McLaren receives £300m.......
Discussion
Chrism355 said:
He is a man who wanted to change the whole super car ownership experience and he did initially, he knew it was a long term proposition, but then the bean counters took over with his investors wanting a return quicker, not wanting to play the long game.
Sorry but that is nonsense.The original investment plan (that was used to entice wealthy backers to invest in McLaren Automotive) was drawn up under Ron Dennis's Chairmanship. It contained targets for production and profitability within a set timetable. In layman's terms "We will make this many cars per year, make this much profit, generate this much cash that you will see a return on your investment of X% by X date".
The Company failed to meet those targets and had to keep going back to their investors for more money which was given in the form of loans. When the Company could no longer generate sufficient money to pay the interest on the loans the debt was swapped for equity. This happened repeatedly over several years.
The investors didn't change the plan or ask for a quicker return. The Company, chaired by Dennis, changed the plan for one that involved the investors putting in more money for a lower return over a longer period of time - and the investors agreed! However, everybody's patience has a limit and after years of failure the investors had no choice but to show Dennis the door.
There is a cult that exists around Ron Dennis that elevates him to some sort of untouchable super being that is beyond criticism but the above is the reality of what happened.
Ron Dennis was a successful F1 Team Principal but he was not able to create a successful car company. It is as simple as that.
ralphrj said:
Chrism355 said:
He is a man who wanted to change the whole super car ownership experience and he did initially, he knew it was a long term proposition, but then the bean counters took over with his investors wanting a return quicker, not wanting to play the long game.
Sorry but that is nonsense.The original investment plan (that was used to entice wealthy backers to invest in McLaren Automotive) was drawn up under Ron Dennis's Chairmanship. It contained targets for production and profitability within a set timetable. In layman's terms "We will make this many cars per year, make this much profit, generate this much cash that you will see a return on your investment of X% by X date".
The Company failed to meet those targets and had to keep going back to their investors for more money which was given in the form of loans. When the Company could no longer generate sufficient money to pay the interest on the loans the debt was swapped for equity. This happened repeatedly over several years.
The investors didn't change the plan or ask for a quicker return. The Company, chaired by Dennis, changed the plan for one that involved the investors putting in more money for a lower return over a longer period of time - and the investors agreed! However, everybody's patience has a limit and after years of failure the investors had no choice but to show Dennis the door.
There is a cult that exists around Ron Dennis that elevates him to some sort of untouchable super being that is beyond criticism but the above is the reality of what happened.
Ron Dennis was a successful F1 Team Principal but he was not able to create a successful car company. It is as simple as that.
ralphrj said:
There is a cult that exists around Ron Dennis that elevates him to some sort of untouchable super being that is beyond criticism but the above is the reality of what happened.
Very much so. RD was indisputably hugely successful for Mclaren....but that was in the 80s and 90s. The F1 team was going nowhere under him for years and in some respects directly due to some of his personality quirks (Newey for example doesn't remember his time at Woking too fondly per his book) and the failures of Mclaren Automotive started under RD. Success in the past didn't mean he was always going to remain so and it had been proven so.I know two people who worked with RD in the F1 era (pre automotive) and heard several stories years ago of his support for families and extended family members in times of illness. I was told one of those occasions he made his plane available and paid for the best medical care. This was for a family member of an F1 team member. Whatever is said about his track record, that is an admirable trait and there was a human side perhaps the public did not see.
ralphrj said:
There is a cult that exists around Ron Dennis that elevates him to some sort of untouchable super being that is beyond criticism but the above is the reality of what happened.
Another reality is that since Ron left, McLaren have had to raise £200m from Latifi, £300m this year, and are now after another £300m. ralphrj said:
Chrism355 said:
He is a man who wanted to change the whole super car ownership experience and he did initially, he knew it was a long term proposition, but then the bean counters took over with his investors wanting a return quicker, not wanting to play the long game.
Sorry but that is nonsense.The original investment plan (that was used to entice wealthy backers to invest in McLaren Automotive) was drawn up under Ron Dennis's Chairmanship. It contained targets for production and profitability within a set timetable. In layman's terms "We will make this many cars per year, make this much profit, generate this much cash that you will see a return on your investment of X% by X date".
The Company failed to meet those targets and had to keep going back to their investors for more money which was given in the form of loans. When the Company could no longer generate sufficient money to pay the interest on the loans the debt was swapped for equity. This happened repeatedly over several years.
The investors didn't change the plan or ask for a quicker return. The Company, chaired by Dennis, changed the plan for one that involved the investors putting in more money for a lower return over a longer period of time - and the investors agreed! However, everybody's patience has a limit and after years of failure the investors had no choice but to show Dennis the door.
There is a cult that exists around Ron Dennis that elevates him to some sort of untouchable super being that is beyond criticism but the above is the reality of what happened.
Ron Dennis was a successful F1 Team Principal but he was not able to create a successful car company. It is as simple as that.
