Lotus hits funding roadblock - LotusTalk

Wimbledon · 03-02-2009, 01:52 PM

Plans to build two future Lotus models including the next Esprit will come under scrutiny when Lotus and Proton executives meet in Hethel this Wednesday.

The Lotus Evora was supposed to be the first of three new models to be designed and built at Hethel under a five-year plan. But that plan may now be revised as Lotus deals with serious credit issues, potential supplier insolvencies, and damaging exchange rates.

Group Lotus CEO Mike Kimberley explains: “We have two new models to come in our five-year plan that need to be funded. We can't find anyone to fund them. The banks don't want to know. The financial institutions don't want to know. The government could support that kind of thing. Look what the Germans are doing, they are putting more than Euro2000 on every car that is replaced if its nine years old. They reckon they will sell an extra 600,000 to 800,000 cars that way this year. That's the sort of thing our government could do. It depends on our shareholders. But the whole world is suffering from this recession.”

The credit availability issues come at what should be bright days for Lotus despite the global economic downturn. Since returning to Lotus, Mike Kimberley has turned the company’s finances around. Three years ago Lotus lost £5 million – now Lotus posts a profit of £2 million. The launch of the Evora is just on the horizon and Lotus is expanding into new markets including Saudi Arabia and possibly China. Lotus Engineering also worked on 340 projects for 140 clients last year and there are plans to open a new technology center in India this year.

Speaking about supplier issues, Kimberley remarks: “The biggest threat we have is supplier companies going into administration - both suppliers to Lotus Cars and Lotus Engineering. We have the exhaust system being manufactured by a company in the north. They were doing excellent work. But because a number of their big clients cut back on production, they got down to a level when they were losing money and went into administration. That could have meant a problem for us in finding another supplier. An exhaust system part has to be good for 10 years life and 100,000 kilometres in Europe and America in durability, so you have to go through all those tests again if you start with another supplier. In this case, we were lucky that the company was bought by a bigger UK business and is continuing. Those are the sort of things that significantly affect us.”

And on escalating material costs due to exchange rates Kimberley comments: “The other threat is the weakness of the pound sterling. It helps our engineering business but damaging on the car side. Our engines and transmissions come from Japan - you've seen how the value of the pound has fallen against the Yen. That pushes our material costs up. We buy a lot in Europe. Because the pound has sunk so low against the Euro, the cost of those parts have gone up.”

source: EDP24 -Funding sought for new models

glb · 03-02-2009, 02:04 PM

Interesting. Thanks for posting this.

-g

Bavarian Motorist · 03-02-2009, 02:12 PM

They'd really cut the Evora?

Wimbledon · 03-02-2009, 02:16 PM

Quote:

Originally Posted by glb

Interesting. Thanks for posting this.

-g

You're welcome.

I hope Lotus has enough credit secured to stay on schedule for the Evora launch...

kestrel74 · 03-02-2009, 02:22 PM

Quote:

Originally Posted by Wimbledon

You're welcome.

I hope Lotus has enough credit secured to stay on schedule for the Evora launch...

If not, it might make used Elise/Exige prices jump !!!

Chris Mackey · 03-02-2009, 02:53 PM

That sucks.

biscoradio · 03-02-2009, 02:55 PM

I read it as plans for two of the three new models might change. It sounds like the Evora will be released.

Randy Chase · 03-02-2009, 02:55 PM

Sucks indeed, though not unexpected. Kudos to Lotus for keeping us informed.

Randy Chase · 03-02-2009, 02:56 PM

Quote:

Originally Posted by biscoradio

I read it as plans for two of the three new models might change. It sounds like the Evora will be released.

Possibly. The two models might be the Esprit and the new Elise.

LarryB · 03-02-2009, 02:59 PM

The Evora plan was to go into production within the next few months. Would expect it to be affected the least of the 3 models. They would have already committed for the tooling and would expect the full production line would be well under way, if not pretty much already done. In which case doubt credit issues would be as much of a problem. "Potential supplier insolvencies, and damaging exchange rates." Not to mention the niche market and price point would be more of a issue.

Suspect the 2 of 3 models in the 5 year plan to be concerned with would be the Esprit and next Gen Elise/ Exige. Given that the Esprit had been pretty far along, before being held back for a bit of a re-do (and the higher cost and even more of a niche car). It would be a more likely candidate for the chopping block. Would guess, the next Gen Elise/ Exige is early enough in the design cycle (plus lower cost / higher volume, and some interest in using the platform, from other car companies), that it would have some breathing room.

In any case that is my off the cuff guess.

EliseAtLeast · 03-02-2009, 03:19 PM

Yeah, I would also bet that the Esprit would be axed before the next gen Elise but of course both could get the axe

qu1Z · 03-02-2009, 03:23 PM

Quote:

Originally Posted by kestrel74

If not, it might make used Elise/Exige prices jump !!!

That's what I think... hold on to your cars people.

Wimbledon · 03-02-2009, 03:24 PM

Quote:

Originally Posted by Randy Chase

Kudos to Lotus for keeping us informed.

Just to avoid any ambuguity, this isn't an official press release. I wrote the article. Perhaps Lotus will issue an official press release after decisions are made this week.

