Geely mulls RM7.7b revival plan for Lotus Cars

Geely is also in talks to increase its 51% stake in Lotus with its Malaysian partner, Etika Automotive

by BLOOMBERG

BEIJINGThe Chinese owner of Lotus Cars is considering an investment of at least £1.5 billion (RM7.73 billion) to revive the iconic British brand featured in James Bond movies, according to people familiar with the matter.

Zhejiang Geely Holding Group Co Ltd, which also controls Volvo Car Group, plans to add production facilities and research centres for Lotus Cars in the UK, one of the people said, asking not to be identified because the deliberations are private.

Geely is also in talks to increase its 51% stake in Lotus with its Malaysian partner, Etika Automotive Sdn Bhd, which holds the remainder, another person said.

“Geely is fully committed to restoring Lotus into being a leading global luxury brand,” the automaker said in an email, declining to comment further. Calls to the office phone line of privately held Etika Automotive weren’t answered.

The investment plan is part of Billionaire Li Shufu’s grand vision to take Geely to the forefront of the auto industry rivalling Toyota Motor Corp and Volkswagen AG.

Li’s group acquired Volvo in 2010 and spent more than US$11 billion (RM44.77 billion) to modernise its factories and help turn around the Swedish brand. In February, Li emerged to be the biggest shareholder in German luxury-car maker Daimler AG with an almost 10% stake.

Under Geely’s proposal, the first phase would involve an expansion of Lotus’s Hethel plant with the hiring of 200 engineers, according to one of the people. Later, it plans to set up a second factory in the UK, potentially in the West Midlands region, and add a new design and innovation centre possibly in Coventry, the person said.

Two months ago, Geely had committed to a new UK design studio in Coventry, Geely said in its email.

The Chinese carmaker is hoping to build Lotus as a luxury nameplate that competes with Porsche and Ferrari.

In the seven months through July this year, it sold just 145 cars in its home country, with sales falling 25% according to registration data from the Society of Motor Manufacturers and Traders in London.

Geely acquired the Lotus stake from Proton last year, when it also announced buying 49.9% of Proton from DRBHicom Bhd, the Malaysian conglomerate controlled by tycoon Tan Sri Syed Mokhtar Al Bukhary, who also owns Etika Automotive.

After the acquisition, Li said the priority will be to make Proton Holdings Bhd and Lotus profitable and to sustain growth, while embracing new technology trends of electrification and artificial intelligence.

He also said Geely would consider producing Lotus sports cars in China — Bloomberg