RE: Lotus: The perils of a hands-on CEO
Discussion
We're all big boy and girls. Some of us speed though we know speeding is illegal. If you get caught, accept the consequences and stop blaming 'The man'. The same laws apply to JMG, so he should accept the consequences too.
Anyway there was more to the article than that. I admire the way JMG has come in and taken a pragmatic approach, making the most out of the ingredients he had to hand. He's let the product coming out of the factory do the talking.
He's expanded the dealer network (seems obvious).
I did a Lotus factory tour. A follow-up marketing letter 'from' JMG arrived with me the day before I veiwed a privately-advertised Elise. I know it was only a circular, but at the time it seemed like an omen.That letter helped buy Lotus some brand-recognition and I bought the car. Sure, I might have bought it anyway, but the nicely timed letter impressed me.
Anyway there was more to the article than that. I admire the way JMG has come in and taken a pragmatic approach, making the most out of the ingredients he had to hand. He's let the product coming out of the factory do the talking.
He's expanded the dealer network (seems obvious).
I did a Lotus factory tour. A follow-up marketing letter 'from' JMG arrived with me the day before I veiwed a privately-advertised Elise. I know it was only a circular, but at the time it seemed like an omen.That letter helped buy Lotus some brand-recognition and I bought the car. Sure, I might have bought it anyway, but the nicely timed letter impressed me.
Edited by Darryl247W on Thursday 1st February 20:32
bordseye said:
The lesson that Gales should have learned from his speeding conviction is that rearward visibity from an Evora simply isnt good enough.
I didnt like the sound of " "For brand building Lotus needs something above the Evora," he agreed. "It needs a poster car again." With the Evora already in 911 territory price wise, I dont see any room for a more expensive Lotus. Lotus isnt Ferrari and never will, be so Ferrari type prices arent feasible particularly using someone elses engine and technology.
Its interesting that PH hasn’t covered the recent ‘2 new sports cars and an SUV’ story at all. Has someone at Autocar pee’d of Gales? I didnt like the sound of " "For brand building Lotus needs something above the Evora," he agreed. "It needs a poster car again." With the Evora already in 911 territory price wise, I dont see any room for a more expensive Lotus. Lotus isnt Ferrari and never will, be so Ferrari type prices arent feasible particularly using someone elses engine and technology.
Quite agree the poster car seems an odd idea. Lots of resource tied up in a complete new car that by definition will be sold in very limited numbers. Wasn’t Gales also deriding the use of carbon in the 4C claiming it saved so little weight compared to the Elise tub it was not worth it???
Also, very disturbing to read about pushing the Elise up-market. Has he found Bahar’s old strategy plans at the bottom of his desk?
Unfortunately for Lotus fans in the U.K., Lotus is an export business that must build products for the global consumer. Those products must have good margins in them and they must sell in good numbers.
If you look at the pricing of high end sports cars they are now pushing £200k. Lotus are going to find it really difficult to get over £100k with their current line up. And while Gales has done an absolutely amazing job in sorting out the business and giving it a firm foundation we always knew that this was so as to be a stepping stone forward.
There is a dichotomy for such businesses. On the one hand the old, domestic market cries out for and demands affordable, small sports cars but on the other the infinitely larger global market does not. It wants high end, high ticket goods and due to the nature of new money it is actually disturbed, scared of brands that also sell inexpensive products. They haven’t the foundation to cope with being associated with a brand that builds affordable goods.
As such, Lotus does need a product at the top of its range. It needs something that will allow it to move pricing well over the £100k level and stay on the tails of the global industry and market. And at the same time it is imperative that the product at the bottom of its range does not impinge on that so that product needs to be pushed up also.
If you look at the pricing of high end sports cars they are now pushing £200k. Lotus are going to find it really difficult to get over £100k with their current line up. And while Gales has done an absolutely amazing job in sorting out the business and giving it a firm foundation we always knew that this was so as to be a stepping stone forward.
There is a dichotomy for such businesses. On the one hand the old, domestic market cries out for and demands affordable, small sports cars but on the other the infinitely larger global market does not. It wants high end, high ticket goods and due to the nature of new money it is actually disturbed, scared of brands that also sell inexpensive products. They haven’t the foundation to cope with being associated with a brand that builds affordable goods.
