PH Blog: follow the money


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

 

Comments (19) Join the discussion on the forum

  • JS100 15 Dec 2011

    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.

  • JS100 15 Dec 2011

    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 15 Dec 2011

    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!!

  • donna180 15 Dec 2011

    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.


  • izzag 15 Dec 2011

    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.

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