A recent article in Bloomberg revealed some financial analysis suggested ailing automotive company Proton should sell off Lotus, seeing that Proton and Lotus are not meant for each other. Proton, who has driven back into profit in recent years, thanks to the helm of former Perodua MD, Datuk Syed Zainal Abidin, has their profit plunged sharply as they need to spend more to fund Lotus’s ambition but maniacally expensive.
Has Proton had enough of Lotus?
A lot of things changed for Lotus since former Ferrari man, Dany Bahar took over. From the shocking six new models in Paris Motorshow in 2010 (with the new Esprit to be released in 2013), developing their new V8 engine by their own, ambitious motorsports plans, massive sponsorship of Renault F1 team (and eventually changed to Lotus F1 in 2012) and so on. All these in just under 2 years. In 2011, Bahar has also secured £270 million loan from the Malaysia consortium of banks, courtesy of Proton. As of now, the Lotus Esprit, the first of the six new models, is scheduled for launch in 2013 and the current Evora has undergone many face lifts, but sales figures remains a disappointment as some sources claimed.
Proton’s biggest shareholder of 42.7% comes from the Malaysian government investment arm, Khazanah Nasional and which is now offering all their shares to a suitable bidder. Currently it is being offered to major Malaysian industry players like DRB-Hicom, Naza and even current Proton chairman Datuk Mohd Nadzmi Mohd Salleh. On a recent interview with Datuk Mohd Nadzmi in a media report, one of his plans include offloading Lotus. Quote from him “If I buy Proton, I will cut it off, and probably retain a 20 to 30% stake, which translates to a lot of savings every year. There is a lot of potential buyers for Lotus, and once a deal is signed it will be written back to the books of Proton,”. That pretty much indicates that he feel Lotus is a big burden to Proton.
Current Group Lotus’s madman Dany Bahar
Interestingly, source from Autocar UK revealed that Bahar has admitted that Proton might consider selling Lotus to a major international car group that could provide the long-term backing it needs. He knows that the 270 million pounds of funding barely enough to fund their ambitious plans, moreover after the new Esprit model launched in 2013. Strangely though, Proton bosses have extended Bahar’s own contract until at least 2015.
Bahar, in the Autocar report said, “There are three clear options,” he said. “Proton could keep Lotus, float it off or sell it outright. It would be quite understandable if an owner that has invested so much wanted to see a return on its investment, especially if the buyer were a major car maker that could back Lotus for the long term.”
So can we conclude that Proton has had enough of Lotus and finally wants to offload it to the highest bidder? As much I want the new Lotus to succeed, it will be better if Lotus to be bought over by a bigger power, say Toyota or Ford as they can provide much resources and funding Lotus needs. Interestingly Toyota is a logical choice seeing Toyota did supply their engines to Lotus Elise, Exige and Evora. Don’t forget Bahar wants to ditch Toyota engines in favour to self develop engines. Developing a mass produced world class economy engine might take up to 500 millions of pound and don’t ever think it will be cheaper for a sports car engine. The further Proton holds Lotus, the more hurtful Proton will be and it will be a heavy burden to sensitive Malaysian tax payers who were more vary of corruption and misuse of public funds scandals of National Cow project and some defense contracts.
I might want to agree with the financial analysis from that Bloomberg report, sell off Lotus, Proton. Quick!