As such, Lotus does need a product at the top of its range. It needs something that will allow it to move pricing well over the £100k level and stay on the tails of the global industry and market. And at the same time it is imperative that the product at the bottom of its range does not impinge on that so that product needs to be pushed up also.
DonkeyApple said:
Unfortunately for Lotus fans in the U.K., Lotus is an export business that must build products for the global consumer. Those products must have good margins in them and they must sell in good numbers.
If you look at the pricing of high end sports cars they are now pushing £200k. Lotus are going to find it really difficult to get over £100k with their current line up. And while Gales has done an absolutely amazing job in sorting out the business and giving it a firm foundation we always knew that this was so as to be a stepping stone forward.
There is a dichotomy for such businesses. On the one hand the old, domestic market cries out for and demands affordable, small sports cars but on the other the infinitely larger global market does not. It wants high end, high ticket goods and due to the nature of new money it is actually disturbed, scared of brands that also sell inexpensive products. They haven’t the foundation to cope with being associated with a brand that builds affordable goods.
As such, Lotus does need a product at the top of its range. It needs something that will allow it to move pricing well over the £100k level and stay on the tails of the global industry and market. And at the same time it is imperative that the product at the bottom of its range does not impinge on that so that product needs to be pushed up also.
pretty much spot on. except I'm not sure even the home market is that keen on affordable small sports cars. image and stats dominate here too. to be fair they probably always did, but in decades past family saloons or hatchbacks weren't as fast.If you look at the pricing of high end sports cars they are now pushing £200k. Lotus are going to find it really difficult to get over £100k with their current line up. And while Gales has done an absolutely amazing job in sorting out the business and giving it a firm foundation we always knew that this was so as to be a stepping stone forward.
There is a dichotomy for such businesses. On the one hand the old, domestic market cries out for and demands affordable, small sports cars but on the other the infinitely larger global market does not. It wants high end, high ticket goods and due to the nature of new money it is actually disturbed, scared of brands that also sell inexpensive products. They haven’t the foundation to cope with being associated with a brand that builds affordable goods.
As such, Lotus does need a product at the top of its range. It needs something that will allow it to move pricing well over the £100k level and stay on the tails of the global industry and market. And at the same time it is imperative that the product at the bottom of its range does not impinge on that so that product needs to be pushed up also.
Moving evermore upmarket (i.e. add options and therefore weight) is surely more difficult for Lotus to come to terms with than other manufacturers, considering their ethos.
From a business POV, Lotus is doing a great great job of wringing every drop of life from the current platforms.
Small volume car manufacturers in the UK keep repeating the cycle, and forgetting the lessons :
1. move upmarket to survive, but become too expensive for the core customer while still lacking the quality to attract sufficient buyers away from the established competition,
2. Close to failure, return to roots by contracting and producing the low volume, more affordable model the core customer wants.
3. Repeat.
With talk of moving upmarket, should we be nervous about what form the proposed 2020 Elise might take? I hope not. Hopefully Lotus surprise us again with a wonderfully analogue machine.
From a business POV, Lotus is doing a great great job of wringing every drop of life from the current platforms.
Small volume car manufacturers in the UK keep repeating the cycle, and forgetting the lessons :
1. move upmarket to survive, but become too expensive for the core customer while still lacking the quality to attract sufficient buyers away from the established competition,
2. Close to failure, return to roots by contracting and producing the low volume, more affordable model the core customer wants.
3. Repeat.
With talk of moving upmarket, should we be nervous about what form the proposed 2020 Elise might take? I hope not. Hopefully Lotus surprise us again with a wonderfully analogue machine.
Darryl247W said:
Moving evermore upmarket (i.e. add options and therefore weight) is surely more difficult for Lotus to come to terms with than other manufacturers, considering their ethos.
From a business POV, Lotus is doing a great great job of wringing every drop of life from the current platforms.
Small volume car manufacturers in the UK keep repeating the cycle, and forgetting the lessons :
1. move upmarket to survive, but become too expensive for the core customer while still lacking the quality to attract sufficient buyers away from the established competition,
2. Close to failure, return to roots by contracting and producing the low volume, more affordable model the core customer wants.
3. Repeat.
With talk of moving upmarket, should we be nervous about what form the proposed 2020 Elise might take? I hope not. Hopefully Lotus surprise us again with a wonderfully analogue machine.
