By on June 7, 2012

Lotus CEO Dany Bahar’s 14 day suspension is set to expire on Monday. We have no idea what will happen next. He may get the boot, taking his ambitious five-year product plan with him. Or he may not. Putting the pieces together since Lotus was taken over by DRB-Hicom has painted an interesting picture, while still leaving the future of Lotus up in the air.

In the end, it turned out that Bahar received his suspension for some spending practices that Lotus and independent auditors found questionable, including renovations to his rented home totaling $54,152, and over $1.5 million in private aircraft fees. According to the Daily Mail, the paper that broke the story, Bahar received compensation worth $1.85 million on top of those perks, while Lotus had an operating loss of $1.5 million in 2011, along with debts of $309 million.

Despite fears of parent company DRB-Hicom (owner of Proton, which in turn owns Lotus) offloading the Lotus brand to the Chinese (a common fear for enthusiasts), it looks like Lotus might be safe under Malaysian stewardship for the near future. DRB-Hicom initiated an independent audit  of the company back in March, following compliance failure for a 2010 loan worth nearly $418 million, which was being guaranteed by Proton. A report in the Malaysian press detailed the issue

In March, Proton, in its third quarter results, noted that its subsidiary was in a technical breach of certain post drawdown covenants on its existing long-term loan. It has requested for an extension of time to fulfil the covenants and has submitted an appeal to the lenders.

For now, the loan amounting to RM1.01bil had been re-classified as a short-term loan as at Dec 31, until the receipt of approval for the extension of time.”

Early March was also the start of Lotus suspending development of the new Esprit, while also putting a hold on Bahar’s five-year plan. Officially, only day to day operations could be carried out under Malaysian takeover laws while DRB-Hicom conducted its due diligence of Lotus, which may have ended up being the audit discussed in the above reports by the Malaysian press. That period was supposed to have wrapped up by the end of March, but in mid-April, Bahar seemed to have no idea regarding the future direction of the company, aside from DRB-Hicom’s indications that they’d hang on to Lotus. But by May, Bahar was in the doghouse just when he claimed that a decision on his plan would be made, and Proton’s managing director and CFO resigned, and the company issued another denial that it had planned to sell Lotus.

The July issue of EVO magazine claims that only 43 new Lotus cars were registered in the UK at the time of publication, with eight cars registered in April, 2012. In 2011, 37 Lotus cars were registered in that month alone. Despite this, Lotus is claiming that the poor sales are a result of a re-jigging of their dealer network, and that they have orders for 1,168 cars in total [Bahar claimed 1162 in an April web interview with EVO].

The tragedy here seems to be that Lotus is on the up-swing in terms of product. The Evora S, Exige S V6 and Elise S have been well-received by the press, and Bahar’s future plans for a new Esprit and an expanded model range looked like they’d be the kind of cars that could expand the appeal of Lotus cars beyond the narrow hard-core enthusiast customer base. If the allegations are true, then Bahar may have become a victim of the kind of hubris and irresponsible behavior that has been the downfall of countless individuals. Let’s see what Monday holds.

Get the latest TTAC e-Newsletter!

11 Comments on “Was DRB-Hicom’s “Due Diligence” The Beginning And The End For Dany Bahar And Lotus?...”


  • avatar
    imag

    The guy might be a crook. He isn’t a huge car nut.

    But I have trouble complaining too much about someone who had an energetic plan for one of the best sports car companies on Earth, who hired some of the best people in the business to fix their interiors and manufacturing, and who got them moving on new product.

    Lotus isn’t magic. They can’t make cars that are 500 lbs. lighter with no compromise. They weren’t selling enough cars to stay viable in any form, and the awesome Exige/Elise chassis can no longer be certified in the US. They had to change.

    I hope the new masters stick with the company. Throw Bahar to the wolves or not for all I care, but the company has genius in it. I just wish the Exige V6 were coming to the States.

    • 0 avatar

      Well said. Alan Mulally isn’t a car guy and things seem to be turning out just fine.

      • 0 avatar
        bball40dtw

        But Mulally is an engineer that led the 777 team/project. He gets that manufacturing is extremely labor and capital intensive. At the same time, he didn’t come with the 10-20 years of industry baggage.

        You are right Derek, Bill Ford is couting his blessings that he hired the right non-car guy.

    • 0 avatar
      ccd1

      I wish the Exige Roadster were coming to the US. But all current Lotus cars lack sufficent refinement and fit/finish to compete effectively in the market place. The Evora was a promising first effort, but we need Evora 2.0.

      • 0 avatar
        imag

        Evora 2.0 is already out. The 2012 model features a number of improvements, especially to the interior. They certainly needed to get into the modern era with regard to fit and finish. To give credit where it’s due, Bahar made that a priority.

        With regard to the lightweight cars like the Elise and Exige – there is a reason they weigh less. You don’t get lighter weight without losing refinement to some extent. I feel like people want them to be light, refined, and cheap – and that’s just an impossible combination.

  • avatar
    sportyaccordy

    Yep, as much as I like Lotus current crop of cars, I think they need a revamp to “get to that next level”. And a revamp doesn’t necessarily have to mean abandoning what they stand for. Porsche makes 6 cylinder 2+”2″s weighing in just over 3000lbs, so there’s no reason why the new crop of Lotuses would be much heavier, if at all.

    I don’t know what the deal with dude is, but I hope they can discipline him and keep him on board. He seems to have been a good influence on the company.

  • avatar
    vwbora25

    Hope this does not affect the F1 team

  • avatar

    (a common fear for enthusiasts)

    Why?

  • avatar
    philadlj

    questionable spending practices…
    rented home renovations (if I was that wealthy, I’d buy)…
    private aircraft fees…
    blue-chip compensation…

    Somebody apparently forgot to tell Dany-boy he ain’t workin’ fer Ferrari no more.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India