‘Business as usual’ at Lotus Cars

By Ben Kendall
Published on Wednesday 18 January 2012 10:17

Bosses at car-maker Lotus have insisted it is “business as usual” despite the Malaysian government selling its controlling stake in its parent company.

Malaysian conglomerate DRB-Hicom Berhad says it is keeping its options open about selling the loss-making British manufacturer after buying its parent company Proton.

Group Lotus, based at Hethel in Norfolk, insisted the deal would not alter plans to turn the company around.

The directors’ report to 31 March showed the firm made a pre-tax loss of £26.1 million, compared to a loss of nearly £12m in 2010.

Proton had pledged to fund a £200m plan aimed at creating hundreds of jobs and transforming the manufacturer from a niche brand to a profitable sports car company rivalling Ferrari and Lamborghini by 2014.

A Group Lotus spokesman told the Eastern Daily Press: “It doesn’t change anything for us at the moment.

“The situation that’s currently going on in Malaysia doesn’t change anything. Our plan remains the same – it’s business as usual.”

DRB-Hicom, which distributes and assembles Volkswagen, Mercedes-Benz and Honda, also said it is in talks with its foreign partners on possible tie-ups to revive the national car-maker but ruled out selling a stake in Proton.

Managing director Mohamad Khamil Jamil said today that DRB-Hicom would conduct due diligence on Lotus before making a decision.

Proton bought Lotus in 1996 to bolster its technological know-how, but losses at Lotus have weighed on the company.

DRB-Hicom announced a £625m deal to take over Proton on Monday, in a new chapter for the struggling car-maker.

“It has been there for years and has done some good things,” Mohamad Khamil said.

“We need to sit down with Lotus management and look at their plans before arriving at a definitive decision.”

Analysts said DRB-Hicom’s deal to take over Proton would boost the car-maker, but losses at Lotus would require a hefty cash injection that could hamper a turnaround.

Last year, Proton entered Formula One racing as the chief sponsor for Renault to help Lotus strengthen its hand in the luxury market.

Ahmad Maghfur, analyst with OSK Research, said: “Lotus is still relevant in the longer-term picture for Proton. There is strong demand in China for Lotus cars but Proton has to tone down on capital expenditure for Lotus.”

Mohamad Khamil said he would meet Proton’s management soon to discuss growth plans, including restructuring the vendor supply chain, reviving Proton’s brand name and ramping up exports, especially to south east Asian markets.

“Our long-term plan is to ensure Proton remains a heritage, a national car company but we have to fortify the brand,” he said.

Proton’s fortunes have dwindled, with its market share in Malaysia falling to around 30 per cent, from more than two-thirds just over five years ago due to greater competition as the country liberalised its car market.

Proton has failed in recent years to seal tie-ups with foreign car-makers, including Volkswagen, due to the Malaysian government’s insistence on maintaining control.

DRB-Hicom, controlled by billionaire tycoon Syed Mokhtar Al-Bukhary, is also involved in banking, services and property.

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