Lotus CEO Jean-Marc Gales expects to be profitable by 2017

Article by Andrew Christian, on May 6, 2015

Lotus Cars CEO Jean-Marc Gales is confident that the automaker will make a profit once again by 2017 after having lost money for years. Gales, who used to be an executive of PSA/Peugeot-Citroen and Daimler, has undertaken measures to reduce costs while improving the product lineup since he started overseeing Lotus in May 2014.

However, Gales said that the automaker won’t launch all-new cars until its new China-assembled SUV is released in 2018/19 as he puts the focus on increasing sales and cashflow. He added that in the short term, Lotus will raise sales by modifying the existing three-car lineup.

An automatic transmission has been added to its track-focused Exige two-seater, which is on track to overtaking the entry-level Elise as Lotus’ top-selling model. Gales anticipates that Exige models with automatic transmission will make up 40% of sales.

Last March at the Geneva auto show, the British sports car maker revealed a facelifted version of the flagship Evora coupe that will headline the return of the brand to the U.S. market. Lotus used to sell the Evora in the U.S., its only model in this market.

However, it failed to meet federal crash standards and had to be taken out from the 2015 model year. The Evora was redesigned to comply with U.S. standards and the mid-engine coupe was shifted upmarket to be more competitive with cars like the Porsche 911 and Audi R8.

Lotus is expected to come out with a convertible version next year. Gales predicts that the U.S. will be Evora’s largest market. He added that Lotus has cut 10% off the costs of building cars and he is planning to cut costs further by changing suppliers.

Lotus has been reducing costs and raising quality by steadily replacing its smaller suppliers with bigger ones. The company announced last September that it was dropping 325 jobs from its total of 1,250 workers at its headquarters. It turns out that the job loss was at 260.

The automaker’s consultancy, Lotus Engineering, was also scaled back. This is a separate division of Group Lotus that offers engineering services to car makers and suppliers. Gales said that from making up 50% of Lotus revenue about 10 or 15 years ago, this arm now accounts for 10%.

Lotus has decided for its engineers to concentrate on developing its road cars. Gales thinks that it will be 3 or 4 years before the engineering division will have another growth spurt. Its wholesale vehicle sales had grown by 55% to 2,015 in the financial year to the end of March 2015, from the previous year’s 1,403.

Gales hopes that by 2016, it will sell 3,500 units a year. Lotus had 174 dealerships by the end of March and this number is expected to go up to 200 by the end of 2015. In the year until the end of March, Lotus losses have been “massively reduced.”

It can be recalled in the year ending March 31, 2014, Lotus had lost 65.6 million pounds ($100 million). Lotus reported a loss of 159.4 million pounds in the previous year. Gales thinks that Lotus will become profitable in the financial year that ends in March 2017.

Topics: lotus, ceo, profit

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