RacyTracy · 03-02-2009, 03:43 PM

Did you interview Mike Kimberly? If not, where did his quotes come from?

Aedo · 03-02-2009, 04:23 PM

Quote:

Originally Posted by LarryB

The Evora plan was to go into production within the next few months...

Already in production! Evora: she's coming down the line!

Wimbledon · 03-02-2009, 04:33 PM

The individual quotations are from another article. A moderator in the past has requested that I not post any links at all so I won't.

Back to the main issue at hand, Fiat CEO Marchionne and his analysts have predicted that only six major automakers will survive this downturn. Everyone producing under 5.5 million units per year will be forced to consolidate with a larger automaker in order to survive the credit drought and other issues, at least according to Fiat. With this in mind, I truly hope that this news is not the beginning of the writing on the wall for Lotus.

I don't mean to sound apocalyptic but we are witnessing a truly extraordinary time for the auto industry. One only has to look at the financial difficulties of GM, Chrysler, Ford, Opel/Vauxhall, Saab, Volvo, Ssangyong, Tesla, and others to understand what I mean.

LarryB · 03-02-2009, 04:38 PM

They definitely are in pre-production. Was thinking more in terms of the full production line for customer delivered cars. Thanks for the link, Aedo looks they do indeed have the full production line in place at the factory and are assembling the Evora's already.

Wimbledon- thanks for the clarification, there are a wide variety of opinions on the state of the car industry.

Wimbledon · 03-02-2009, 04:42 PM

Quote:

Originally Posted by LarryB

Wimbledon- thanks for the clarification, there are a wide variety of opinions on the state of the car industry.

Indeed. And of course I wish Lotus the best and hope that Marchionne's perspective on the situation is incorrect but I figured I'd share that.

Aedo · 03-02-2009, 05:42 PM

Quote:

Originally Posted by LarryB

... Thanks for the link, Aedo ...

Wish I could say I found it but it was originally posted by calypsoelise in this thread

Quote:

Originally Posted by Wimbledon

...
Back to the main issue at hand, Fiat CEO Marchionne and his analysts have predicted that only six major automakers will survive this downturn.
...

He is not the first to make such a prediction in hard economic times - the demise of auto manufacturers is great press fodder and guarantees an increased profile for whoever says it. Also last I checked Lotus wasn't one of the major manufacturers so can't be on his hit list

03-02-2009, 01:52 PM	#1 (permalink)
Wimbledon Registered User Join Date: Feb 2007 Location: USA Posts: 213	Lotus hits funding roadblock Plans to build two future Lotus models including the next Esprit will come under scrutiny when Lotus and Proton executives meet in Hethel this Wednesday. The Lotus Evora was supposed to be the first of three new models to be designed and built at Hethel under a five-year plan. But that plan may now be revised as Lotus deals with serious credit issues, potential supplier insolvencies, and damaging exchange rates. Group Lotus CEO Mike Kimberley explains: “We have two new models to come in our five-year plan that need to be funded. We can't find anyone to fund them. The banks don't want to know. The financial institutions don't want to know. The government could support that kind of thing. Look what the Germans are doing, they are putting more than Euro2000 on every car that is replaced if its nine years old. They reckon they will sell an extra 600,000 to 800,000 cars that way this year. That's the sort of thing our government could do. It depends on our shareholders. But the whole world is suffering from this recession.” The credit availability issues come at what should be bright days for Lotus despite the global economic downturn. Since returning to Lotus, Mike Kimberley has turned the company’s finances around. Three years ago Lotus lost £5 million – now Lotus posts a profit of £2 million. The launch of the Evora is just on the horizon and Lotus is expanding into new markets including Saudi Arabia and possibly China. Lotus Engineering also worked on 340 projects for 140 clients last year and there are plans to open a new technology center in India this year. Speaking about supplier issues, Kimberley remarks: “The biggest threat we have is supplier companies going into administration - both suppliers to Lotus Cars and Lotus Engineering. We have the exhaust system being manufactured by a company in the north. They were doing excellent work. But because a number of their big clients cut back on production, they got down to a level when they were losing money and went into administration. That could have meant a problem for us in finding another supplier. An exhaust system part has to be good for 10 years life and 100,000 kilometres in Europe and America in durability, so you have to go through all those tests again if you start with another supplier. In this case, we were lucky that the company was bought by a bigger UK business and is continuing. Those are the sort of things that significantly affect us.” And on escalating material costs due to exchange rates Kimberley comments: “The other threat is the weakness of the pound sterling. It helps our engineering business but damaging on the car side. Our engines and transmissions come from Japan - you've seen how the value of the pound has fallen against the Yen. That pushes our material costs up. We buy a lot in Europe. Because the pound has sunk so low against the Euro, the cost of those parts have gone up.” source: EDP24 -Funding sought for new models Last edited by Aedo : 03-03-2009 at 05:16 AM. Reason: added source

03-02-2009, 02:04 PM	#2 (permalink)
glb Unattractive Nuisance Join Date: May 2005 Location: Chester, NJ Posts: 4,532	Interesting. Thanks for posting this. -g __________________ 05 elise (PES chip, SSRs, shift tower mods, Multivex; HID low beams); 05 Corolla XRS; 72 Elan Sprint, 170 hp (Sold) "Political language is designed to make lies sound truthful and murder respectable." G. Orwell. 6. "A bore is a man who deprives you of solitude without providing you with company." - Gian Vincenzo Gravina

03-02-2009, 02:12 PM	#3 (permalink)
Bavarian Motorist Live to Drive Join Date: Nov 2006 Location: NYC/Westchester, NY Posts: 10,852	They'd really cut the Evora? __________________ Be an alpha male. Drive a Lotus.

