Can Lotus Blossom Again?

The famous British automaker is determined to regain its former mightiness amongst supercars after staying in the rival’s shadow for decades.

The newly recruited Group Lotus Plc CEO Jean Marc Gales arrived to England, Norfolk last May, with a clear yet difficult task to accomplish – to restore the influence of this once mighty British supercar. Over the last decades, Lotus’s growth has dramatically decreased while its main rivals Ferrari, Porsche and McLaren have outpaced it in racing, vehicle manufacturing as well as engineering services and profitability. Over the past two years Lotus has experienced a loss of nearly $ 400 million.

Jean-Marc Gales (52) began his career as Volkswagen’s sales manager, followed by managing Mercedes global marketing, but in 2009 he became The president of Peugeot. He also became involved in a complex car sales business as a real technocrat, and by the middle of his career, Gales had obtained an astonishing sense for business management. He also had a fearless heart.

Full speed ahead:The new CEO of Lotus Jean Marc Gales expects that in 2016 the company will begin to make money.

Last year in May, upon starting to work for Lotus, Gales set priorities, tasking the engineers to develop and launch new models on the market within a year. His goal: to unveil the next generation of Lotus cars at the Geneva auto show in March. While the engineers were getting busy, Gales also introduced changes in the financial field. “It required painful decisions,” he admits. “1240 employees were not necessary, to produce 1296 cars, – this is not a sustainable situation.” And he dismissed 25% of the workforce.

Then Gales himself started selling. “The dealer network was very uneven. We did not have a dealer in Paris, no dealer in London, as well as in Cannes, Milan, and Abu Dhabi. There were no dealers in places where people have money to buy our cars. “He recruited 25 new sales representatives, and by the end of the year their number will improve by fifty more. Voting with their own money, dealers have agreed to buy vehicles and spare parts for cash, taking full responsibility for their transactions and thus boosting Lotus’ cash flow.

Why are they willing to invest money in a brand only a few people apart from sports car enthusiasts recognize or understand; a brand that had to overcome one financial disaster after another during most of its existence? The answer is the attractiveness of mythological history, the promise of new products, a changing regulatory environment and a sensible company manager.

Colin Chapman founded Lotus in 1952, and in 1963 it was already ahead of Ferrari, Porsche, Cooper and BRM, winning the first of their six wins at the Formula 1 World Championship in a pilot test and seven championships in team or constructor rankings. In the ever-changing American motor rally Indanapolis 500, Lotus introduced a rear- engine placement in its cars.

Outside the racetrack, Lotus created innovative, but odd sports cars that were designed according to the principles of Colin Chapman – simplify and then make it lighter. Small cars usually (with very few exceptions) were powered by engines that were originally manufactured by Ford, then by GM, now by Toyota, and new great ideas were used to steer and handle them.

Despite some popularity in the late 1970s due to the Lotus Esprit , which was the James Bond amphibious vehicle in The Spy, Who Loved Me – by 1982 the company was selling only a few hundred cars per year. It was based on an intellectual property agreement with Toyota, which was signed shortly before the death of Chapman at age 54. Remaining without the founder’s guiding hand the  Lotus’  majesty soon faded.

After seven years of ownership, GM sold its share in 1993. Based on the principle do-or-die Lotus created its own model Elise – the first production car with an aluminium body. The result of this process – a sort of industrial origami – a powerful, lightweight car.

Appearance of Elise  was like a lightning bolt twenty years ago and  Ford  hired  Lotus  to develop the vertical-horizontal (VH) concept that is at the core of all Aston Martin’s cars. But until now Lotus lacked funds to introduce the  Evora  model, a car with the engine positioned in the middle of the body.

Prior to Gales there was an another attempt to restore the company’s former glory, but it quickly failed. In 2010, parent company from Malaysia Proton appointed former Red Bull and Ferrari executive Dany Bahar as CEO. He recruited a Mercedes-AMG powertrain engineer, and designers from Ferrari. Bahar – this bright manager who was accustomed to the Red Bull’s big marketing budgets – had a boasty plan, but few achievable goals. His tenure ended with a blame game and legal conflict. Soon after Proton was taken over by its rival from Malaysia, DRB-HICOM. “The financial situation was in a disastrous state for several years –with losses of $ 255 million in 2012-2013 and $ 108 million in 2013-2014″, Gales admits.

Evora engages the driver in a friendly conversation between the car and the road.

Sharing the opinion with sports car fans who admire these cars in their original form, Gales is adamant that Lotus will continue to be one of the few exceptions in the world of computer-controlled supercars that constantly defy the laws of physics. Evora,  just like Elise before, engages the driver in a friendly conversation between the car and the road. Any cyclist or skier would quickly learn the flexible yet rigorous handling style of Evora.

Although Gales is hesitant to speak about the vehicles to be exposed in Geneva, it’s believed a lighter and more powerful version of Evora is expected to be presented. According to Gales, Lotus has also cut production cost by 10%. “The balance depends on several variables, but we definitely have the intention to make money in 2016 by assembling and selling more than 3000 cars,” he says.

For the purpose to increase sales, the new Evora model – available for sale in the US only by the end of 2015 – might become the basis for a new SUV with two doors. A more radical solution could be a sedan with four doors, engine position behind the front axle and rear-drive. However, it will take years for such a car to surface. Gales is convinced that with several Evora models, off-road cars and a small number of special Lotus cars for private racing clubs (such as Thermal in Palm Springs), Lotus will be able to increase sales volumes to ten thousand by 2018.

Answering the question why the former president of Peugeot would move to Norfolk to run a modernized engineering company, that also makes exotically simple sports cars, Gales is laconic. “For the challenge,” he says. “I see enormous amount of potential in this company, and I am convinced that we can exercise this potential. I have always loved Lotus, ever since I was a child and my father took me to the Lotus dealer in Luxembourg. I still have brochures from that visit. “ A former Lotus flagship – Elise