China’s Geely will buy a majority stake in Lotus as the British sports-car maker’s Malaysian owner attempts to recoup years of losses and expand its fledgling Proton brand to China.
Geely’s parent company, Zheijang Geely Holding Group, has owned Volvo since 2010. When the deal closes in July, the company will also own 49.9 percent of Proton, which presently owns Lotus and is controlled by the Malaysian conglomerate DRB-Hicom. The Lotus deal, worth the equivalent of $129 million, will see Geely take 51 percent and Etika Automotive, a body and engine manufacturer owned by Malaysian billionaire Syed Mokhtar Al-Bukhary, take the remainder.
In a financial disclosure dated May 24, 2017, DRB-Hicom said it is selling Lotus “in light of its historical losses and future capital needs,” and at a higher price than expected. For the fiscal years ending in March, Lotus recorded a $69 million loss in 2016 and $15 million through 2017. Lotus hasn’t turned a profit in almost two decades; Proton purchased the sports-car manufacturer from a Luxembourg holding company in 1996. While Proton has put Lotus up for sale at least twice, the Malaysian government forced its hand this time. The Malaysian automaker, created by the government in 1983 and kept afloat last year by a $350 million state loan, was under the obligation to find a “major new investor” to hedge against continued losses. Among those potential candidates were Suzuki, Renault, and the PSA Group, which owns Peugeot and Citroën, according to a report in Automotive News China.
Proton last tried selling Lotus in 2007, to Volkswagen; it tried again in 2012, when then CEO Dany Bahar was ousted after three years of attempting to transform the company into a six-model lineup of larger, heavier luxury cars. Bahar’s hype included putting rapper Swizz Beatz and former General Motors chairman Bob Lutz on the payroll, but his dreams hit rock bottom when Lotus failed to federalize the Elise for U.S. sale past 2011.
When Jean-Marc Gales (pictured below) took over in 2014, the former PSA president announced Lotus would build an Evora-based crossover, increase production nearly tenfold by 2020, and become profitable by 2016. Proton plowed the equivalent of more than $150 million into Lotus in 2013 and maintained Lotus Engineering as a separate division to tune the automaker’s own cars and contract with other automakers, including Hyundai for the Genesis. At the same time, though, Lotus began cutting a quarter of its 1200 employees, and profit remained nowhere in sight.
There’s no telling how Geely will utilize Lotus, but obvious guesses suggest that under its influence Volvo and Geely cars will shed pounds and handle like go-karts—or at least could see better chassis dynamics. There’s also no word on whether Toyota will continue supplying Lotus with engines and transmissions, whether Lotus Engineering will keep up the freelance work, or whether Gales will keep his post. With China’s penchant for foreign luxury brands, Lotus cars may indeed become bigger and heavier.
Since the early 1980s, when founder Colin Chapman died and the once independent company nearly folded, the company’s non-British owners (which have included General Motors, Toyota, and a holding company that owned Bugatti) have steered Lotus with varying degrees of success. Somehow, through it all, Lotus has remained true to its legendary lightweight self. If Geely can revitalize Lotus the way it did Volvo, then the sports-car maker could finally be in for a smoother ride.
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