Is Lotus Making a Mistake?

Later this month at the upcoming Paris auto show, Lotus will be revealing the first car that reflects their new strategic vision, a vision of going upmarket and luxurious to compete directly with the likes of Porsche, Ferrari and Aston Martin. The car, originally slotted to fill the role of the much beloved Esprit, will now be “something more” than the Esprit. The midengine supercar is rumored to be powered by the V10 engine that powers the Lexus LF-A. Toyota currently supplies Lotus with all of its production car engines. The LF-A’s announced production run of 500 units probably won’t cover that engine’s development costs, so the rumor makes sense.

Lotus has been controlled by the Malaysian state owned Proton company since 1996. That was just as Lotus was launching the Elise, which signaled a new era for the company. The Elise introduced Lotus’ aluminum chassis technology based on bonding relatively inexpensive aluminum extrusions together to form a strong but light structure. The architecture also allows for changing track width and wheelbase without having to change chassis or drivetrain hard points. The Elise has been a relative success in the marketplace, selling more than any previous Lotus, and the variants like the Exige, and now the larger Evora have been well received by the motoring press and by enthusiasts. The side of Lotus that does engineering for other concerns has also kept busy.

So what’s Proton’s problem? Lotus hasn’t turned a profit since Proton has owned the British firm. While Lotus has been teasing about the exact nature of the new supercar, in June Datuk Mohd Nadzmi Mohd Salleh, chairman of both Proton and Lotus, held a press briefing laying out his strategic five year plan to turn Lotus into a profitable company. To many observers it marks a bold departure from the company’s current branding, and even more so, from its founder’s vision.

Average Lotus prices will rise to approximately $125,000 – $170,000 (£80,000-£110,000), and the company’s motto will be “Tomorrow’s luxury sports car, today”. Salleh projected that sales of Lotus cars would rise from 2,000-2,500 units annually to 6,000-8,000 in five years. The countries where Lotus cars are sold will rise from 30 to 55. Lotus Engineering, highly respected within the auto industry and the source of much of Lotus revenue through contract work for other companies, will take a greater role in the design and engineering of cars for both Lotus Cars and Proton.

That sharing of technology, and Proton’s desire to have Lotus emulate companies like Aston Martin, can be seen in the fact that Lotus will be selling a city car. While AM is basing their tiny Cygnet on the Toyota iQ, the Lotus city car will be a derivative of the EMAS concept that Giugiaro designed for Proton.

Lotus’ move upmarket can also be seen in changes in the executive suite as well as with their advertising and dealer network.

Mike Kimberley, who guided Lotus through some very rough waters after Colin Chapman died, recently retired for health reasons after a job well done. Since then, from Ferrari alone Lotus has hired Dany Bahar to be Lotus CEO, former Ferrari director of design Donato Coco, and Andreas Prillman who headed business development and sales in Modena. Cladio Berro, who has directed racing for Ferrari, Maserati, Alfa Romeo and Abarth individually, and then the entire Fiat Group’s racing operations including F1, GT, touring car and rally teams, now heads motorsports in Hethel.

Modena wasn’t Lotus’ only shopping stop. Former Mercedes-AMG managing director of Engineering & Production and chief engineer for Technical Strategy, Wolf Zimmermann, became chief technology officer at Lotus last week. He replaced former Porsche directory of quality Frank Tuch, who decided to move on to Volkswagen, which has arrived at an agreement with Lotus to allow Tuch to continue to advise Lotus.

Andreas Schlegel, who formerly ran Aston Martin’s marketing and dealer network management, will do the same for Lotus. He will have a delicate dance to perform as Lotus will continue selling its current range of minimalist lightweight sports cars as it completes the makeover.

Apparently Schlegel’s brief is to be a change agent, as significant changes in Lotus’ marketing and dealer network are already underway. In advance of the Paris Motor Show introduction, the McCann Erickson Central advertising agency was hired by Lotus to oversee the brand’s relaunch. McCann Erickson Central is preparing new brochures and websites for Lotus that reflect that rebranding. The release of the new materials will coincide with the Paris show reveal.

