Soon after it was revealed in September last year that historic motor marque Lotus intended to return to F1 in 2010 it also came to light that the real money behind the team was coming from racing fan Tony Fernandes who owns the Air Asia airline. With the Lotus car company itself being owned by Malaysian motoring giant Proton some speculated why Lotus itself was not taking full ownership of the team. It appears that the reason for this may be that Lotus' finances simply couldn't support it.
A recent report in the Independent on Sunday newspaper by Pitpass' business editor Chris Sylt, reveals that Lotus reversed from a £2m after-tax profit to a £14.6m loss according to its accounts for the year to 31 March 2009. This was driven by accelerating costs as Proton invested in it through the recession.
The company took on 185 more staff as it prepared for the launch in July 2008 of the Evora, its first new model in 14 years. In a bid to boost sales, new variants of existing models were also introduced and its dealer network was expanded to cover more emerging markets including Saudi Arabia, Indonesia and Taiwan.
This strategy spluttered due to the downturn and Lotus produced 2,202 cars during the year compared to 2,649 in 2008. Revenue from car sales and services slowed down 5.9% to £73.7m but this was offset by growth in Lotus' high-technology engineering consultancy division to leave total revenues for the year nudging up 1.9% to £110.9m. However, the increased investment battered the company's profit margin and costs rose 16.6% to £124.2m.
Proton had to pour in finance to keep Lotus motoring during the year and parent company loans increased nearly six-fold with bank loans rising by a factor of 10 bringing total borrowing to £72m. The company's shareholders' funds slid from £17m to a deficit of £4.5m but the accounts state that a fellow Proton subsidiary will support Lotus as necessary for another 12 months. With deliveries of the Evora commencing in June last year, it should have a smoother road ahead.
The Evora is the world's first mid-engine 2+2 supercar and it launched to great acclaim at the 2008 British International Motorshow in London. It will launch in the US early this year with an automatic variant, specifically targeted at the American market, following in 2011.
Lotus' largest market is North and South America contributing £36.2m of its revenue. This is followed by Asia and Africa which demonstrates the company's success at attracting emerging markets. In contrast, its traditional heartland of the UK is not only Lotus' second-smallest market but it is the only one which declined during the year shrinking by 5.6% to provide £24.5m of the company's turnover. The return of the historic Lotus name to F1 should boost this and the driving force behind it is believed to be Dany Bahar, the car company's chief executive.
Bahar masterminded Red Bull's F1 entries before moving to Ferrari to become its senior vice president for the commercial and brand department. The news of Lotus' F1 entry came just days after it was announced that Bahar was taking over the driving seat from retiring boss Mike Kimberley.
The precise nature of the relationship between the car company and the F1 team isn't known but at the very least there is a licensing agreement in place for the latter to use the Lotus brand. Neither Proton nor Lotus itself are shareholders in 1Malaysia F1 team sdn bhd, the Malaysia-based company which ultimately owns the outfit, so it seems that Bahar has steered Lotus out of financial involvement whilst giving it the prestige of association with F1. Now all the team has to do is perform on-track.