Latest on the future of Lotus

Lotus is once again at a crossroads. But Lotus boss Dany Bahar said he was confident that the company had a strong future.

New Malaysian owner DRB-Hicom is currently deciding whether to go ahead with a £500million investment to launch five new sports cars over the next five years, including a new Esprit.

That investment was agreed by previous owner Proton, which has been taken over by DRB-Hicom. Bahar expects a decision from DRB within the next two weeks on whether to back the investment plan, revise it or to sell Lotus.

“Lotus remains a special company, and I remain confident and committed that we can bring it back to the top. We have a healthy order book of 1,127 cars, but due to the takeover it has been a very difficult financial time.” 

Bahar added: “We have spent the last two weeks discussing in detail with our new owners our investment plans and all aspects of the business, which they are now evaluating.”

Bahar said that bosses at DRB realise that the uncertainty over Lotus needs to be resolved quickly. “They know the situation Lotus is in, and it is in their interest to resolve the issues as soon as possible.”

Lotus’ investment plans, backed by previous owner Proton, would create 1,100 new jobs and five new models, including a new Esprit supercar. The plan could triple sales to 6,000 cars a year.

Bahar accepts that DRB could decide to revise the ambitious investment plan to build four new sports cars and an upmarket city car. The other option is to sell Lotus. 

He also stressed that the new owners had absolutely not considered putting the firm into administration.

But the big question is who would buy Lotus in these tough economic times? Especially as the Norfolk firm has rising debts and faces the prospect of making losses for the next four years until the new models go on sale.

The most likely buyers would be the Chinese, who have already snapped up MG. Geeley – which owns Volvo – is in the front-running.

Ironically, Lotus is currently celebrating its 60th anniversary since the company was formed by Colin Chapman in 1952, but not for the first time in its chequered history it finds its future in the balance.

It has had several owners in the last 20 years, including US giant General Motors, but none have turned it into a financial success.

And sales have slumped badly in the UK this year, with just 35 cars sold so far, and there have been disappointing sales of its newest model, the Evora.

But Dany Bahar revealed that there is a healthy order book of 1,200 cars, and that production, which has been cut back because of the cash flow problems, would be back in full swing by May.

Lotus’ operating funds have been severely cut since DRB’s takeover of Proton. Under Malaysian takeover rules, funds can only be approved for carrying out the ‘ordinary course of business’ for a firm for a period of 60 days, and does not apply to new investment.

Lotus has also confirmed that the cashflow problems had forced them to put back the launch date of the crucial new £100,000 Esprit from 2013 to 2014. But Bahar reports that testing is continuing at Hethel on the Espirt’s new V8 engine.

The Government will be watching anxiously as they have given a £10.4million grant towards Lotus’s ambitious investment programme.

Lotus has always had a traumatic history from the glory days of Colin Chapman and Formula One racing success in the eighties, to the Esprit model appearing in Bond movies. The next two weeks are likely to decide its long-term future and the jobs of 1,400 Lotus workers.