Group Lotus goes on the defensive..

Group Lotus goes on the defensive..

An interesting press release arrived on our desks last night with a message from Dany Bahar, Chief Executive Officer of Group Lotus Plc. Presented in the form of a faux-interview by Lotus PR Manager Liz Brooks, we’re told this is the first in a series of regular updates on the progress of Group Lotus towards achieving its 5-year plan.

Sounds reasonable thus far, but let me provide some context by way of outspoken F1 writer and publisher of GP+ e-magazine, Joe Saward.

A log-jam at Renault F1

Group Lotus is the major supporter of the Renault F1 team and is committed to providing significant sponsorship to the team for a lengthy period of time. Unfortunately Bahar’s plan to shovel Team Lotus out of the way and use the Lotus name on the Renault F1 cars has failed, following the High Court judgement last week.

This means that as things stand Bahar is committed to funding a team that will run cars called Renaults, even though Renault itself does not want that to happen. In order to change the name of the F1 cars, the owners of Renault F1 – purportedly a Luxembourg group called GenII – must secure the support of all of the other F1 teams.

Unfortunately, the teams do not want to help because Bahar, the team’s primary sponsor, has a history with several of the teams and they are not keen to help him. Thus Renault F1 cannot change the chassis name to something like Elan Racing, which might be a possible way out of the problem. Nor does it seem that there is any money available to convince Tony Fernandes to give up his plans for Team Lotus.

If Fernandes will not sell – and there is no reason he should unless the money gets to eye-watering levels – Bahar is stuck. GenII is stuck. Renault is stuck and Proton is stuck paying for a team that promotes Renault. And the buck has to stop somewhere.

Extract from the article, A log-jam at Renault F1 by Joe Saward. Read the remainder by clicking here.

In any battle there are bound to be winners and losers, and clearly in the case of Group Lotus vs Team Lotus (or Bahar vs Fernandes), the Lotus CEO has been the loser and is clearly on the back foot. It would be an endearing quality if Bahar could now show a little contrition, recognise the mistakes he’s made and provide his stakeholders with some comfort that Lotus would now focus on activities which moved its brand and product range forward.

Instead we read a statement that seems little more than a PR offensive and which continues to be at odds with the views of most commentators. It’s interesting to note Bahar’s comments about the Elan being delayed and the Evora becoming a focus – something which was clearly absent from Bahar’s original 5-year plan. Also that the Esprit is moving along to plan.

With Bahar’s position now inevitably weaker than it was 12 months ago and pressure mounting on parent company Proton to justify its investment choices, the joint Lotus-Proton City Car is likely to move ahead of other models in Bahar’s 5-year plan such as the Elan, Elite and Eterne. It will be interesting to see just how much of this 5-year plan remains intact as the demands for early profitability (and the servicing of its $750m debt) come to bear on Group Lotus.

The following statement from the Group Lotus CEO, whilst acknowledging some of these challenges concludes by asking us to trust his judgement, so this will remain a fascinating story to watch for quite some time to come.

Three Questions with Dany Bahar

Q1: Following the result of the naming rights court case, is there an update regarding Group Lotus’ F1 involvement?

Dany Bahar: The judgement grants Group Lotus the rights to use the name ‘Lotus’ and the Lotus roundel on their own within F1, we are, therefore, even more committed than ever before to our long term plan within the sport.

The Judge also found that Team Lotus, run by 1Malaysia Racing Team, has the right to continue to race in F1 under the name Team Lotus and using the Team Lotus roundel. As a consequence, it is inevitable that the similarity of the names Lotus and Team Lotus will cause confusion not only amongst F1 supporters and the wider public, but also amongst F1 commentators who use the word ‘Lotus’ interchangeably for both teams as demonstrated throughout the season so far. With the full support of our parent company, Proton, we are seeking leave to appeal so that this point can be clarified for the benefit of all interested in F1.

With regards to our involvement with Lotus Renault GP, as Lotus we stand united with Genii Capital and have every confidence in the future success of Lotus Renault GP.

Q2: This must have also been an interesting time for your parent company Proton. Does this have an impact on your relationship?

DB: They have followed the court case with great interest and like us, they are looking forward to the matter being brought to a close. More importantly than the on-going F1 naming issues, the past year has been an extremely important one in Group Lotus’ history and Proton has played, and continue to play, a crucial role in our development.

One of the most critical elements of this support has been assisting us in securing the funding for our future plans. I am happy to confirm that this is now all complete thanks to Proton’s help and, together with Proton, we can focus on completing the five year business plan to return Group Lotus to profit.

We have an incredibly strong relationship with Proton, they support us 100 per cent and frankly this is really important for a company like ours. Part of the business plan is the joint development of a global small car platform meaning that for the first time in the Proton Lotus history, the relationship will be mutually beneficial. This alone should demonstrate how close we are.

Q3: With F1 and a complete new car line up, there seems to be a lot going on at Group Lotus, what’s the status regarding Lotus Cars and your activity in motorsport generally?

DB: With road cars we’re in a good position, we’ve completed year one of a five year plan and we are making good progress on the development of the new Esprit which will be the first of the new models to go on sale.

Based on the feedback we have received since the unveiling in Paris from customers, the media and the industry, we have made some adjustments to our plans. For example, feedback regarding the Elan showed us that it was too close in style and positioning to the Esprit, and so as a consequence we have delayed the delivery of the Elan – delayed not cancelled. This allows us to focus more of our attention on the Evora which I believe has fantastic potential. We are now concentrating our efforts on making sure that the quality of the Evora matches its undeniable performance. Another major development that has come about as a consequence of the feedback we received is that we are now developing our own engine to use in our future cars, creating even more the “pure Lotus experience”.

With regard to motorsport, everyone always asks about F1 but for us, it’s not just about F1, given that motorsport in general is a key ingredient to our marketing strategy. We have always been and will always be an automotive brand that is associated with racing. Congratulations to Nick Heidfeld on his result in Monaco, when he came in eighth to earn valuable points that pushed him up a place in the Driver’s Championship to sixth; whilst Tony Kanaan did a great job coming fourth at the Indy 500. We want to win though, not just participate. But we don’t expect everything overnight, we start slowly and gradually build up our presence in a way that makes sense for our business. Look at our involvement within IndyCar, we started last year with one car, now we have three and from next year onwards we’ll be offering engines.

People always question the cost but, believe me, if we couldn’t afford it we wouldn’t do it.