British carmaker Lotus Cars has been in the red since the 1970s, but it has somehow managed to keep itself alive. This financial bleeding, of course, has been a source of frustrations at Lotus, which has been looking to plug its losses through a number of means. Now, it seems that it would be able to post its first operating profit since around 40 years ago.
According to the chief executive of Norfolk, United Kingdom-based Group Lotus plc, Jean-Marc Gales, the company is on track to stop its four decade-long string of operational losses. Gales was tapped as CEO in 2014 and was in charge of implementing a drastic turnaround plan that entailed massive reduction of its workforce. In fact, when Gales took the driver’s seat at Lotus in 2014 – he was with the French carmakers Peugeot and Citroen before that – the carmaker had 1,200 employees.
He noted at the time that these 1,200 workers were building fewer than 1,400 cars. He had said that if Lotus sells 1,200 cars, it can’t employ the same number of workers. Gales’ turnaround plan saw 400 workers made redundant from the company, and now Lotus’ workforce is at 800-employee strong. However, he noted that these 800 workers are now producing annually over 2,000 cars, all of which are of higher quality than the carmaker’s previous models.
For the fiscal year ending March 31, 2014, Lotus had racked up £168 million in losses. In the first year of the turnaround plan, this loss was substantially reduced by more than half to £71.1 million by March 31, 2015. A year after, the carmaker also managed to significantly trim its losses while reporting a positive cash flow in March 31, 2016. Now, Lotus is doing much better, and that gave Gales more than enough confidence to declare an operating profit by March 31, 2017.
As soon as Gales became the CEO of the company, he declared that his production plans would focus on building new limited edition models, instead of developing new vehicles. This has been the case since 2014, with Gales cancelling new projects at Lotus including a modern interpretation of the Esprit supercar as well as the Lotus Ethos plug-in hybrid. Limited edition models built in Gales’ term include the Exige Sport 380.
Gales also attributed Lotus’ magical return to black to the heavy success of the Lotus Evora 400 in the United States. Powered by a 3.5-liter 24-valve V6 engine providing 400 hp of output and 410 Nm of torque, the Evora 400 was just launched by Lotus in the August 2016. Amazingly, Lotus has sold the Evora 400 out in the US until late March 2017 since it can’t produce this sports car fast enough to cater to demand in the country. Gales noted that customers in the US have a general understanding and are increasingly more able to connect with Lotus’ cars nowadays.