Lotus and Proton turn to China for future survival

Is this a picture of the new Lotus Extinct?

Lotus Group International has announced the long awaited plans to build and manufacture a Lotus-branded Sports Utility Vehicle in Fujian Province, China, by 2019. The news of the new venture for the Malaysian-owned but UK-based sports car company was made late last year but it is only now that details are emerging from Proton Holdings Berhad, the owner of Lotus.

Proton CEO, Datuk Abdul Harith, said, "We are talking to the local authorities in China to build a manufacturing plant there, but before we can do that it will take at least two years to obtain the manufacturing license.” Abdul Harith, who is also a director at Lotus, added that “Once the licenses are obtained, we will start to build the plant with our local partner, Goldstar Heavy Industry Co Ltd.”

Proton and Lotus signed a JV agreement with Goldstar in April of this year, which will see a Lotus-branded sedan built and sold in China. Lotus is said to have identified China as the company’s top key growth market for exports and now expects the expansion to be even faster with the new arrangement. The JV is a three way split, with Proton owning 40%, Lotus with 10% and Goldstar the remaining 50%, and all three will be splitting the 10 billion Yuan bill in that proportion.

Abdul Harith is obviously eyeing the fact that about 20% of global car sales occur in China (roughly 22 million cars last year) and thus regardless of the recent downturn in business, he realises the folly of ignoring the market. Harith said in a recent interview, “We will start with a Lotus SUV first and gradually we will bring Proton models into the market, but first we need to understand China’s Automotive Policy which requires high levels of local content. If we do not comply with the policy, we will get penalised which will lead to ours cars becoming more expensive and priced out of the market.”

In the first year, Lotus in China hope to sell about 10,000 of the rather smart looking SUV (assuming the finished model looks anything like the photo above) but the aim is to rapidly ramp this up to 100,000 units per year as they enter a market that is dominated by the likes of the Porsche Macan and Range Rover Evoque, or was that LandWind? At present, there are scant few details on the design or specification. It is believed that the old Lotus mantra of building it light will continue, and thus the Lotus SUV is expected to be about 600 pounds lighter than its competition.

In a recent statement by Abdul Harith, he claimed Lotus to be a premium brand which needed to be on a par with other competing brands such as Porsche, Audi, and even Lamborghini, who all have an SUV in their stables. One key point that he seems to be missing is the dire straits that Lotus is in, with just over 2000 cars sold last year and losses of just over 70 million Pounds on turnover of just over 80 million Pounds; not really the performance of a premium brand, of course.

There are new dealers in the pipeline across Europe and the Middle East. This is expected to boost sales this year to about 3000 units, coming from their existing line-up of Exige, Elise and Evora models, all of which should see the Lotus Group having a positive operating cash-flow for the year. But that is of course well short of being a premium brand performance.

Lotus is a company steeped in automotive and racing history, and it will be a shame to see them flounder. Launching a new car could be their saving grace, but to do it in a joint venture in a country where they have no history is going to be a tough ask. The new, as of yet unmade SUV will of course follow the normal tradition of starting the name with the letter ‘e’. Let’s hope they don’t pick EXTINCT.

image: autocar.co.uk