Lotus position looks uncomfortable

New Lotus owners DRB-HICOM welcome British Business Secretary Vince Cable to the Lotus Originals flagship store on Regent Street. Photo / Supplied.

While the opening of a Lotus accessory store in London had all the razzmatazz you would expect of the iconic sports-car maker, there have been rumblings about the future of the luxury brand.

Attending the opening of the flagship store for Lotus Originals, the clothing and accessories brand for Group Lotus, were top executives from DRB-Hicom, the Malaysian giant industrial conglomerate that now owns Lotus, the Malaysian High Commissioner and a dozen Malaysian journalists and TV cameramen flown over especially for the event.

Noticeable for their absence, though, were the British press and the leggy blondes usual in sports-car circles; this launch was for show back home in Malaysia where Lotus is a trophy brand.

DRB's high command included Khamil Jamil, DRB-Hicom's group managing director, and the new chief operating officer, Aslam Farikullah, brought into Lotus after the suspension of Dany Bahar, the flamboyant former chief executive who was dismissed over alleged financial "misconduct".

In a move aimed at quelling speculation that DRB is not committed to the carmaker, Jamil said at the launch: "Group Lotus has some of the most technically gifted and talented members of the automotive industry and we are determined that they will be given the opportunity to flourish under the new management.

"DRB-Hicom has invested new funds and it is our job to make sure that investment is used in a way that can drive the company forward."

He added: "Malaysia will be a second home for Lotus."

Even so, the store opening was clouded by news that Lotus will not be exhibiting at the Paris Motor Show this September; that 57 contractors - including Bahar's close associate Gino Rosato, director of corporate operations - have had their work terminated at the factory in Hethel, Norfolk; and that DRB-Hicom is reviewing marketing plans.

DRB's decision to review marketing, and cut back on contractors, has raised fresh doubts in the car industry about its long-term plans for Lotus and the future of its 1300 employees.

Some sources claim DRB wants to strip out the intellectual property from Lotus Engineering - the consultancy arm of the group that works for other carmakers such as Tesla and Mercedes - taking it back to Malaysia.

A DRB spokesman denied this, repeating again that it was committed to Lotus and had already pumped 100 million ($197 million) into the company since taking over.

The new owners also said contractors had been given notice because they wanted key staff to be employeees - not on contract - because of the confidential nature of so much of the engineering work being carried out.

But the German press says Volkswagen has expressed an interest in buying a stake in Proton, and might even consider acquiring the national carmaker in the long-term.
Shares in DRB-Hicom shot up 2.7 per cent on the Kuala Lumpur exchange - their highest since March.

For now, Lotus is concentrating on producing the award-winning Evora - a car which even the hard-to-please Jeremy Clarkson once said was as good as a Porsche - while the 273km/h V6 Exige S is now in production.

DRB has yet to present its new strategy to turn around the lossmaking sports-car maker but has definitely decided to kill Bahar's "five models in five years", a plan that many in the industry thought was both ambitious and misguided.

DRB said that Proton executives had submitted a plan to the six banks and hoped the rest of the money agreed with Lotus 18 months ago would soon be released.

The loan was for 270 million, with 207 million to be drawn down by the former management - and the banks are due to release the balance when new terms are agreed, according to the company.

The syndicate lent the money to Lotus on the basis of a back-to-back guarantee with Proton, which is said to have cash of around 255.2 million pounds.

Indeed, it is this guarantee that worries some insiders who are concerned Lotus could have a domino effect on DRB because of its debts.

"That is why Lotus is such a big problem for them," said one source. "They have to get it right."

- THE INDEPENDENT