Lotus Positions Itself for Life After Brexit

From Automotive News, March 25th, 2019:

 

Lotus positions itself for life after Brexit

Aggressive long-term growth plan still intact

DETROIT — Lotus Cars is stockpiling parts in case the United Kingdom leaves the European Union in a chaotic way that blocks supply chains, said CEO Phil Popham. But despite the steady drumbeat of concern over the risk of hard Brexit, he said it won't throw off the storied sports car brand's aggressive five-year plan.

"We're going to get our heads down and deliver it," Popham said during a visit to Automotive News here last week. "In talking with our owners, in talking with our board, [Brexit] doesn't change the long term. We all think a deal will get done at some point, whatever that is, and it may be a different world, but there'll be some normality that comes back again."

That plan starts with a new sports car and extends to include a new platform, possibly new body types and probably a second factory.

If such aggressive growth sounds familiar, it might be because of similarities to Volvo Cars' path as part of Li Shufu's Zhejiang Geely Holding Group. Geely's rapid global expansion enveloped Lotus in 2017.

Popham, a former Jaguar Land Rover executive who was most recently CEO at Sunseeker International, a yacht company, joined Lotus in October.

 With global sales of 1,630 cars in 2018, Lotus is not a volume manufacturer, nor does it aspire to become one, even with its expected growth, Popham said. Lower volume protects Lotus from the potential disruption Brexit could bring to larger automakers, he said.

"The worst we're going to get is to leave under [World Trade Organization] arrangements, which means duty for parts that are coming in and duty paid for imports elsewhere," he said. "The U.K. is in the top 20 trading countries in the world, so you've got to assume that in the course of time, those trading arrangements and agreements are going to be made."

Volvo can be looked at as a model for the brand's future.

"I would suggest they're more Swedish now than they were eight or nine years ago," when Geely bought Volvo from Ford, Popham said. "The DNA of the brand, the personality of the brand hasn't changed. What has changed is the infrastructure in China and in Europe and the investment they've made in fantastic product, good-quality product. They're expanding their range. They've more than doubled their sales in that time. That's a success story for me. We're different — our brand is different — but that sort of model is what we should see with Lotus."

CEO Popham on the five-year plan: “We’re going to get our heads down and deliver it.”

Investing in new model

That means the focus at Lotus will continue to remain on sports cars and all that is important in that segment: the driving experience, performance, handling and dynamics for use on roads and tracks.

"We're a sports car brand, and we are developing a new sports car, which you'll see towards the end of next year," Popham said, noting that all future models will be engineered to meet the regulation standards of key markets such as the U.S.

Popham said the car that will be shown at the end of 2020 will be within the price range of what Lotus currently offers in the U.S. That is only the Evora, which starts at $96,785, including shipping. The upcoming car will appeal to a wider audience, he said, because of its better ergonomics, ingress and egress, a higher refinement level and connectivity.

There's been investment tied to the upcoming model at Lotus' Hethel plant in England to increase the capacity and level of automation, but Popham acknowledged that with its business plan, Lotus eventually will outgrow it.

"We will need to manufacture at some point outside of Hethel" as well, he said, adding that production could be done overseas.

The need for additional production capacity is simple. Lotus is investing in a new platform, which will spawn multiple vehicles, Popham said.

Lotus can turn to Geely resources and technology found in other brands within the group, such as Volvo, Lynk & CO and Polestar, as well as engineering and manufacturing talent.

"We have the opportunity to do that, which will enable us to go beyond just sports cars in the future," he said.

Popham said that while he hasn't determined everything that will go on Lotus' next platform, there are options — as long as it looks and feels like a Lotus.

"That might differ if it were to be an SUV or a GT or a saloon car or whatever segment we went into," he said. "It would still have to have the capability of a Lotus in that sense of something you'd expect to be from Lotus."

New hires

The company has been hiring for key positions from other premium automakers as the brand embarks on its business plan.

One of the most recent hires is a sales and service director who will start at Lotus in the next week or so, Popham said. Part of that role will be developing Lotus' global retail network, which currently includes 40 dealers in the U.S. and Canada.

"I don't think it will be 100 percent a traditional model" in the future, Popham said. "We're going to grow our volumes substantially, but we're still going to be relatively small in automotive terms. We've got to be quite creative in the way we take our vehicles to market and make sure we've got a global infrastructure to support our customers."

Popham described Lotus' U.S. volume as modest — 228 Evoras last year — but said it will grow with just the new sports car. Any additional models likely will do the same.

Said Popham: "Clearly, if we move into other segments, and I've said all vehicles will be federalized, then we've got great opportunity to grow."