McLaren

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Discussion

TheDeuce

5,468 posts

21 months

Tuesday 23rd June
quotequote all
RonaldMcDonaldAteMyCat said:
TheDeuce said:
That 1.2bn would represent approx 1000 cars a year at a value of around £150k each in order to break over, across the 6 year time period you refer to. Some sell for a lot more than that of course, and I'm sure there are other forms of revenue too.

Is 1000+ cars a year realistic? Actually in 2017 they shifted 3300 units, then 2018 nearly 5000 units.. So the numbers involved, although huge, most likely do (or did..) stack up. The world has changed somewhat since of course.

The sheer scale of operation to put out so many hand built cars explains how they can lose vast amounts in a very short time perhaps.
On top of development investment you have the actual costs of building the cars and running the business.
Of course, but given the volume and price tag of the cars they have been putting out the last couple of years, the £1.2bn R&D commitment doesn't seem entirely crazy, that was my point.

Anyway, all we have is a few headline figures and the accounts - would need to actually see their internal business plan to judge if their choices in recent years were actually sensible or not.

If you want to read up on one massive challenge that all small volume sportscar firms such as McLaren (Hello Aston Martin too..) face, check this out: https://www.autocar.co.uk/car-news/industry/analys...

Towards the bottom you see the formula for calculating the fines, based on a BMW 1 series. The major car firms are trying to offset their average emissions by developing super clean affordable cars for the masses, which enables them to continue to sell performance monsters to the minority that want such a car. Hence tiny 3 cylinder engines and research in to new two stroke designs. You can see that is a problem for McLaren as their entire range is not green at all. So they have huge fines ramping up year on year for each car they sell.

One positive is that firms producing 1000 cars or less per year are exempt. That is why along with a reduction in staffing it's possible - likely even - that they will look to producing far fewer, but far more expensive cars. It's also essentially why supercars from any reasonable sized outfit (Ferrari etc) are getting so expensive, they have to factor in the fines whilst also researching crazy expensive new electric platforms in order to minimise the fines.

Fun time to be building sports cars..

Exige77

5,172 posts

146 months

Tuesday 23rd June
quotequote all
TheDeuce said:
Of course, but given the volume and price tag of the cars they have been putting out the last couple of years, the £1.2bn R&D commitment doesn't seem entirely crazy, that was my point.

Anyway, all we have is a few headline figures and the accounts - would need to actually see their internal business plan to judge if their choices in recent years were actually sensible or not.

If you want to read up on one massive challenge that all small volume sportscar firms such as McLaren (Hello Aston Martin too..) face, check this out: https://www.autocar.co.uk/car-news/industry/analys...

Towards the bottom you see the formula for calculating the fines, based on a BMW 1 series. The major car firms are trying to offset their average emissions by developing super clean affordable cars for the masses, which enables them to continue to sell performance monsters to the minority that want such a car. Hence tiny 3 cylinder engines and research in to new two stroke designs. You can see that is a problem for McLaren as their entire range is not green at all. So they have huge fines ramping up year on year for each car they sell.

One positive is that firms producing 1000 cars or less per year are exempt. That is why along with a reduction in staffing it's possible - likely even - that they will look to producing far fewer, but far more expensive cars. It's also essentially why supercars from any reasonable sized outfit (Ferrari etc) are getting so expensive, they have to factor in the fines whilst also researching crazy expensive new electric platforms in order to minimise the fines.

Fun time to be building sports cars..
Is this not an EU thing and not a global thing ?

How does it effect non EU manufacturers ?

TheDeuce

5,468 posts

21 months

Tuesday 23rd June
quotequote all
Exige77 said:
Is this not an EU thing and not a global thing ?

How does it effect non EU manufacturers ?
It is an EU thing.. my understanding is we're still adopting the same rules in the UK by default, until such time as we make our own. Either way the UK is signed up to emissions targets so the car makers here, and elsewhere, will all get the same sort of financial pressure to not make the sort of cars that McLaren do.

thegreenhell

6,957 posts

174 months

Tuesday 23rd June
quotequote all
I'm sure McLaren, and likely Ferrari, will be going fully hybrid ICE/electric in their next model phase. McLaren already have the technology from the P1 and Speedtail, and with the rate they introduce new models they can probably get something into production by lunchtime next week.

TheDeuce

5,468 posts

21 months

Tuesday 23rd June
quotequote all
thegreenhell said:
I'm sure McLaren, and likely Ferrari, will be going fully hybrid ICE/electric in their next model phase. McLaren already have the technology from the P1 and Speedtail, and with the rate they introduce new models they can probably get something into production by lunchtime next week.
They can indeed. That's essentially what bought about the 'holy trinity' of hybrid supercars. Problem is, they're fairly light hybrids and don't do nearly enough to offset that ICE emmisions. Ferrari & McLaren need full EV to make a significant dent - or at least a very popular and more economical hybrid offering (£100k price point entry level car..?). Porsche already have the taycan which they're seriously pushing the volume of now via some pretty tasty lease incentives...

The kick in the bks is that most of these car firms customers unashamedly want a monster V10/12 n/a car, but that's the last thing the makers want to sell these days. Financially at least..

thegreenhell

6,957 posts

174 months

Tuesday 23rd June
quotequote all
They don't need full EV. They just need a short range of EV-only, enough to get the overall average down for the official tests, and they'll design the hybrid system to give them the best results under test conditions. This is what most hybrids do anyway. Even the P1 could drive in electric-only mode, in which they have zero emmissions, and that is now old-tech.

