Monday, April 23, 2012

My gut feeling regarding Group Lotus

This post is based on my gut feeling.
Regarding Group Lotus.
I have no idea if the present management will remain in place. Proton are going to put in a Senior Manager.
This is not surprising. DRB-Hicom stated they were surprised at the autonomy Hethel enjoyed.
They have not named the Proton man. When I worked in GM Ruesselsheim, GM always had an executive who reported back to Detroit.
Proton will have an executive who reports back to Shah Alam in Malaysia.

When I attended the ASLI auto conference in 2009, I was joined by a local Automotive celebrity.
This person now has a role with Caterham. I got the impression he felt that Proton would like to sell Group Lotus.
So when I saw that Dany Bahar will get 5% enterprise value of any sale,I was not surprised. At the time Proton hired Dany Bahar, they probably wanted to get Group Lotus in a healthy position, so they could walk away with heads held high.

Mr Bahar’s contract, seen by The Daily Telegraph, says he is entitled to 5pc of the enterprise value of Group Lotus if it is sold or 5pc of the value of its shares if the car maker is floated on a stock market anywhere in the world.
The potential payment comes on top of a guaranteed annual payment of at least £1.2m, including a £600,000 salary and performance-related bonuses.
Mr Bahar joined Lotus in 2009 and he was offered the new contract extension in December last year, a month before DRB-Hicom announced its investment in Proton.

Things change:

One thing is DRB-Hicom has synergies with Group Lotus. They have a University. A private University.
The proposal to open global Motorsport University campuses could benefit both Malaysia and the UK.

Second, whilst being a private concern (DRB-Hicom), they have strong links with the Malaysian Government. If the Malaysian Prime Minister asks them to seriously investigate any and all potential synergies with a view to keeping Group Lotus Malaysian, with a strong but regulated base in England, they will comply.

David Cameron recently visited Malaysia. He asked the PM and DRB-Hicom to keep Hethel open.
Mr Cameron said: "I raised this issue with the Malaysian Prime Minister and with the new Malaysian owners of Lotus's parent company. Lotus makes a key contribution to the UK automotive sector. The sector is doing well and I want to see Lotus succeed and to have a secure future. We are in contact with the company, monitoring the situation very closely and ensuring that it knows about the regional growth fund money that is available."

If DRB-Hicom unload Group Lotus now it would be messy. They (Group Lotus) would be viewed as a basket case. Invest more... WISELY... and it could be a win win for everyone.

My gut feeling is common-sense and political pressure dictates a healthy and profitable future for Group Lotus.

I hope so anyway.

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