Schlegel is also overseeing changes in Lotus’ dealers. Lotus has been particularly weak is in the strength of their dealers. I don’t think that Lotus has ever had a consistent network in the US, with dealers taking on and dropping the brand. That may change if actions in Europe are any omen. All of their European dealers have been pink slipped. They’ve been given a two-year notice, and if they want to continue to sell Lotus cars after July 2012, they’ll have to reapply for a franchise. They will most likely be expected to make substantial upgrades in their showrooms and customer service levels if they want to sell cars to Lotus’ new breed of customer.

Since the new company motto looks to the future, the significantly higher prices will be based on Lotus’ reputation as a high technology car company, and “tomorrow’s luxury sports cars” will have active aerodynamics, continuously adjustable shock absorbers, range extended EV and hybrid drivetrains, and heads up displays. Salleh said that combustion engine powered versions might be capable of running on alternative fuels.

Many of these technologies are indeed core Lotus competencies. The company has been a pioneer in aerodynamics and suspension design, including active suspensions. Lotus’ developmental Omnivore engine can run on multiple fuels, and recently Lotus Engineering and component maker Fagor Ederlan announced a partnership to put the three-cylinder 1.2L Lotus Range Extender Engine into production.

Interestingly, though, the one competency for which Lotus is best known, it’s founder Colin Chapman’s credo, “simplicate and add lightness”, was left unmentioned. That has left car enthusiasts scratching their head. Luxury generally adds weight and the idea of more luxurious Loti gives rise to fears of Porsche level brand dilution. Autoblog suggested that the new Lotus cars’ alternative power source might be drawn from Chapman spinning in his grave.

On one forum a fan said “No, no, no, no, NO!”

At Gtplanet.com, some forum members were a bit more understanding of Lotus’ need to sell profitable cars that are not seen by the general public as lacking creature comforts. Still, the site’s poll results showed that 53% of respondents thought it was a bad idea vs. only 33% who supported it.

Motor Authority editor Viknesh Vijayenthiran described the move as “abandoning Chapman’s original philosophy” and Lotus’ “low weight ethos”.

Longtime TTAC readers will know of my admiration for Lotus and for Chapman. That admiration, of course, is tempered by reality. Chapman was not a man adverse to luxury. At his life’s end he was staying in luxury hospitals and traveling by private plane. His daily driver was an S Class Mercedes. Though the first Lotus road car, the Seven, was and is indeed a hair shirt car, as Chapman got older and as his family grew Lotus cars also got bigger and more luxurious. Colin didn’t let simplicating and adding lightness get in the way of his own creature comforts. After the Seven, the next road car that Chapman sold was the original Elite, a touring car. The Elite’s two-seater replacement, the Elan, grew into the Elan +2 after Colin and Hazel had a couple of kids. Then the proper four seat Elite and Eclat. Even the Esprit, a 10/10ths sports car, had fairly upscale interior trim. Electric windows and flow through ventilation were standard as early as series 3 & 4 Elans, and even the earliest Elans had fully finished interiors, something you couldn’t say for other contemporary sports cars in 1964. At the time of Chapman’s death, Lotus has a V8 powered luxury sedan, the Etna, on the drawing boards. That V8 would end up powering the later Esprits.

True Lotus aficionados know of and value the Lotus Cortina, the Talbot Sunbeam Lotus and the Vauxhall Lotus Carlton. Heck, Lotus fans don’t even casually disregard the Isuzus that wear “Handling by Lotus” badges. Lotus has shown a deft hand making a variety of car platforms perform in ways that make enthusiasts smile. Considering the cars that Lotus has badged, it’s hard for Lotus fans to make fun of Porsche producing a four-door. Conversely, one reason why Lotus fans don’t disregard those cars is precisely that deft hand. The Lotus badged cars have credibility so the brand hasn’t been diluted. Lotus could make an ox cart handle.

Still, there’s no question that this decision to move Lotus upmarket and make Lotus cars more luxurious has left Lotus fans queasy.

I’m sure that when Lotus takes on Ferrari, Porsche and other luxury sports car makers that the cars they produce will be fast, beautiful and handle better than the competition. That’s no question. The question is will those cars be Loti?