By on September 11, 2010

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?

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19 Comments on “Is Lotus making a mistake?...”


  • avatar
    slow kills

    This is the old Rolex clock/radio gag.  If you can afford a luxury sports car, you can afford a luxury car AND a sports car.  And that is a much better idea.
    I like the idea of a Lotus tolerable for daily driving, but I’d much prefer one without a V10 engine and a $100K+ price tag.

  • avatar

    Whatever keeps them alive.
     
    If they want to take the highest-volume-selling luxury sports cars and make Lotus versions, so be it.
     
    A split-strategy (of GTs & Track cars, give them letter codes or something) or a partner could help them survive.
     
    And Creature Comforts sell.
     
    Hopefully they will do BOTH; some track~ish cars, some high-priced DBS-style GTs.

    Maybe some kind of dealership-partnering, like ask BMWNA for a deal or something??
    There used to be a really awesome Lotus dealer around here; real enthusiasts, full shop, etc., but they closed and there hasn’t been much of a suitable replacement.

  • avatar
    James2

    I don’t know about the price points, but somehow Lotus needs to find a balance between “simplicate” and “luxury”… in other words, make the cars a little more civilized for daily driving. I remember Jezza’s test of the Elise in which he had to demonstrate the flexibility of a gymnast to get out of the car and all it offered in the way of ‘luxuries’ were electric window switches. There’s got to be a better way.

    • 0 avatar
      Educator(of teachers)Dan

      That’s true.  A balance struck between the extremes.  Or conversely sell a “stripped” all out performance version and a “luxury” version of each vehicle.  Maybe it would work.  As long as they kept the strict discipline.

  • avatar
    John Horner

    Unfortunately Chapman’s “add lightness” credo often was paired with “who cares about reliability or durability”.  In any case, Lotus is doing what it needs to do to have a shot at surviving. I highly doubt that the car making side of Lotus has ever been a profitable enterprise for any extended period of time. Contract engineering work and a succession of glassy eyed buyers have been all the kept the lights on.
    Besides, the lunatic fringe still has Morgan and Caterham Cars to obsess over ;).
     

  • avatar
    Educator(of teachers)Dan

    “Lotus Engineering, highly respected within the auto industry and the source of much of Lotus revenue through contract work for other companies.”
     
    Well as long as they keep doing that I guess GM will have someone to contract to for engineering when they finally have to kill Opel.

  • avatar
    jconli1

    I could care less about the path towards high-dollar GT cars… I’m astonished by the “Tomorrow’s blah blah blah Today” motto.

    That’s been a punch line since the dawn of the (first) web economy bust. Even the countless consulting and “solutions” companies that once used that cookie cutter statement realized its hilarity and paid someone a few bucks more for something imaginative.  Maybe it was made from the boardroom before the rebranding push was underway… but if it’s any indication of things to come… wow.

    • 0 avatar

      “Tomorrow’s luxury sports car today” sound leaden compared to “Simplicate and add lightness”.
       
      My guess is that Proton/Lotus CEO Salleh came up with that motto.
       
       
      Lotus might be able to play in the big leagues, they’ve certainly always punched above their weight. They have an outstanding engineering staff and the hires they’ve made away from Ferrari, Porsche and Mercedes appear to be competent people.
       
      They may be able to compete, but I don’t think that Lotus will see those production figures inside of 5 yars. Salleh’s about as delusional as VW’s Winterkorn when it comes to long range sales projections.

    • 0 avatar
      John Horner

      Oddly enough, VW is hitting its numbers.

  • avatar
    gslippy

    I understand going upmarket, but not downmarket so much.
     
    What I find particularly galling is the “me-too” interest in hybrids and EVs.  EVs will not add profitability, and I still don’t think people who buy sports cars want a hybrid (I’m talking to you Ferrari).
     
    Maybe Lotus should try some manufacturabilty improvements to reduce costs as a path to profitability.

  • avatar
    kol

    I can understand why Lotus might think it needs to jump out and change what it is. Still, I’m not sure its the right move. It seems like every car company wants to be the same thing these days. Luxurious, comfortable, and (kinda) sporty. That could describe what Jaguar, BMW, Volkswagen, Mercedes, Lexus and many others want you to think about their cars.
    What Lotus has is unique. Perhaps before jumping ship they could try and slightly tame the vehicles they have so they’re not some of the most uncomfortable vehicles on the road. Perhaps they could do something about the fact that a lot of people don’t even know that a car company called Lotus exists. Perhaps they could work on their manufacturing process so that the cars they produce are of higher quality and more reliable.
    Just saying. The idea of going mass-market with a brand seems to be the cure-all these days.

  • avatar
    blowfish

    going up market is suicidal thats all, so many example out there, lotus may have a good name but not exactly can compete with Prancing horse, Porsches head on thats all.
    Lotus was famous with her small cars. Proton is making a gravely mistake.

  • avatar
    PeriSoft

    WTF?
     
    “OK, gentlemen. Here’s the situation. We have an amazing reputation, built over many years, for building the light, purebred sports cars that other high end manufacturers won’t. Our name means “we actually build sports cars, not luxury cars that went through a roller and got three times as expensive”. There is essentially no competition in our space, and in the luxury sports car market, there are Porsche, Ferrari, Maserati, McLaren, and Aston Martin, all of whom have far more money than we do. What should our strategy be?”
     
    “Sir, I suggest that we throw out our entire history and take on an entrenched market full of powerful, rich players with a vehicle we can’t afford to engineer and that can’t possibly differentiate itself enough.”

    “Brilliant! We have a winner!”
     
    The article headline shouldn’t be, “Is Lotus making a mistake?”, it should be, “My God, what the hell is wrong with those crazy b*stards?”

    • 0 avatar
      Russycle

      I totally agree with you, but if they’re not making money, it’s hard to blame them for going another direction.  But it makes me sad.

    • 0 avatar
      M 1

      Russycle, Daimler said Chrysler wasn’t making any profits, either — shortly after they raided Chrysler’s coffers and forced them to redesign everything around left-over mid-grade Benz parts. When a big parent company complains that a wholly-owned formerly-independent subsidiary isn’t profitable, alarm bells go off.

      Granted, in that discussion “no competition in our space” was still probably “no profits in our space,” and it’s a valid concern no matter what the reason, but I think the good Mr. PeriSoft makes a valid point.

      This is a prime example of when to apply the maxim about babies and bathwater.

      The real trouble is that Lotus thought they were somehow competing with real sports cars at all, when in fact they were actually competing with pretend sports cars like the Miata. The first step to enlightenment would have been an honest assessment of what market they were actually in, and then making adjustments to better compete there. (And before Miata owners get their panties wadded, nobody looks at either car and thinks “Le Mans,” they think of a rented parking lot and 200 orange cones.)

  • avatar
    d002

    Ok, going upmarket just as the Conservatives are ploughing the economy back into recession…

    Proton, btw, is not state owned.  Petronas may “own the state”, but it is technically a private company.
    The fact that the owners of Proton treat Malaysia as their personal plaything is why so many Malaysians despise Proton.


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