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When sports car company Lotus had announced the end of its title sponsorship of the Lotus F1 team, a red flag was raised as concerns over Group Lotus’ financial problems surfaced. Now, new reports reveal that the troubles facing the automaker are more than meets the eye.
Earlier warning signs were brought to attention this year when Lotus’ Malaysian parent company Proton sold a controlling stake to another Malaysian conglomerate, DRB-Hicom. As per Malaysian law, Lotus had to halt all business operations and freeze its financial accounts during the 60-day transition period.
The 60-day period ended in March and now, new owner DRB-Hicom is currently conducting the due diligence of Group Lotus, investigating worrisome figures including Lotus’ $320 million in accumulated debt.
Due to the mounting concerns, rumors have spread that Lotus may be put into administration to free itself from debt and that even CEO Dany Bahar has been let go from the company. What’s more, in line with our reports earlier this year, Chinese automaker Zhejian Youngman Lotus Automobile (Youngman) is a potential buyer of the brand, placing a bid on its remaining assets, including naming rights. The official importer of Proton and Lotus cars in China, Youngman is perhaps better known for its past failed attempt to purchase the now defunct Saab.
So far, a Lotus spokesperson has denied these rumors and insisted that DRB-Hicom and Lotus executives are working to keep the business running as usual, ”There have been and continue to be positive discussions between Group Lotus senior management and senior management at DRB-Hicom both here in Hethel and in Malaysia. Despite various rumours in the media to the contrary, at no point has DRB-Hicom indicated to Group Lotus that they intend to put the company into administration and we welcome the opportunity to put that rumour along with incorrect speculation that production has stopped, that Dany Bahar is no longer CEO and that we are no longer involved in F1 to bed.”
The spokesperson adds, “It’s no secret that we are going through a very difficult time at the moment due to the change in ownership but we’re doing everything we can to get through this period and come out the other side stronger than before.”
Optimistic words, but something definitely isn’t right in the house of Lotus. Stay tuned for more information as the situation continues to develop.
Despite terminating its title sponsorship deal with Group Lotus, Lotus is committed to keeping its name in Formula 1 for the imminent feature. Confused? You should be.
Group Lotus was recently sold by Proton to Malaysian automotive corporation DRB-Hicom, causing Lotus F1′s team owner Genii Capital to end its formal relationship with Lotus. Just a week ago, we reported that Proton might be interested in acquiring Team Lotus F1, but that appears to be off the table now.
Despite the end of the Group Lotus sponsorship, Genii owner Gerard Lopez remains committed to the Lotus name. Lopez has recently agreed to a deal for title sponsorship on the F1 team, something he originally put together back in 2010, but that has been canceled and Proton’s option to buy 50 percent of the team has also been removed.
“We are happy to carry the Lotus name as we believe it is a good name for F1,” Lopez explained in a recent interview with Autosport. “We funded the team last year and the year before for whatever delta was missing. We would prefer to have sponsors up to the full amount – but if we have to fund it then we will fund it.”
Sponsorship deals that Genii had secured included Unilever and Microsoft, two companies that were arguably game changers in F1. Lopez also elaborated that buying Group Lotus isn’t entirely out of the question yet, but the organization would like to know what the new owners plan on doing with it.
It’s hard out there for a sports car manufacturer, especially if it is owned by a larger company.
Over the last 17-years, Lotus has not made a profit for its parent company. That was not such a big deal since Lotus was seen as more of a high-class brand name for the Malaysian state-owned Proton. However, just earlier this year, Proton sold its 42.7% stake in Lotus to DRB-Hicom, one of the largest private companies in Malaysia. Generally, private companies are much more concerned with making a profit rather than owning a company just for its prestige.
Now word comes from Lotus CEO Dany Bahar, that the future of Lotus’ production is in jeopardy, as development for new models like the updated Esprit have been suspended. In fact, Bahar was “completely taken aback” when he learned at the Geneva Auto Show, that the entire Proton group would enter a three-month “lockdown.”
That means, only normal trading activities would be allowed, hence all future developments have been suspended. This lockdown will even effect its recently announced models like the Exige S and the Evora GTE. The new Esprit will now likely be pushed to a 2014 launch, which means the concept would be nearly five-years old when it hits the road.
That is, if DRB-Hicom even decides to keep Lotus. Rumors suggest that they will want to off-load the unprofitable Lotus brand, which means Bahar has to find a savior for Lotus very quickly.
For now, Lotus’ motor sport activities, the opening of their new showroom on Regent Street in London, and its participation at this years Goodwood Festival of Speed as the featured marque will continue. Let’s hope Lotus can survive through its current dilemma.
GALLERY: Lotus Esprit
In a deal eclipsing $410 million, DRB-Hicom purchased a 43 percent stake in Proton, a Malaysian automaker better known for its ownership of the famous British sports car brand, Lotus.
Originally, the stake belonged to Malaysia’s state-owned Khazanah Nasional Bhd. However, as Proton has not made a profit in the last two years, multiple prospective buyers stepped in for acquisition talks before the controlling stake was finally approved for DRB-Hicom, a large conglomerate with a hand in automotive services, transport, and power generation.
This investment effectively hands DRB-Hicom the control of two Malaysian car plants that are capable of producing a combined 350,000 vehicles a year. This production number may increase in the future as General Motors just reached out to Proton last month about a possible manufacturing joint venture in Malaysia so that GM could gain better access into the Southeast Asian market. The talks are not yet complete and it will be interesting to see what effects DRB-Hicom will have in the discussions.
What’s more, DRB-Hicom is also the new private owner of Lotus. Unfortunately, this change puts the future of Lotus into question. Lotus has not been able to make a profit for Proton since 1996, an equities investor suggested that all or part of Lotus would likely be sold. Among those interested in Lotus is Genii Capital, a part owner of Lotus Renault GP.