

otolith said:

Interview with the Lotus CEO discussing the restructuring and model range plans.

http://www.telegraph.co.uk/motoring/car-manufactur...

All sounds very sensible... whether it will work remains to be seen.

Interesting that the Exige is outselling both the Evora and the Elise, I wouldn't have expected that. I think a convertible Evora is certainly the obvious cheap improvement to the model lineup. Assuming it'd be two seater only, it'd give them a genuine Boxster competitor to attack the market in the states with; they just need to make sure it's actually finished when they release it this time.

Edited by kambites on Wednesday 24th September 09:21

[Ozzie Osmond]

Nohedes said:

Ah, I wasn't sure of they could sell the older model compliantly in 2015, but it seems they can. Thanks for clarifying

Perhaps they are "already built for 2014 but remain unsold".

Hopefully "Evora refresh" may mean "completely rebodied car". But that may be optimistic.

[bri_the_fly]

I left a couple weeks ago handing in my notice on the same day the cull started. Overall impression of working there can be summed up in one word - disappointed.
The new boss seems to have got jobs for his mates appointing new director for this, that and the other and first on the cull list were of course the CAD contractors.
The old boss was from Malaysian owners, who didn't really know about cars, but I'm convinced they bought the 'brand' with the idea of selling T-shirts and all sorts of other paraphenalia with the Lotus logo on it (check the merch website). Obviously you can make a much higher mark up of stuff Made in China with Lotus on it. That will probably keep them going to make a few cars on the side.
New projects like an Evora refresh looks unlikely as ex-Ferrari design boss seems to think there is a bottomless pit of cash to have a fancy design. The current models will just be modified here and there to make them even better.

What the firm needs in my opinion is an engineer to run the place, as the core of Lotus and the people who have spent a lifetime working there is about engineering and not about selling stuff.
The only problem is if I had a Lotus I would just receive too many speeding tickets..oh well.

[DonkeyApple]

kambites said:

otolith said:

Interview with the Lotus CEO discussing the restructuring and model range plans.

http://www.telegraph.co.uk/motoring/car-manufactur...

All sounds very sensible... whether it will work remains to be seen.

Interesting that the Exige is outselling both the Evora and the Elise, I wouldn't have expected that. I think a convertible Evora is certainly the obvious cheap improvement to the model lineup. Assuming it'd be two seater only, it'd give them a genuine Boxster competitor to attack the market in the states with; they just need to make sure it's actually finished when they release it this time.

Edited by kambites on Wednesday 24th September 09:21

It highlights a couple of interesting things.

The entire car world has seen volumes grow by adding complexity and weight. Lotus is fighting the trend by sticking to its core ethos. It won't get mainstream volume uplift so long as the entire market expects electric roofs, seats, warmers and all that OAP Assist crap.

The fact that they are selling more of the track focussed products highlights the market they are in. Track cars for the road, not road cars for the image. Again, wrong side of the trend.

Adjusting the models to make them more practical is a good thing.

The other interesting point is about the shop windows. They are spot on that you can't sell a product if you don't have enough or the right type of shop windows.

I had no idea that they had pretty much no sales outlets. That is a huge oversight in today's world. A Starbucks in every corner and the masses will buy the worst coffee on the highstreet. You can't sell cars if potential buyers aren't seeing them in the windows.

Investing in dealers in the right location is the key tool for increasing sales of the existing products.

As an aside, what is the average margin on a Lotus car? £20k tops?

How many staff in Lotus Cars? Average gross cost of employment? Probably over £40k per head?

Just to cover wages one wonders if 2000 units a year is sufficient.

[otolith]

DonkeyApple said:

I had no idea that they had pretty much no sales outlets.

Bahahahar had termination letters sent out to all the European Lotus dealerships. They were invited to reapply if they met the "standards" necessary to meet the brand image he thought it was important to portray.

http://www.am-online.com/news/2011/8/4/dealers-dit...

[unpc]

The ingress/egress aspect of their product has always been a stumbling block (no pun intended) of their range. They need to invest some of their resources (and it sounds like they are) in addressing this ASAP as I think the Spartan nature is less of a problem than this.

I prefer cars with little to no toys and I'm sure I'm not alone but I like to be able to get out of the thing after I've parked it. Fixing this won't hurt their sales.

[otolith]

4C looks about as easy to get in/out of as an Elise.

https://www.youtube.com/watch?v=bLDIjjFhL9Y

Access may well put some people off. The flipside is that if you end up with a normal car seating position, it feels more ordinary and less special.

[TA14]

Ozzie Osmond said:

Nohedes said:

Ah, I wasn't sure of they could sell the older model compliantly in 2015, but it seems they can. Thanks for clarifying

Perhaps they are "already built for 2014 but remain unsold".

Mmmm. If they stockpile say 30, 2014 cars that may well be enough for 2015