Mike Kimberley, Dani Bahar, now Gales and even Chapman himself recognised the need to take Lotus upmarket, and I totally understand and agree with the rationale, but only Chapman actually produced more than one model in the attempt. By the time Kimberley delivered the Evora, the global crash was upon us and even if it had been the right car, it would have been tough to keep the momentum. From a business POV, Lotus is doing a great great job of wringing every drop of life from the current platforms.
Small volume car manufacturers in the UK keep repeating the cycle, and forgetting the lessons :
1. move upmarket to survive, but become too expensive for the core customer while still lacking the quality to attract sufficient buyers away from the established competition,
2. Close to failure, return to roots by contracting and producing the low volume, more affordable model the core customer wants.
3. Repeat.
With talk of moving upmarket, should we be nervous about what form the proposed 2020 Elise might take? I hope not. Hopefully Lotus surprise us again with a wonderfully analogue machine.
Lotus can and should move upmarket with circa 180k Esprit, but it must also move downmarket and fill the original 20-25k Elise slot with a 3 cyl version imho. A car like this, with a kei option, could provide huge entertainment for spirited drivers on backroads, true to the brand idiom. It could even appeal to millennials as their only car, a trick the original Elise achieved which helped to deliver more than 3x the projected sales.
Lotus is unique in that it can build cars that appeal to the man AND woman in the street as well as billionaires the world over. Could Ferrari or Lamborghini park a 20k mx5 competitor next to their line up and remain credible? Of course not. What an opportunity for Lotus! Could anybody screw it up? Well probably, yes. Build an entirely new modular platform, make one car off it to really waste some cash, then try to palm off a Re-bodied XC40 as a Lotus SUV and suffer the same fate as the X-Type Jag. Watch this space......
40,000 people who buy MX5’s every year may disagree, but I understand your point, I am not suggesting in any way it’s easy. To sell a sufficient number of vehicles profitably, Lotus would need to use a very high degree of carryover on interiors, chassis, power train etc. Having bespoke Lotus interface parts like stalks, handles, vents etc could be viable if shared across multiple models. Much better than using Volvo everything.
My fear is that Lotus will do a ‘Lotus’ SUV in the sense it will be underdeveloped, unreliable and with a poor customer experience. You simply cannot sell this type of car to a completely different demographic whose passion for the brand is only based on how they feel others perceive them. An SUV strategy is not a safe bet by any means. I strongly believe hey need to prove to the world they can build a great sports car, which is what they are supposed to be good at, before they attempt to build a good SUV.
My fear is that Lotus will do a ‘Lotus’ SUV in the sense it will be underdeveloped, unreliable and with a poor customer experience. You simply cannot sell this type of car to a completely different demographic whose passion for the brand is only based on how they feel others perceive them. An SUV strategy is not a safe bet by any means. I strongly believe hey need to prove to the world they can build a great sports car, which is what they are supposed to be good at, before they attempt to build a good SUV.
Jellinek said:
Mike Kimberley, Dani Bahar, now Gales and even Chapman himself recognised the need to take Lotus upmarket, and I totally understand and agree with the rationale, but only Chapman actually produced more than one model in the attempt. By the time Kimberley delivered the Evora, the global crash was upon us and even if it had been the right car, it would have been tough to keep the momentum.
Lotus can and should move upmarket with circa 180k Esprit, but it must also move downmarket and fill the original 20-25k Elise slot with a 3 cyl version imho. A car like this, with a kei option, could provide huge entertainment for spirited drivers on backroads, true to the brand idiom. It could even appeal to millennials as their only car, a trick the original Elise achieved which helped to deliver more than 3x the projected sales.
Lotus is unique in that it can build cars that appeal to the man AND woman in the street as well as billionaires the world over. Could Ferrari or Lamborghini park a 20k mx5 competitor next to their line up and remain credible? Of course not. What an opportunity for Lotus! Could anybody screw it up? Well probably, yes. Build an entirely new modular platform, make one car off it to really waste some cash, then try to palm off a Re-bodied XC40 as a Lotus SUV and suffer the same fate as the X-Type Jag. Watch this space......
Spot on. The kei car market is, in my opinion a huge gap and one that Lotus can and should exploit. Think of a Honda s660 alternative. Lotus can and should move upmarket with circa 180k Esprit, but it must also move downmarket and fill the original 20-25k Elise slot with a 3 cyl version imho. A car like this, with a kei option, could provide huge entertainment for spirited drivers on backroads, true to the brand idiom. It could even appeal to millennials as their only car, a trick the original Elise achieved which helped to deliver more than 3x the projected sales.
