My English teacher once proclaimed that all good stories should start at the beginning, finish at the end and have something worth reading in the middle. Here was a man who had clearly not seen Star Wars.
Of course, George Lucas had a number of very good reasons for introducing his epic saga to celluloid midway through its chronology, and this account is no different: There are moments from the past that have combined in a remarkable chemistry of fate to bring us to this point, but the important part, the essence of this tale, is the episode that is about to begin.
The fact that the Zenos name is inspired by a marriage of deep philosophical values and latent strength is no accident. The founding partners, Mark Edwards and Ansar Ali, have journeyed together since meeting at Lotus thirteen years ago.
They’ve had time, plenty of time, to prepare for this moment, and the trust and cohesion that binds their relationship is obvious. Even so, with the launch of the E10 rapidly approaching, their confident and relaxed presentation is occasionally tempered by the challenges to come.
We met them on a quiet mid-November morning as they prepared for the marque’s Autosport International debut later this week.
Belief without illusion
Compared to most other new car companies, there’s something very different happening here. The E10 was never an ambitious development project; it’s not a rolled-up marketing scheme and it’s certainly not a costly dream. It’s a real car addressing a clearly-understood market segment.
So when the Zenos team proudly take the wraps off their creation, what you will see is a car that was designed with the customer in mind; a car that was created by combining practical innovations with clever engineering and careful cost control. As simple as this might sound, there are very few others doing the same.
But Zenos isn’t just about the E10; they’re creating a brand and more importantly, building a business, a business founded on sound engineering principles. A point which, within a shared breath, they make abundantly clear. Their message carries weight. After all, for all the toil and effort with Lotus and then Caterham, the principles that breathed new life into both have all too easily been sacrificed as successors aim beyond the natural reach of each marque.
And this really matters. Because for all the grand schemes, beautiful renderings and legions of distant admirers that others may proffer, Zenos’s stall is aimed squarely at those ready to hand over deposits. It’s not rocket science, just good business sense.
With the halls of Birmingham’s NEC soon to be filled with some of the greatest cars and drivers in modern history, it’s a brave move for any new business to try and get itself noticed. Yet just as the underpinnings of the E10 have been carefully constructed to deliver an exhilarating level of performance, the real fundamental to Zenos, and the standout story for me is the ongoing development of their commercial strategy.
These might seem like strange words from someone who normally adores sleek lines and noisy engines, but the automotive world is changing and for any new entrant to realise its potential, working to a carefully controlled plan is essential. And Zenos’s plan? It’s really rather simple; instead of starting the E10’s design process in the drawing room, they started with a spreadsheet and a single entry – the price that years of experience had taught them that people would pay for the right product.
As it is, this core element, the much speculated-about figure, will remain a closely guarded secret until Thursday. However, we do know that when the hour strikes, against all competition, headlines will be written.
Whilst lingering on the subject of box-ticking (styling, price, focus), there’s one other crucial part to the Zenos plan – understanding demand.
“..if demand doesn’t reach the required production volumes then you don’t have a business.”
Back in 2007, KTM boldly announced 600 initial orders for the X-Bow and the promise of a new production facility to meet increasing demand. Two years later and the reality was a total of just 480 sales, together with a growing inventory of unsold dealer and factory stock. Today, KTM aim to produce just 100 X-Bows per year.
This failure to understand the market could have been catastrophic had it not been for the strength of KTM’s traditional motor cycle business. So whilst Zenos can move confidently forward with their funding structure in place, everyone is very much aware that they have to get this right first time and on time.
But this is a team who understand more than most how to build low-volume cars for profit, which is probably the ace up their sleeve.
It doesn’t matter how great a car looks, or how keenly it’s priced, if demand doesn’t reach the required production volumes then you don’t have a business. I’m not going to talk specific numbers, but when I sat with Edwards last summer to run through the plan it was evident that Zenos will be here for the long-term.
As conversations go, this was a refreshingly different one.
For a start, Steve Davies (SM’s Editor-in-Chief) and I were joined by the third member of the team, Chris Weston. The former Caterham development engineer is a valuable asset; he breathes adrenalin, speaks plainly and builds cars that are confident and strong. There are no secrets here; no huddled meetings or closed doors. Everyone is in this together. His inputs are welcomed and the atmosphere is in stark contrast to when we all first met at Dartford some nine years ago.
Those who have known Caterham will know that when Edwards and Ali led the management buy-in (MBI) at Caterham, early in 2005, the culture changed. To be honest, it had to, but the delivery was both instant and extreme.
Over the last year, we’ve talked openly about this and there’s no doubt that if they had their time again, some things would have been managed differently. Having said that, now knowing the extent of the troubles they faced, it’s easy to understand why they acted as they did. Their strength now is an open-mind and the ambition to drive outcomes.
And as we talk, so it becomes even clearer what Zenos is about. Personality (brand identity) will become just as important as the cars and the technology.
