Lotus is no stranger to controversy and crises, as anybody who’s followed the company’s ups and downs over the decades will testify. But the latest news that more than a quarter of Lotus’ global workforce could soon be facing redundancy has still come as something of a shock.
The announcement was made by new chief executive Jean-Marc Gales, the ex-PSA (Peugeot-Citroën) president who was brought on board by Lotus owner DRB-HICOM this year in order to turn around the company’s fortunes. He certainly has a major task ahead of him: Group Lotus (which includes the car maker’s world renowned engineering consultancy) lost £159 million in the year to the end of March 2013, itself a deterioration on the previous year’s loss of £115 million. Clearly something needs to be done if Lotus is to have a stable long-term future.
Gales’ assessment of the business and its much-needed restructuring plans were behind suggestions that up to 325 jobs will go. Group Lotus employs 1215 people worldwide, 1032 of whom are in its home county of Norfolk. According to a Lotus statement, the restructuring is “the result of the need both to reshape its organisation and to reduce costs”.
This is obviously worrying news for all involved and comes just two years after previous boss Dany Bahar was axed by the company. Bahar’s audacious plan to launch five new cars in five years (including a replacement for the iconic Esprit) came to nought, leaving many onlookers wondering whether Lotus had a long-term future at all, particularly with sales of the existing range falling at the time.
Since then, Lotus has been busy developing its current model range still further, while also focusing on new sales opportunities overseas. There are already some early signs of success, with Lotus anticipating an increase in worldwide sales to 2000 cars this year (up from just over 1200 in 2013), the aim being to increase this to 3000 annually from 2015 onwards.
To help achieve this Gales has been focusing on opening new sales outlets, as he explained in a recent interview with The Telegraph: “Our sales network basically did not provide enough coverage for our sales ambitions. If you look in London there is not a single dealer. There is no dealer in Paris, no dealer in Madrid, none in the north of Italy, none in Hamburg, none in Berlin.”
Such gaps in Lotus’ worldwide dealer network are now being filled, opening the range up to a wider potential audience than before. But what about the cars themselves? The focus at present is on improving what’s already there, with uprated versions of the Elise, Exige and Evora already on sale.
CUTTING COSTS
Gales admits that costs are being scrutinised at every level, with each of the company’s three product lines being given its own programme manager to ensure new variants are delivered on time and to budget. Interestingly though, as sales finally begin to increase at a healthy rate, it’s Lotus’ track-biased Exige (costing £54,000-plus here in the UK) that’s proving to be the best-seller, rather than the £30,000 Elise. If nothing else, this should mean higher profit margins overall.
With the Elise having been around since 1996, however, can Lotus rely on simply further developing existing models? In the short term it appears so, especially as the latest Elise is a much improved product. Its ultra-lightweight bonded aluminium chassis, for example, is still highly competitive, while the method of using a central ‘tub’ onto which the mid-mounted engine and chassis sections are attached is the same method that Alfa Romeo recently adopted for its 4C flagship. Gales was delighted to point out in a recent interview that, at 65kg, the 4C’s carbon fibre ‘tub’ is only marginally lighter than the Lotus equivalent: “In the 17 years since the Elise was launched, they’ve saved only three kilos,” he cheerfully explained.
In the longer term, Gales knows that Lotus needs extra models and is confident that these will come. Interestingly though, this will involve venturing into new market sectors rather than focusing on no-compromise sportsters – and, according to recent press reports, that means launching a high-performance saloon and an SUV.
There’s no doubt that the rapidly expanding global market for SUVs and crossovers is a tempting proposition for any vehicle manufacturer, but could a Lotus-badged new contender really become reality? Renowned motoring journalist Steve Cropley recently spoke with Jean-Marc Gales: “He wants to employ the Porsche strategy, to make cars of other formats – just as Porsche does Cayennes and Panameras – to generate the money it takes to keep building the iconic sports cars that truly drive the company’s image and reputation.”
Cropley accepts that such a move is a drastic break with Lotus tradition but suggests that it might just work: “Right now it is a bit difficult to imagine Lotus launching any model that isn’t a sports car. There’s no tradition for it. Neither was there a tradition for the Porsche Cayenne.”
The Cayenne has since gone on to become Porsche’s best-selling model, helping to fund the company’s sports car future as a result. So could Lotus really follow suit? Whatever the outcome, there’s no denying one obvious fact – yet more interesting times lies ahead for Lotus.
WHAT DO YOU THINK?
Are you a Lotus owner or enthusiast? What direction do you think the company should take in order to prosper? Whatever your views on its future, drop a comment below.