03-02-2009, 02:53 PM	#6 (permalink)
Chris Mackey Registered User Join Date: Jun 2007 Location: Austin, Texas Posts: 2,587	That sucks. __________________ 2006 Elise, Ardent Red, Black Pack, LSS wheels, shocks and springs. ChuforiaGraffix.com SDD Lives On! SweetDaddyDelicious(at)hotmail(dot)com

03-02-2009, 02:55 PM	#8 (permalink)
Randy Chase Registered User Join Date: Apr 2002 Location: San Diego and where ever the roads lead Posts: 28,175 Images: 761	Sucks indeed, though not unexpected. Kudos to Lotus for keeping us informed. __________________ * V E R I T A S * A E Q U I T A S * No Longer the ADMIN here, please do not PM me asking for help. Thanks! http://www.facebook.com/randychase 1991 Toyota MR2. AutoX Beast 2006 Noble M400. Track weapon. 2009 Rossion Q1. Monaco Orange. Canyon Carver. In build: 2009 Toniq R (300whp? 1100 pounds?). Chrome Orange. Lexus GX-470 tow vehicle. On Order: Lotus Evora Next: McLaren MP4-12C

03-02-2009, 02:55 PM	#7 (permalink)
biscoradio GG #668 Join Date: Jul 2004 Location: chicago Posts: 302 Images: 2	I read it as plans for two of the three new models might change. It sounds like the Evora will be released.

03-02-2009, 02:59 PM	#10 (permalink)
LarryB Registered User Join Date: Mar 2003 Location: NorCal Posts: 3,112	The Evora plan was to go into production within the next few months. Would expect it to be affected the least of the 3 models. They would have already committed for the tooling and would expect the full production line would be well under way, if not pretty much already done. In which case doubt credit issues would be as much of a problem. "Potential supplier insolvencies, and damaging exchange rates." Not to mention the niche market and price point would be more of a issue. Suspect the 2 of 3 models in the 5 year plan to be concerned with would be the Esprit and next Gen Elise/ Exige. Given that the Esprit had been pretty far along, before being held back for a bit of a re-do (and the higher cost and even more of a niche car). It would be a more likely candidate for the chopping block. Would guess, the next Gen Elise/ Exige is early enough in the design cycle (plus lower cost / higher volume, and some interest in using the platform, from other car companies), that it would have some breathing room. In any case that is my off the cuff guess.

03-02-2009, 03:19 PM	#11 (permalink)
EliseAtLeast Registered User Join Date: May 2005 Location: Basking Ridge, NJ Posts: 1,221	Yeah, I would also bet that the Esprit would be axed before the next gen Elise but of course both could get the axe __________________ '08 Honda S2000 CR (Rio Yellow Pearl) '07 Lotus Exige S (Aspen White) Touring, Traction, Starshield '04 BMW 330 ci (White)

03-02-2009, 03:43 PM	#14 (permalink)
RacyTracy V Not my picture V Join Date: Jan 2005 Location: Palatine, IL Posts: 9,203 Images: 1	Did you interview Mike Kimberly? If not, where did his quotes come from? __________________ Tracy 2009 Lotus Exige S260 2008 Toyota FJ Cruiser LOG 29 photos

03-02-2009, 04:33 PM	#16 (permalink)
Wimbledon Registered User Join Date: Feb 2007 Location: USA Posts: 213	The individual quotations are from another article. A moderator in the past has requested that I not post any links at all so I won't. Back to the main issue at hand, Fiat CEO Marchionne and his analysts have predicted that only six major automakers will survive this downturn. Everyone producing under 5.5 million units per year will be forced to consolidate with a larger automaker in order to survive the credit drought and other issues, at least according to Fiat. With this in mind, I truly hope that this news is not the beginning of the writing on the wall for Lotus. I don't mean to sound apocalyptic but we are witnessing a truly extraordinary time for the auto industry. One only has to look at the financial difficulties of GM, Chrysler, Ford, Opel/Vauxhall, Saab, Volvo, Ssangyong, Tesla, and others to understand what I mean.

03-02-2009, 04:38 PM	#17 (permalink)
LarryB Registered User Join Date: Mar 2003 Location: NorCal Posts: 3,112	They definitely are in pre-production. Was thinking more in terms of the full production line for customer delivered cars. Thanks for the link, Aedo looks they do indeed have the full production line in place at the factory and are assembling the Evora's already. Wimbledon- thanks for the clarification, there are a wide variety of opinions on the state of the car industry. Last edited by LarryB : 03-02-2009 at 04:44 PM.

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