Lotus is unique in that it can build cars that appeal to the man AND woman in the street as well as billionaires the world over. Could Ferrari or Lamborghini park a 20k mx5 competitor next to their line up and remain credible? Of course not. What an opportunity for Lotus! Could anybody screw it up? Well probably, yes. Build an entirely new modular platform, make one car off it to really waste some cash, then try to palm off a Re-bodied XC40 as a Lotus SUV and suffer the same fate as the X-Type Jag. Watch this space......
Jellinek said:
40,000 people who buy MX5’s every year may disagree, but I understand your point, I am not suggesting in any way it’s easy. To sell a sufficient number of vehicles profitably, Lotus would need to use a very high degree of carryover on interiors, chassis, power train etc. Having bespoke Lotus interface parts like stalks, handles, vents etc could be viable if shared across multiple models. Much better than using Volvo everything.
My fear is that Lotus will do a ‘Lotus’ SUV in the sense it will be underdeveloped, unreliable and with a poor customer experience. You simply cannot sell this type of car to a completely different demographic whose passion for the brand is only based on how they feel others perceive them. An SUV strategy is not a safe bet by any means. I strongly believe hey need to prove to the world they can build a great sports car, which is what they are supposed to be good at, before they attempt to build a good SUV.
I think that 40.000 highlights why it’s not a safe market to try and create a volume market in. If Mazda with its enormous global network and economic might is only generating that number then Lotus doesn’t stand any chance at all. They sell a car that in many aspects is superior to the Mazda but only manage to sell a few hundred a year around the world. That suggests that to try and match Mazda or even carve into their segment they need to do one of two things; they either need to create a massive global sales network and infrastructure or they need to add all the creature comforts and practicalities that the MX5 has. And if you look at the basic costs of doing either then you’re looking at them probably needing to sell their base car for about £250k+ each to try and make a profit. That’s the problem. Maybe in time they could piggy back growth off the Geely network and parts bin, build them in China where labour is cheap and take on the likes of Mazda but it’s not something that can be done from Britain or by a small firm. My fear is that Lotus will do a ‘Lotus’ SUV in the sense it will be underdeveloped, unreliable and with a poor customer experience. You simply cannot sell this type of car to a completely different demographic whose passion for the brand is only based on how they feel others perceive them. An SUV strategy is not a safe bet by any means. I strongly believe hey need to prove to the world they can build a great sports car, which is what they are supposed to be good at, before they attempt to build a good SUV.
They absolutely have to go up market for the products which aren’t volume players. They have to be able to secure profit margins with solid buffers. I think they’ll bring out a new Elise that is much more expensive and something a big notch above the Evora. They need to take the halo product through that £100k barrier and with the cheapest Maclaren just on the other side of it they need a product to compete against that. And as a business they have the ability and heritage to do it. It’s the old solution of building a £100k product that looks £200k.
I absolutely agree re the SUV. It’s where the global demand is and where the best margins are and it’s a segement Lotus should have been in years ago as it is a segment that had massive, massive fat to be trimmed in Lotus’ key areas of removing weight and adding handling. They really missed the boat but they are there now. But as you say the product needs to be a quality product that delivers looks, weight saving and performance in order to rightly carry the Lotus badge and yet like you I have suspicions that rather than seeing the Lotus answer to the Lamborghini Uros we will in fact see something more akin to a Qoros 5 that’s been glued together by a kindergarten class high on Skittles and then gone 12 rounds with Mike Tyson that Lotus think they can just shovel out the door to Chinese consumers and hope to scrape a few quid.
But with Gales finally getting the business to the point that he has revealed the plan for two new sports cars to top and tail the range before the delivery of the SUV then at least we can all look forward to news stories this year that aren’t that month’s limited special editions that are pretty much the only way they are shifting the high end stock. The next couple of years should be amazing for Lotus if they get the halo car right.
rockin said:
DonkeyApple said:
The next couple of years should be amazing for Lotus if they get the halo car right.
