Sports car maker Lotus is heading upmarket. Its ambition to rival luxury brands Porsche and Ferrari will see the launch of five new models in under four years. We met the man behind the plan
Hethel in Norfolk is a quiet, unassuming place. One claim to fame is that it's home to the oldest living hawthorn tree in East Anglia. It's an unlikely location for a revolution. But since 1966, Hethel's old RAF base has been home to sports car firm Lotus. Here, amid a sprawling low-rise factory and engineering complex, a revolution of sorts is unfurling.
The first results of this transformation were displayed at last year's Paris Motor Show. Lotus caused a sensation by unveiling a line-up of five new models all due on our roads by 2015. This was followed by another display at the LA Motor Show. The message was clear. Lotus is heading upmarket. No longer content with turning out lightweight, glass-fibre track cars for enthusiasts, the company wants to be a player in the luxury car market and that means establishing itself as a high-end lifestyle brand.
The plan involves shifting cars for more than £100,000, which pitches it up alongside Aston Martin and Porsche. And if that induces ridicule from some industry experts, then Dany Bahar, the firm's charismatic chief executive, doesn't see the joke. For him Lotus is a "lost brand" looking to regain its place among the elite.
While it might be hard to see now, he says there was a time when Lotus outshone Ferrari for glamour and performance and thinks that situation can be restored. Not all those familiar with the Lotus story agree. Roger Putnam joined Lotus in 1965 and worked closely with the firm's founder, Colin Chapman, for 17 years, ending up as sales and marketing director. "Lotus is a complex brand," he says. "There is a polarity to it. The success of the Lotus Seven has to be at its core. The success of the Elise is down to it being a successor to the Seven."
Putnam paints a different picture of the past to Bahar. "Lotus has never had deep appeal as a brand. It has always wandered. In 1973, we sold 5,000 cars, which then was a record. But the company lurched from cashflow crisis to cashflow crisis. It was only with the launch of the Elise that it recovered. It got back to the roots of Chapman."
Bahar says that the firm's current plan is a reversion to Chapman's original thinking. "All we are doing is replicating Colin's plan in a more commercial way. The company has become too reliant on the Elise. The Lotus brand is more than a 900kg, four-cylinder, two-litre track car. Chapman wanted to go premium. He had to sell expensive cars to earn enough to go racing. The F1 budget was rising so he built bigger, more expensive cars. Lotuses 25 years ago were heavier and more expensive than the ones we plan today. Colin was moving in the right direction, but he was not a great businessman. That was the problem."
For Putnam this is only partly right. He says: "Colin's plans to move upmarket were more mid-market." Putnam is not the only one to wonder if ex-Ferrari employee Bahar is using Lotus to create a UK version of the Italian outfit. "But you can't push a brand where it doesn't want to go," he adds.
Bahar compares the two firms at length. "There's a strong analogy between the two," he says. "It's a nice story to compare Chapman and Enzo Ferrari. Neither wanted to develop road cars, they both wanted to race. Road cars were a necessity to fund racing. They were competitive and became enthusiastic to achieve the same results in road cars that they had with racing."
Again, Putnam has a different view: "I seem to remember the two men didn't get on too well. Enzo once said that while he made cars out of metal and drilled holes in them to make them lighter, Colin made cars out of feathers and balsa wood and put metal on them to make them heavier. They were from opposite ends of the spectrum."
Lotus, Putnum says, is a brand for drivers, Ferrari one for owners. "People want a Lotus because of how they drive. With a Ferrari, it's how it looks in the drive that counts."
While Bahar has recruited senior staff from Ferrari he also points to recruits from Mercedes and other top manufacturers. And with a weary smile he rejects the idea that he wants to turn Lotus into Ferrari. "Ferrari is unique and can't be recreated."
But he has learnt from his old employer. "Ferrari is very good at using F1 activity to build its brand. The combination of motor sports and road cars is at its best there and I want to use that model. And we are bigger than Ferrari when it comes to ordinary people driving our cars in racing series. We have a heritage across motor racing and when it comes to using it as a tool to promote cars, we are ahead. We don't have to concentrate all our activities on F1."
Brand power
The Lotus F1 racing brand has been mired in legal disputes in recent years with two teams eager to use the name. But media expert Ash Gupta, founder of the Gupta Partnership and a former marketing executive in the car industry, believes the conflict shows the brand's allure. "Lotus has a pedigree so strong people always have a residual memory of them. You can reactivate that memory at any time. Car brands often have residual power. Lotus is one of those."
Gupta says Lotus can find a place in the upper market. "The market for cars between £80,000 and £120,000 is interesting. There
is space for Lotus there, but it has to be carefully managed. They need to get the brand in front of the motoring-aware public with more high-quality merchandise."