They don't need to fundamentally change their model ranges to acheive a low overall average. Just hybridise everything. Ferrari can still produce the loud NA V12, just with a bit of hybrid added like they did with the LaFerrari.

TheDeuce

5,468 posts

21 months

Tuesday 23rd June
quotequote all
thegreenhell said:
They don't need full EV. They just need a short range of EV-only, enough to get the overall average down for the official tests, and they'll design the hybrid system to give them the best results under test conditions. This is what most hybrids do anyway. Even the P1 could drive in electric-only mode, in which they have zero emmissions, and that is now old-tech.

They don't need to fundamentally change their model ranges to acheive a low overall average. Just hybridise everything. Ferrari can still produce the loud NA V12, just with a bit of hybrid added like they did with the LaFerrari.
Yes if they hybridise everything and can carry on with no fines. But that is itself an expensive task - they need to develop a platform that has the capability to not just pass today's token tests, but also tighter tests that are likely to exist within the platforms lifespan - typically 7-10 years.

Even then they lose a % customers that just want a bog standard ICE.

It's workable for sure but for small car firms like McLaren, the obstacles they have to overcome are very taxing.

sparta6

1,784 posts

55 months

Tuesday 23rd June
quotequote all
TheDeuce said:
Even then they lose a % customers that just want a bog standard ICE.

.
How many "bog standard" V12's have you tried lately ?

They are extremely dull biggrinbiggrin



Piginapoke

1,073 posts

140 months

Tuesday 23rd June
quotequote all
glazbagun said:
How do you spend £291M in three months?!
Walk away from the Honda engine deal, pay Alonso's salary and then pay Ron £200m to leave. That'll do it.

Some of this is external, but the Group has spent cash like water.

Edited by Piginapoke on Tuesday 23 June 19:11


Edited by Piginapoke on Tuesday 23 June 19:11

Deesee

3,887 posts

38 months

Tuesday 23rd June
quotequote all
High Court next week, probably insolvency, bond holders to take control.

LaurasOtherHalf

17,285 posts

151 months

Tuesday 23rd June
quotequote all
Who are the bond holders?

TheDeuce

5,468 posts

21 months

Tuesday 23rd June
quotequote all
Deesee said:
High Court next week, probably insolvency, bond holders to take control.
If they lose their fight that may trigger creditors to petition their insolvency - although that is by no means certain, the creditors may well consider that such a move would reduce what they can salvage and prefer to see McLaren release equity to continue trading.

If however a petition for insolvency was heard simultaneously (that is also possible), the the company would be placed into administration - and they would have control. Those that hold title of various assets would have that right of title assessed ahead of liquidation of the entire corporate holdings. The fact the creditors hold title of those assets wouldn't give them any control.

All that's happening currently, so far as we know at least... Is that McLaren are contesting who has security on what assets, in order to ascertain what remaining assets could be used to leverage further borrowing. If they are not successful, none of us know what their next plan of action might be. For all we know, they might immediately petition their own winding up.. or they may simply go about looking to plug the resulting cashflow hole via a partial sale of equity. Or maybe their friends in Bahrain won't step in until the court hearing has been had and failed. We'll all know much more after the hearing, as one way or another it will have to trigger 'something' as a next step.

Edited by TheDeuce on Tuesday 23 June 22:58

RonaldMcDonaldAteMyCat

6,801 posts

50 months

Tuesday 23rd June
quotequote all
Deesee said:
High Court next week, probably insolvency, bond holders to take control.
Are you of the opinion the court will refuse to grant declaratory relief?

rallycross

10,942 posts

192 months

Tuesday 23rd June
quotequote all
Deesee said:
High Court next week, probably insolvency, bond holders to take control.
Is this a power struggle where by playing this card the bond holders can nick the business?

Deesee

3,887 posts

38 months

Tuesday 23rd June
quotequote all
LaurasOtherHalf said:
Who are the bond holders?
Not the Bahrainis, mostly hedge funds now..

The lenders (bond holders) are not happy they do not want to extend funding or give away pledged assets (as per reports), the shareholders (Bahrain) are not happy, I see a insolvency here, can’t see what the judge might do.

Easy solution they all put cash in.

Practical solution the road business goes, down size the race organisation.

Real life solution sell the property and heritage assets, and go racing.

Deesee

3,887 posts

38 months

Tuesday 23rd June
quotequote all
RonaldMcDonaldAteMyCat said:
Deesee said:
High Court next week, probably insolvency, bond holders to take control.
Are you of the opinion the court will refuse to grant declaratory relief?
The bond offer was quite clear in its offer of tangible security, so yes.

RonaldMcDonaldAteMyCat

6,801 posts

50 months

Tuesday 23rd June
quotequote all
If I had to gaze into the crystal ball I'd say court grants declaratory relief, trustee allows sale of the assets and McLaren lives to fight another day, for now at least.

Deesee

3,887 posts

38 months

Tuesday 23rd June
quotequote all
rallycross said:
Deesee said:
High Court next week, probably insolvency, bond holders to take control.
Is this a power struggle where by playing this card the bond holders can nick the business?
No this is more like who is left holding the cards..

Race team is viable, everything else marginal.

Shareholders and bond holders are not in a great place by counter suing each other IMO.

andburg

3,744 posts

124 months

Wednesday 24th June
quotequote all
https://www.forbes.com/sites/csylt/2020/06/23/the-...

in short;
Massive sales drop means they don't have the money to pay all the outstanding invoices and could be faced with winding up in July.