Geely brings to Lotus an impressive track record in turning around Volvo, massively expanding its own brand in China, and successfully delivering seemingly impossible projects such as the plug-in hybrid London taxi under the LEVC brand.
But Lotus poses a far tougher challenge, despite surviving to celebrate its 70th anniversary last year. GM, which bailed on the brand in 1993 after seven years of ownership, would agree.
A surgical approach to cost cutting allowed Gales to stabilize Lotus’ losses during his reign post-Bahar, but it wasn’t easy. “Lotus has basically never been profitable on the car side,” Gales said when he started in 2014.
The Evora — its only road-legal Lotus currently offered in the U.S. — might be universally praised for its handling, but the global market for midrange sports cars is vanishingly small, and Lotus currently sells only around 1,600 sports cars a year.
There are question marks over the brand power globally, too. The problem is not Lotus’ impeccable historical credentials. Colin Chapman was a visionary, and his hard-charging approach to Formula 1 and sports cars has a parallel in Elon Musk and Tesla today. Both were unafraid to push boundaries, sometimes glossing over safety and reliability concerns, earning them a reputation that swings between adulation and revulsion. There’s a physical connection too: Lotus built Tesla’s first car, the Roadster.
But Chapman’s glories were a long time ago. Aside from a short-lived F1 rebirth in 2012 that resulted in just two wins, Lotus’ reign as one of the leading racing manufacturers ended in the mid-1980s.
“People can see the margins that Ferrari and others are making and that’s pretty attractive, but you’re starting from such a marginal place,” Max Warburton, an analyst with AllianceBernstein, told Automotive News. “Apart from a few F1 fanatics, brand awareness of Lotus is low.”
Geely has direct knowledge of the volume luxury market through Volvo, but that experience won’t necessarily translate to Lotus.
“What I can say from my own experience is that the step up between luxury and ultraluxury is just bloody enormous,” said Aston Martin CEO Andy Palmer, a former chairman of Infiniti. “The difference in behavior around the stewardship of your brand, of your pricing, of the experiential work you need to do with your customers, of your customer interface [dealers], is a long way from what I experienced with Infiniti.”