McLaren receives £300m.......

[MDL111]

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.

I’d say that is the same thing - there are not enough people who find the cars good enough to pay the high list price / the cars - or more precisely the ownership cost to enjoyment ratio - are not worth it to them (I personally think the same will soon apply to a lot of other cars too - how badly does somebody really still want a 812 when the car depreciates heavily and the “limited” Ferraris are relatively easy to get at list or even more so an SF90 for nigh on half a million euros)

[flemke]

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.

My understanding is that there were very different causes for Ron's departure, nothing to do with the road car business.

[EK993]

ralphrj said:

early replacement of the model.

I keep reading this on lots of places, car forums, you tube comments, FB groups - McLaren replace models every other week. However given the current Sports Series has been out for 5 years now and the current Super Series has been out 3 years and neither has been replaced yet - is that a true statement?

[rev-erend]

flemke said:

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.

My understanding is that there were very different causes for Ron's departure, nothing to do with the road car business.

Useful read:

https://www.bbc.co.uk/sport/formula1/38000198

[650spider]

EK993 said:

ralphrj said:

early replacement of the model.

I keep reading this on lots of places, car forums, you tube comments, FB groups - McLaren replace models every other week. However given the current Sports Series has been out for 5 years now and the current Super Series has been out 3 years and neither has been replaced yet - is that a true statement?

Jeez EK...don't start asking questions like that..it ruins the myth!

It has been put on forums many times how many variants of Porsche and Ferrari have been released in the same timeframe.

Somehow, although their numbers are far greater, McLaren apparently launches a new car every week.

Its a very lazy and boring post that is posted on almost every McLaren thread usually by the same types that claim they are soulless, character less and boring to drive...of which most have never even sat in one before.

That kind of post is usually followed by how they all have the same engines, carbon tubs, blah blah blah.

However, back to the actual topic subject, it would be very naive to think this is just a McLaren only issue.

Every single car manufacturer is going to have to baton down the hatches within the coming months.

When furlough stops and the real financial implications of Covid-19 sinks in, it is highly likely there shall be similar sized % redundancies throughout the car manufacturing industry.

Unfortunately, it would not be unrealistic to see a 2nd smaller wave of redundancies at McLaren if the F1 for this season is binned reducing that revenue stream.

It must leave a bad taste in the mouth for those being made redundant to read of the payment terms for Ricciardo next season.

[Cheib]

Regardless of business plan, whether they were funded through debt or equity or whether the cars represent value or not the one thing I think McLaren have got desperately wrong is the supply/demand balance....they are making too many cars for the price they want to charge for them.

Where they are very different from the likes of Ferrari or Porsche is that they have pursued a model of discounting cars outright or through finance packages to get them sold. It’s really hurt them as a brand.

[flemke]

rev-erend said:

flemke said:

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.

My understanding is that there were very different causes for Ron's departure, nothing to do with the road car business.

Useful read:

https://www.bbc.co.uk/sport/formula1/38000198

Helpful, but it leaves out crucial moments such as Bahrain GP, Martin Whitmarsh, and Ojjeh's surgery.

[anonymous-user]

flemke said:

Helpful, but it leaves out crucial moments such as Bahrain GP, Martin Whitmarsh, and Ojjeh's surgery.

Are you able to fill in the blanks..?

[isaldiri]

thecook101 said:

Are you able to fill in the blanks..?

Something along the lines of this I believe. It was in the news at the time if one was looking around for it I believe.

https://joesaward.wordpress.com/2016/11/16/ron-den...

[anonymous-user]

isaldiri said:

Something along the lines of this I believe. It was in the news at the time if one was looking around for it I believe.

https://joesaward.wordpress.com/2016/11/16/ron-den...

Thanks. Good article that but just emphasises that in F1 the decisions will generally follow the money.

[LaurasOtherHalf]

Just to say thanks to whoever recommended the Chris Goodwin podcast with Chris Harris, listened today at work and it was great with a very interesting insight into the McLaren machine.

I've never felt the love for McLaren Automotive too much in the past but I'm starting to fall for them now they look like an underdog!

[ghuk]

LaurasOtherHalf said:

Just to say thanks to whoever recommended the Chris Goodwin podcast with Chris Harris, listened today at work and it was great with a very interesting insight into the McLaren machine.

I've never felt the love for McLaren Automotive too much in the past but I'm starting to fall for them now they look like an underdog!

You wouldn't be so kind and advise me where I can find the link for the above? Actually fancy listening to that myself at work tomorrow afternoon......