Unfortunately anything resembling that is built in Woking and called a McLaren.Whilst I agree they need to go upmarket and get that halo car out there, they ought to keep the 'underdog' vibe going and offer more for less. Simply moving up into the McLaren band without maintaining some sort of identity or reason to buy a Lotus over a <something else> would not be a good idea. It seems that Gales shares that philosophy, but we've yet to see an entirely new product from his grand vision.
I don't think Lotus should be competing in the high volume MX-5 market. I think the current placement of the Elise - which, if you ignore the 1.6 which they aren't pushing, is 40-50k - is about right. If they new model can be made more broadly competitive in that market without throwing the baby out with the bathwater, I think that's fine. Selling Boxsters and Caymans doesn't seem to inhibit Porsche's ability to sell much more expensive cars.
otolith said:
I don't think Lotus should be competing in the high volume MX-5 market. I think the current placement of the Elise - which, if you ignore the 1.6 which they aren't pushing, is 40-50k - is about right. If they new model can be made more broadly competitive in that market without throwing the baby out with the bathwater, I think that's fine. Selling Boxsters and Caymans doesn't seem to inhibit Porsche's ability to sell much more expensive cars.
I don’t believe they should either. To be clear, I was making the point that the market is larger than many people believe. I think 3-4 thousand Elise at the current price range is a sensible, but to achieve it would require the car to be well engineered, well supported and have the options available to make it more usuable. I would personally want to see the new car in a very similar vein to the current one but with better access and a much better roof arrangement. I would definitely like to see a sub Elise model released though based off the same platform but with 660 and 1 Litre 3 cylinder. This could add another 5-7k cars potentially and would enable Lotus to support tooling up its own customer interface parts as well as key dna components Having to use Volvo everything is going to be atrocious if they go down that route. Part weight is baked in at the design stage and for Volvo or Geely, it simply isn’t a priority. You would end up with carbon fibre this and aluminium that and still have a car that weighed not much less than a steel bodied competitor like the MX.
As far as the halo car goes, Lotus has an instantly recognizable icon in their past with Esprit, so just bring it up to date as a striking, light, enthusiasts supercar. 
Preferably naturally aspirated, not shooting for the ultimate numbers, but for driving experience that only lightness can provide.
Preferably naturally aspirated, not shooting for the ultimate numbers, but for driving experience that only lightness can provide.
That’s an interesting conundrum, the engine choice for any halo car. It’s still going to need big numbers for the top trump stakes but what’s lighter, a big cc NA unit or a smaller unit with turbos? They’ve probably gone as far as they can with the Toyota unit in terms of extracting power, the engineering compromises and the brand ceiling. From what they’ve said about the car competing against the likes of Maclaren by being no frills by comparison one wonders if the Noble 600 isn’t going to be the true comparison in terms of product rather than pricing?
DonkeyApple said:
That’s an interesting conundrum, the engine choice for any halo car. It’s still going to need big numbers for the top trump stakes but what’s lighter, a big cc NA unit or a smaller unit with turbos? They’ve probably gone as far as they can with the Toyota unit in terms of extracting power, the engineering compromises and the brand ceiling. From what they’ve said about the car competing against the likes of Maclaren by being no frills by comparison one wonders if the Noble 600 isn’t going to be the true comparison in terms of product rather than pricing?
Toyota make some pretty good quad-cam v8's...AW111 said:
Toyota make some pretty good quad-cam v8's...
Lotus designed one as well, but never used it themselves. Under GM ownership Lotus designed the LT-5 engine for use in Corvette ZR-1. The engines ended up being built by Mercury Marine in North America. In 1990 the first ZR-1 put down 375 horsepower and 370 pound-feet of torque to its rear wheels - big numbers nearly 30 years ago. I anticipate the torque from this engine would have eaten alive any transaxle available to Lotus at that time. The back end of Esprit was always restricted by this issue. Lotus own V8 (the 918) is said to have been detuned from a potential 500 hp to prevent gearbox damage.
Oilchange said:
I read an article about the Lotus V8 they were going to put in the new stillborn Esprit, said they had done a lot of the development work already. Wonder if Geely have the foresight to re light the project...
I mentioned the Toyota v8 because they have done all the work of making it emissions compliant world-wide. They make millions of them, so there are economies of scale. And they tend to be massively over-engineered.I'll have the 5 litre 2UR-GSE : in the RC-F and GS-F they make 348 kW (467 hp) at 7,100 rpm and 530 N⋅m (391 lb⋅ft) at 4800-5600 rpm.
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