“At Caterham, we understood the need to keep it small, tight, versatile and controlled. We needed to stay in touch. We learned the importance of the contact between our businesses and the customer, and delivering a sense of community.”
This is their “line in the sand”. Of course they are ambitious, but they are also realistic. They’ve seen the dark side and understand the need for critical mass.
“Personally, my ambitions are to keep this business small and profitable. I value the direct interface with the customer”.
“And focused. It’s too easy to arrive at a point where you lose the ability to innovate. For me, the challenge is not only to meet demand but to find new ways of meeting it”.
So is there a gap in the volume-critical market for Zenos? They believe that the key lies in their ability to maintain a relationship with the customer whilst being able to deliver a competitively priced product, and satisfy the demand for innovation. It sounds easy, doesn’t it, but even with a portfolio as capable as the E10, E11 and E12, there are plenty of others touting or promising similar offerings.
For the moment though, we’ll concentrate on the E10 as the other two models, whilst already in development, are merely that. The E10, on the other hand, will be ready for production in Q4 of this year. So what is it up against?
Obvious comparisons will be drawn against Caterham’s AeroSeven, the VUHL 05 and KTM’s X-Bow, but do you know what, I don’t see any of these seriously posing any sort of threat.
The AeroSeven looks like a hurried attempt to hold column inches. It started life as an interpretation of a modern Seven, based on Caterham’s CSR chassis, yet I believe that Caterham are already having to make serious changes (such as a switch to the S5 chassis) in order to address costs.
In a statement, a Caterham spokesperson said: “The car is still very much in the development stage so we cannot confirm which chassis will be used.”
They did, however, go on to say that “..the autumn launch of the production vehicle is still the plan; while a production facility is (still) to be confirmed“. At this time, no pricing is being announced, but previously, it was suggested to me that it would be at the top of their range, which indicates something north of £50k.
The VUHL 05 looks even less likely to compete with Zenos for sales. There’s no denying the Echeverria brothers have produced a sleek and well-built car, but there won’t be any change from £85k and as much as I want them to succeed, they’re going to have to look very closely at their production costs before being able to turn the Mexican dream into a commercial reality.
And then there’s the X-Bow. Still regarded by many as ‘Usain Bolt meets Shrek’; the Marmite of the trackday world. Again, you’ll pay over £60k for a car that you can only ever keep proudly under-wraps. If the competition wants to get serious, then they’ll have to seriously address specification, the bill-of-materials and most importantly, the bottom-line.
The impact on anyone turning into Chapman Way and then the Hethel Engineering Centre is immediate. This is where great cars are known to have been built. And for Edwards and Ali, the choice of location was obvious.
For Ali, it’s closer than a trip to the corner shop. He might have been educated at Ford but he learned his craft at Lotus.
The same too for Edwards.
So often referred to as “the man in the white shirt” during his time at Caterham, he previously worked as a manufacturing engineer at Hethel, then emerged as the hard-hitting executive assistant to former CEO Chris Knight. Both know this place well and both understand why it has become so important to the British sports car industry. Yet it’s equally clear that they also recognise how success can quickly spiral into failure.
“There’s a point in the sports car industry, a ‘dark space’ where production cannot be scaled and innovation becomes too costly to adopt. This was the flaw in Dany’s plan**. Global ambition requires big-ticket R&D, whole-vehicle approvals, multi-national distribution networks and high volume OEM contribution. The funding quite simply cannot be supported.”
** Referring to the now infamous plan by former Lotus CEO Dany Bahar to turn Lotus into a global multiple supercar brand.
“Dany was probably our best salesman at Caterham. I respect what he tried to do by creating a vision but it should have stopped there.”
And that was all that was needed to be said. The conversation flowed and then moved-on; it never lingered unnecessarily. Never any diatribe, just honest and simple answers to open questions.
So what, I asked, would make Zenos stand-out from those around them?
“It has to be about the way we adopt methods and principles. By the need to innovate through both platform and software development, and by addressing the costs of ownership. Caterham and Lotus are creating a void surrounding their products. In launching Zenos, we’re not only being product specific, we’re promoting inclusion. Customers, the person buying our product has to feel as if we’re all in the same place and at the same level – that we’re all a part of the same process. To stand-out, we have to show that we’re different.”
These are strong words, yet potentially confusing. After all, hadn’t Mark Edwards been at the forefront of Caterham’s venture with Renault to jointly develop and market the Alpine-based concept?
“The first engagement (with Renault) was around Caterham delivering a petrol version to Renault’s EV sports variant. Leveraging two different market places; both playing to individual strengths. That made sense. Going head-to-head? What do you think?”
He knows what I think!
And with an intercept more timely than that of the great Bobby Moore, Ali, restores the order..