[LaurasOtherHalf]

ghuk said:

LaurasOtherHalf said:

Just to say thanks to whoever recommended the Chris Goodwin podcast with Chris Harris, listened today at work and it was great with a very interesting insight into the McLaren machine.

I've never felt the love for McLaren Automotive too much in the past but I'm starting to fall for them now they look like an underdog!

You wouldn't be so kind and advise me where I can find the link for the above? Actually fancy listening to that myself at work tomorrow afternoon......

https://collectingcars.com/podcasts/

Episode 13, also on iTunes or your usual pod catcher of choice. Quite a good few on this series too

[flemke]

isaldiri said:

thecook101 said:

Are you able to fill in the blanks..?

Something along the lines of this I believe. It was in the news at the time if one was looking around for it I believe.

https://joesaward.wordpress.com/2016/11/16/ron-den...

Yes, that was the Bahrain episode which, I believe, was the start of bad blood between Ron and Mansour.
Things got stickier in the latter part of 2013. Mansour was incapacitated for a lengthy period after having a double lung transplant and deputed his brother to represent the family interest at McLaren. For some time Ron had wanted to demote/replace Martin Whitmarsh, but Mansour had opposed. With Mansour out of action, Ron arranged to displace Martin. At the same time (AIUI), Ron nearly succeeded in persuading the brother to sell the Ojjeh family stake in McLaren to Ron. Mansour learned about this scheme from someone who, shall we say, was or had been close to both Ron and Mansour. Even though he was still gravely unwell, Mansour was able to intercede and the sale was blocked, but from then on it was pistols at dawn.

[LaurasOtherHalf]

A certain someone who was supposed to be shagging Hamilton Snr perhaps?

In regards to Sawards piece, I think even Ron admits he only ever owned 100% of McLaren for one minute at midnight.

He’s always used funding in the company to control it, it was just a shame at the end he couldn’t pull any more together.

[Desert Dragon]

I've always felt RD and CG where a hindrance to Mcl Automotive. If it wasn't for them there would be a na manual with LSD in their line up. I've seen early footage of Senna driving a manual F1 Mclaren in the wet. The cinematography picks up the visceral energy of the moment. They properly missed a trick and all the in-house software development etc total arrogance and look at where their glitchy software architecture is today. Their achilles heel.

[jhoneyball]

And now Williams F1 is looking at a sale

[Desert Dragon]

Not the clip I mean but you get the picture. Part of their amazing history.

https://www.youtube.com/watch?v=AV1Ey924fuM

[AndrewD]

Daft to say the cars aren’t good enough. This is not a quality or capability of product issue. It is about mismanagement - scaling the business to eat far too much cash and not financing it properly. What exacerbates this is that they mismanaged the market by their pricing and discounting and having too many models. The cars are great but if you know people are routinely getting massive discounts to keep taking the cash in short term because they aren’t well financed as a business, who is going to pay list and actually why not just wait for a second hand one; oh wait, maybe I won’t buy that second hand 650 because the 720 looks nice I’ll wait for that. Etc. IMO anyway.
At some point the buyer makes a move - I bought a 600LTS after waiting many many months, but only because they were offering crazy PCP deals which cover exposure to the residual. So I bought 1 McL - which I love to bits - during the same time 5-10 Porsches of various descriptions.

Edited by AndrewD on Friday 29th May 11:58

[IMI A]

AndrewD said:

Daft to say the cars aren’t good enough. This is not a quality or capability of product issue. It is about mismanagement - scaling the business to eat far too much cash and not financing it properly. What exacerbates this is that they mismanaged the market by their pricing and discounting and having too many models. The cars are great but if you know people are routinely getting massive discounts to keep taking the cash in short term because they aren’t well financed as a business, who is going to pay list and actually why not just wait for a second hand one; oh wait, maybe I won’t buy that second hand 650 because the 720 looks nice I’ll wait for that. Etc. IMO anyway.
At some point the buyer makes a move - I bought a 600LTS after waiting many many months, but only because they were offering crazy PCP deals which cover exposure to the residual. So I bought 1 McL - which I love to bits - during the same time 5-10 Porsches of various descriptions.

Would you want a 600LT in your collection at the end of the PCP deal? This is the interesting thing as you only really get to know a car properly of you've owned it for a long time. Thats the beauty with say an old 993 RS or 2.7RS like you also have. Not the quickest car in the world and does the same thing as the 600LT is meant to (track road car) albeit 25 years and 40 years earlier respectively but the old timers i'd pick with my last tank of fuel.