Lotus Saved By Chinese Firm Geely

Lotus, famous for F1 success decades ago and James Bond's underwater Esprit - driven by the sadly departed Roger Moore - has been taken over by the Chinese firm Geely.

The Geely holding company, which owns the carmakers Geely, Volvo and the London Taxi Company, will take a 51% stake in the struggling sports car firm, and a 49% stake in Proton, which via DRB-Hicom owns Lotus.

Lotus is essentially two companies in one: a highly successful engineering consultancy firm which has great expertise in composites and lightweight materials, and a perennially loss-making sports car maker. Lotus made a loss of £28m in the 12 months ending on in March 2016, with sales down by 240 units to just over 1500 cars.

The attraction for Geely is Lotus' lightweight technology which Geely hopes to use so as to meet emissions targets in China and Europe and the ability to produce right-hand drive models for markets in South Asia, Australia and the UK.

Daniel Donghui Li, chief financial officer of Geely holdings, was today quoted in the FT stating that "reflecting our experience accumulated through Volvo Car's revitalisation, we also aim to unleash the full potential of Lotus Cars and bring it into a new phase of development by expanding and accelerating the rolling out of new products and technologies."

It's another step on the road towards internationalisation for Geely which aims to produce some 3m cars across all of its brands by 2020. Geely will use Proton's manufacturing operations in Malaysia to try to enter new Asian markets. Proton is well known in Asia and could also offer new marketing routes for the firm.

Meanwhile, Proton itself has been struggling of late and didn't have the resources or technology to back Lotus. Last year Proton made just 150,000 cars - around what MG Rover was making in its end days - and was suffering declining market share in its home market. It was bailed out to the tune of £280m last year by the Malaysian government which told it to find an overseas partner, so as to expand its range of products and improve the quality of its cars.

Lotus has been losing money for years. Its CEO Jean-Marc Gales went 'back to basics' when he took over in 2014, axing expensive R&D programmes and concentrating on making its core products lighter and faster. The firm cut losses to £27m last year.

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