Bahar agrees that branding is a big challenge. "It is tricky because you can't control perception. You can control the engineering and build the right product. We looked in detail, market by market. We are confident the product range will be seen as a premium sports car brand and will attract buyers. Now the effort has to be on the brand. Because if you have a perfect product that no one knows about it is useless."
Hence the unseemly court squabble over F1 rights. "The reason we do these activities around F1 and motor racing is to attract the attention of potential buyers so that they don't see Lotus as a technical company,
but also as a company that delivers an experience. The difference between state-of-the-art cars from Ferrari, Aston Martin, Lamborghini or Porsche, is taste. The quality is the same. What differentiates them is brand and customer perception."
In this discussion of the Lotus brand, Bahar doesn't refer to it as being British. And yet it remains a significant part of
the story. So if the firm is owned by a
Malaysian company, or led by so many
non-British directors, does this compromise Britishness? Apparently not. "If I recall correctly, no British brand is owned or managed by the British," smirks Bahar. "But Jaguar, Aston Martin and Bentley are still iconic British motoring brands and Lotus is the same. Ownership doesn't influence whether it is perceived as British. The
cars are hand-built here and most of the suppliers are from the UK."
Made in Britain
The Hethel site currently produces about 2,500 cars, but can it cope with making 7,000 a year? "The first car will definitely be built here," Bahar states firmly. "We are investing £70m in the site to improve machinery and introduce semi-automatic lines to deliver the product we want. It's important for us to have full control of that first product."
Beyond that, Bahar won't commit. He says that overcapacity at contract manufacturers around the world means it doesn't make sense to invest in new factories. "Aston Martin wouldn't be manufacturing its Rapide outside the UK otherwise."
Some continued manufacturing presence in Norfolk is guaranteed. Lotus is the second-largest employer in the area and the only hi-tech automotive firm. "We have done a lot of work with local colleges and with Norfolk council setting up an engineering facility across the road. We are highly integrated into this community," says Bahar.
The firm's engineering division is one reason he is confident Lotus can outshine rivals. "We have a big advantage over other small sports car manufacturers in that we have a great engineering division. No one else has the amazing brainpower of 700 engineers. That's far more than Ferrari or Aston Martin have behind them."
But the company hasn't used this asset wisely in the past. While it has worked with all other major manufacturers to develop and build new technology, it hasn't used the expertise on its own cars. One notable area has been electric-car technology. It helped develop everything from an electric Rolls-Royce prototype to a new range of small electric taxis for the London Olympics. Its most notable success has been with US firm Tesla. The Tesla Roadster sports car was developed and built in Hethel. For brand expert Gupta, it wasn't a good move. "It's not what precious brands should be doing. They devalue the brand by letting Tesla take their cars and put batteries in them," he says.
Bahar admits Lotus's engineering skill will be applied more in-house in future. "There isn't a single major car manufacturer we haven't worked with. But we will now use this technology in our own cars," he says.
Five-year plan
Lotus is entering the second year of a five-year plan, and Bahar says his dream is on course. "We have finished the first year and achieved all the financials and other milestones we set in terms of development timelines. It gives you confidence when the first year goes well. We won't be profitable for the next three years. The break-even point comes in 2014."
Putnam, however, remains worried by the scale of the plan. "When I saw the massive roll-out of new models I thought it was a tall order. No company in the world, even with massive resources, would be able to achieve it. Launching that many models in that timeframe is stretching my credulity very thin. It will end in tears."
And Bahar admits he has dealt with plenty of scepticism. "We have faced lots of questions about how a small company like us will produce five cars in this timeframe. It is hugely ambitious. But we are only building two cars and that is normal in this timeframe. The first car will be the donor car for all the others. Once we have that the rest isn't easy, but it's much more feasible."
So all eyes are on the first product, a new Esprit. This excites and worries Bahar. "Once you have the first product out half the problems are dealt with. If the first product is a failure we may as well all go home."
If Bahar has a catchphrase, it's a line he uses twice when we meet. "You buy a sports car with your stomach and not your head," he says. This is evident in his approach. He is aware that for his revolution to succeed he has to get the branding and the engineering right. His challenge is to retain hardcore Lotus loyalists – who want lightweight track cars that are brilliant fun to drive – while stretching the brand to appeal to buyers in the premium luxury sector.
He thinks the brand can draw on the legacy of Chapman to do both. "Often, track car customers don't expect quality. The cars need to be fun to drive, not perfectly assembled. But is it a mistake if you can get in and out of the car easily, even if it's a track car? And is it wrong if the car is better assembled? We have to combine these two worlds and we can."
