Geely said to mull spending nearly $2 billion on Lotus revival

August 9, 2018 11:54 CET

BEIJING — Zhejiang Geely Holding Group is considering an investment of at least 1.5 billion pounds ($1.9 billion) to revive the British brand Lotus, according to people familiar with the matter.

The Chinese automaker, which also controls Volvo Cars, plans to add production facilities and research centers for Lotus 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 percent stake in Lotus with its Malaysian partner Etika Automotive, 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 rivaling Toyota and Volkswagen Group. Li’s group acquired Volvo in 2010 and spent more than $11 billion to modernize its factories and help turn around the Swedish brand.

In February, Li emerged to be the biggest shareholder in German luxury automaker Daimler with an almost 10 percent stake.

Second factory

Under Geely’s proposal, the first phase would involve an expansion of Lotus’s Hethel plant in England 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 center 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 automaker is hoping to build Lotus as a luxury nameplate that competes with Porsche and Ferrari.

Lotus has floundered under Proton management since being acquired for 51 million pounds in 1996. In the seven months through July this year, it sold just 145 cars in its home country, with sales falling 25 percent according to registration data from the Society of Motor Manufacturers and Traders.

Geely acquired the Lotus stake from Proton Holdings last year, when it also announced buying 49.9 percent of Proton from DRB-Hicom, the Malaysian conglomerate controlled by tycoon Syed Mokhtar Al-Bukhary, who also owns Etika Automotive.

After the acquisition, Li said the priority will be to make Proton 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.

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