Like I said I do hope they can get through this and recover, they make great cars but the current management strategy is appalling.
wl606 said:
Another reality is that since Ron left, McLaren have had to raise £200m from Latifi, £300m this year, and are now after another £300m.
McLaren was deep in debt when Dennis left and also needed to buyout his stake. This was done through the combination of a bond issue and the new investment by Latifi. The £300m investment earlier this year was planned to be used for a new wind tunnel for the F1 team and further road car development. However, the COVID situation means that the cash is being used to keep the Company from collapse. With car production and racing halted they are going to have burned through that by the summer. Hence, the need to raise further cash.Chrism355 said:
Not all nonsense. In an interview Ron admitted that the 12C was not the car he wanted released, he felt it was not ready for market, yet the investors were pushing for a return. He also laid out model time lines of 5 years and limiting production numbers. When the business plan was put to the investors the economies of the world were in good shape, by the time the R&D was done and the car was due to launch the world was a very different place economically. Post Ron Dennis you have a new model every year to try and generate more sale, this has forced second hand values down meaning heavy discounting on new stock, a very short sighted management strategy that is just not sustainable for a niche car producer. Enzo Ferrari always said produce one less car than is required to keep the desirability.
Like I said I do hope they can get through this and recover, they make great cars but the current management strategy is appalling.
Like I said, a cult. You are blaming investors for Dennis's failures.Like I said I do hope they can get through this and recover, they make great cars but the current management strategy is appalling.
The car was not ready for the market. Whose fault do you think that was? The people who gave their money to develop the car or the people who took the money and developed it?
The economy changed. The business plan was put to investors during a recession and the first car launched when it was over. If anything the market was better than during the business plan. What really changed in the world that hurt McLaren's ambitions for their car company was the Ferrari F430 being replaced with the 458.
New models every year are causing discounts/hurting residuals. The reality is that the limited number, short lived models like the 675LT, P1, Senna, Speedtail etc. are the models that are making money - which is why they keep coming up with new ones. The models that are the big problem are the bread and butter sports series and super series models. The business plan assumed that demand would be XXX and McLaren committed to build a factory to supply that many. However, even though (pre-COVID) the marketplace for such cars was bigger than anticipated the cars aren't good enough to persuade people to buy them for the price being asked. Supply exceeds demand which leads to 2 things - discounting and early replacement of the model. What you think is the cause of the problem is actually just a symptom of another problem - that the product just isn't good enough.
ralphrj said:
the cars aren't good enough to persuade people to buy them for the price being asked. Supply exceeds demand which leads to 2 things - discounting and early replacement of the model. What you think is the cause of the problem is actually just a symptom of another problem - that the product just isn't good enough.
Think you'll find most pundits think the cars are "good enough", it's simple enough, over supply, there just aren't enough people who can play at these price levels so depreciation kicks in getting prices down to levels where there are plenty of punters.TB993tt said:
ralphrj said:
the cars aren't good enough to persuade people to buy them for the price being asked. Supply exceeds demand which leads to 2 things - discounting and early replacement of the model. What you think is the cause of the problem is actually just a symptom of another problem - that the product just isn't good enough.
Think you'll find most pundits think the cars are "good enough", it's simple enough, over supply, there just aren't enough people who can play at these price levels so depreciation kicks in getting prices down to levels where there are plenty of punters.TB993tt said:
Because there are about ~50 Aventadors in the UK vs about ~500 720s
According to HowManyLeft there are around 500 x Aventadors and 500 x 720S's registered in 2019 so unsure that's the answer? Think the answer is a little more complicated than that with history/experience a factor - additionally a base aventador is £270k and a similar 720 is around £210k so there's a £60k difference already.Aventador - https://www.howmanyleft.co.uk/?utf8=%E2%9C%93&...
720S - https://www.howmanyleft.co.uk/?utf8=%E2%9C%93&...
TB993tt said:
Ferruccio said:
Why do you think a 2 year old Aventador sells for more than a two year old 720s?
Because there are about ~50 Aventadors in the UK vs about ~500 720s If you look at the How Many Left stats it’s 2001.
So x4 the number of 720s you quote (though How Many Left have 940)
Ferruccio said:
You’re out by a factor of 40.
If you look at the How Many Left stats it’s 2001.
So x4 the number of 720s you quote (though How Many Left have 940)
I read the How Many Left stats as the number of cars licensed every year i.e. the total per year is the number of cars on the road in that year, not the number of new cars that year? If you look at the How Many Left stats it’s 2001.
So x4 the number of 720s you quote (though How Many Left have 940)
PompeyReece said:
Ferruccio said:
You’re out by a factor of 40.
If you look at the How Many Left stats it’s 2001.
So x4 the number of 720s you quote (though How Many Left have 940)
I read the How Many Left stats as the number of cars licensed every year i.e. the total per year is the number of cars on the road in that year, not the number of new cars that year? If you look at the How Many Left stats it’s 2001.
So x4 the number of 720s you quote (though How Many Left have 940)
Yes
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