New boss reveals turnaround plan - including slashed costs, rising sales and quality improvements - has put Lotus on a more secure footing Lotus is recovering, after several years of turmoil, losses and soaring costs that most industry pundits associate with the Dany Bahar era.
Following the announcement last March of a record-breaking 168 million loss in the 2012-2013 financial year, the company has been quietly cutting costs and expanding sales under a turnaround plan led by its low-key chief operating officer, Aslam Farikullah.
Lotuss UK car sales climbed by 86 per cent in 2013, while sales in export markets, especially in new regions such as China, also improved. Quality has been boosted by refinements to the Hethel manufacturing process, and the company currently has a four-month waiting list for cars.
Appointed 18 months ago by DRB-Hicom, Malaysian parent company of Lotus and Proton, Farikullah is a Bath University engineering graduate with expertise in product development, manufacturing and quality and has been based in the UK for the past 26 years.
He is a practical character who knows both the Lotus and Proton businesses well and regards the 2012-2013 loss as housekeeping, carried out as part of our turnaround plan.
The loss was expected. We want Lotus to be at the forefront of automotive success and innovation, and weve spent the past 18 months laying the foundations.
In pursuit of these goals, claims Farikullah, Lotuss shareholders recently contributed 100 million to stabilise and expand the business, which has largely maintained its 1150-strong workforce in tough times and currently has 100 engineering jobs open.
Since 2012, overheads have been slashed by nearly 50 per cent, a move that has dramatically lowered the break-even point of car production.
Farikullah identifies two key objectives for Lotus: maintaining financial stability (a condition he believes the company reached last March, ironically at the same time that it was required to report the record 2012-2013 loss), and further improving the build quality of its cars.
The step up in quality is being achieved through improvements in Lotuss own manufacturing practices, as well as continual contact and dialogue with underperforming suppliers.
Between January and December last year, Lotus production amounted to 1368 units, 31 per cent ahead of the 2012 figure. UK sales for 2013 expanded from 120 to 230 units, with further gains in prospect this year. Farikullah says he is not satisfied with the totals but cites them as evidence of progress.
Car production at Hethel is currently about 40 cars a week, at a markedly improved quality level. The aim now is to increase output to 45 or 50 Elise, Exige and Evora derivatives per week, pushing on towards an annual output of 1800 to 2000 cars.
The companys motorsport arm will build and sell around 110 of its lucrative bespoke models this year, nearly doubling its annual output of recent years. Lotuss engineering consultancy — which made a mere 22 million contribution to turnover in 2012-2013 — is expanding again and currently has 120 live projects on the go, most of them commissioned by large, global manufacturers.
On new models, Farikullah carefully avoids specifics, although he says: Our long-term vision is for Lotus to be at the forefront of automotive innovation.
Farikullah declines to sign up to Bahars eye-popping suite of new model proposals, revealed several years ago, saying merely that Hethel has a number of exciting new projects under development.
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