“Look, we’re a new brand, we have to appeal to the early adopters, those who want to experience the thrill of belonging to something special. Innovation is key, as is interaction, inclusion and confidence. This is what makes us stand out.”
And of course, the fact that this is a business being developed by two of the most respected figures within the industry.
This is a story that is very much of the present (and the future), yet experience from the past, especially their tenure at Caterham, tells us much about how Edwards and Ali are approaching the launch of Zenos.
“When we bought into Caterham with Corven Ventures (the private equity investment firm), we believed that the sunk cost had already been borne by the Nearns, that there was little prospective investment required. It was to be a simple exercise about function; transforming the brand from a comfortable family-run business into a profitable niche-market enterprise. Putting it bluntly – cost-down, exploit motorsport, and target export growth. There were no plans for new products, in fact it wasn’t until 2010 that we even presented any new ideas to the board.”
“Unique opportunities such as acquiring an iconic and commercially successful niche sports car business don’t come around too often, so it wasn’t a difficult decision to become a shareholder and influential player in the future direction of CCL, even though I was enjoying a successful career as General Manager of Lotus.”
Anyone who knew Caterham at this time will be aware that it was only a matter of weeks before the alarm bells sounded.
Firstly, there was the issue of the newly launched CSR, a high-profile race series featuring cars that just weren’t ready. And then on 8th April 2005, just 12 weeks into their tenure, MG Rover closed their doors behind a mountain of debt, and with it, the supply of K-Series engines that had become so fundamental to almost all of Caterham’s annual production.
Edwards’ summary was both startling and brutal:
“We knew that Rover was at risk, but not after just three months. The bank wrote us off. Everyone thought game-over.”
“The MBI business plan and its planning horizon did include investment for an engine programme as a replacement to the K-series because the medium term prospects at Rover were negative. What we didn’t anticipate was the speed of Rover’s decline and the catastrophic consequences of it going into administration. This, coupled with the unravelling of development issues with the CSR, placed the business under considerable financial burden but despite these issues and more, the underlying principles of the MBI strategy remained valid and thankfully, the board remained committed. There was a definite sense of ‘all hands to the pump’ and a collective spirit to dig ourselves out of the difficulties – we all had a lot to lose if a blame culture seeped in – which to be fair, it didn’t.”
By actively encouraging the collaboration of staff, including Caterham’s current management team, the bind became a bond and ultimately, a part of the solution.
Achievements such as the award of Small Series Type Approval for the Seven, using the then new Ford Sigma engine, allowed for a determined export drive, whilst new, long-term component supply contracts helped to manage both production costs and schedules. Front-of-house too, a professional web presence and an enhanced sales team helped to drive revenues and profits, yet all within the careful control of those who knew what they had so nearly lost.
And this is why the future looks promising for Zenos.
Even with the added onslaught of the global downturn while at Caterham, they persevered and the plan paid-off. And so too was the bank loan. Re-paid in full, and ahead of schedule. A feat that will surely rank as one of the most satisfying moments for the two business partners.
Which moves us on to Tony Fernandes.
The evidence of so many executive departures from Caterham tells its own story, yet whether through fear of litigation, or simply because it’s now too far in the past, there’s not a hint of acrimony.
“The fact that we approached Tony with the proposition of him acquiring Caterham is well documented. The Caterham investors at the time were seeking an exit off the back of record sales and profits in 2010 and 2011, and simultaneously, Tony was seeking to acquire a car brand that offered him the capacity to leverage his F1 operations, particularly in new and developing markets. His strategy of partnering with OEMs that can offer access to their parts bin, their manufacturing assets, their retail and distribution channels has considerable merit given his plan to design, assemble and sell more usable everyday automotive products to a consumer base that is being introduced to a re-defined Caterham brand.
Both Mark and I felt we had probably taken Caterham as far as we could, and given the new strategy with the Renault JV, leadership of Caterham required a different approach in order to work with the new vision.”
And what of the Seven? How do they see the future for the car they once cherished?
“We always knew that Caterham is the Seven and the Seven is Caterham.”
“Absolutely. There will always be a want and a need for the Seven; its spirit and simplicity is unrivalled and its following will never extinguish. European Community Small Series Type Approval (ECSSTA) offers the appropriate levels of derogation without significantly compromising its design or engineering purity. So long as there continues to be reinvestment, its future as a road car under current ECSSTA requirements remains assured.”
The pause tells me that it’s time to move on. History plays its part, but it can’t take the next step. As we take one last sip of tea, I ask Ansar to tell me what it is that he feels Zenos must do to make the difference.
“We have to build the right car and sell it at the right price . . and it has to be fun to drive, and look like it’s going to be fun to drive. We have to show people that their dream is our dream; it doesn’t need to be any more complicated than that.”
The Zenos team and the E10 will be at Autosport International, Stand 6765, NEC, Birmingham, from Thursday 9th January 2014 to Sunday 12th January 2014. Talk to them and decide for yourself.