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Fernandes to use Formula 1 to promote a “sports car for everybody”?
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Fernandes to use Formula 1 to promote a “sports car for everybody”?
Posted By: James Allen  |  25 Apr 2011   |  8:58 am GMT  |  130 comments

The battle over the use of the name Lotus in F1 is in a holding pattern at the moment as the two sides wait for the judge, who heard the case last month at the High Court in London, to deliver his judgement.

This will probably come in the next couple of weeks.


But in the last few days, stories have emerged of what Team Lotus boss Tony Fernandes’ next move is likely to be. On Wednesday 27th April he is holding a press conference at Duxford aerodrome, near Cambridge to announce a new business venture and both Reuters and Autosport have reported that this is to announce that he has acquired the Caterham brand, makers of Lotus 7 shaped sports cars. The event is at an aerodrome because the F1 team Lotus will do some straight line aero testing that day.

But what might he be trying to do with Caterham?

Fernandes’ original idea when starting the F1 team and licencing the Lotus name was to rebuild the Lotus brand identity via Formula 1 and then make an offer to the Malaysian government to take over Group Lotus from the state owned Proton company. He would then have been making affordable sports cars, which he promoted via his F1 team. This plan was thwarted by the arrival of Bahar as CEO at Group Lotus, who cancelled the licence to use the Lotus name in F1 and launched his own ambitious plans for a range of Lotus cars.

Fernandes could have waited to see whether Bahar’s plans fail, which might give him a chance to follow through on his original plan, but that could take years and anyway Bahar might succeed, so Fernandes needed another route to market for his road car ambitions.

I spoke to him several times before Christmas about his vision for F1 and listening back to the recording today, a picture begins to emerge of how Caterham fits into the strategy, particularly if he wins the High Court case and is allowed to keep the Team Lotus name in F1.

Fernandes believes that Lotus’ heartland is the affordable sports car sector of the market, the £20,000 to £40,000 bracket; “guys that cannot afford Porsches or Ferraris, but want a sports car”. He believes that this is going to be a massive market in his part of the world, which is Asia. Almost a third of the F1 Grands Prix are now in Asia and he is positioning his team as the Asian F1 team.

Here he differs from the likes of McLaren, which is firmly targeted at the higher end of the market and Ferrari, which has been using F1 to sell sports cars since the 1950s.

“Over the last year we have seen the strength and the weakness of the Lotus brand and what we can do in Asia in terms of monetising a brand, ” he said.

“We can offer a very powerful billboard on the car, (which) could be used to promote things that we own or want to develop.”

So ultimately this could lead to him slightly rebranding the F1 outfit as Team Lotus Caterham (if he wins the court case) and then manufacturing a range of sports cars called Caterham. By doing it this way he has all the brand association from the F1 team, without needing to call the road cars Lotus.

If he loses the case he has a sports car brand with a strong heritage in the right sector and the right associations to build the F1 team around.

Also with F1 moving towards a more road relevant 1.6 litre turbocharged hybrid engine in 2013, the opportunity is there to put a production version of the engine into an affordable sports car and really trade on the F1 connection.

Fernandes feels that Lotus boss Danny Bahar is making a strategic error in directing Group Lotus into the higher end of the market, away from its traditional customer base and into areas where Ferrari and Porsche are so strong.


The Caterham brand has been in that lower end of the market for many years, since the rights to build the design known as the Lotus 7 were acquired by the Nearn family from Colin Chapman in 1973. They sold it on to a former Lotus executive from Malaysia six years ago.

Caterhams have a thriving racing pedigree too, with many championships in existence around the world. They are very easy to drive hard and great fun.

Fernandes’ Air Asia carries around 14 million passengers a year via its hubs in Kuala Lumpur, Bangkok and Jakarta and can market his cars directly to them as well to a wider audience via the F1 platform.

His brand ethos with his airline, Air Asia is “now everyone can fly” and it looks like he’s trying to take the same message into mass market sports cars.

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1
chris bentham

good article,i hadnt quite sussed what was going on until he bought caterham,thing is,for what fernandes is trying to achieve(cheap sports cars)the caterham brand could be just as effective,so why all the hassle,fernandes can leave lotus alone and achieve what he wants through caterham anyway..??

2

After awhile your desires cannot be caged. From all the news Fernandes has proven he deserves more than Bahar, period. Look at all the support he’s received from the postings.

Well, he received the Commander of the order of the British Empire from the Queen.

3

James,

Sorry to hijack this topic, didn’t find a way to contact you directly.

I have dug up some 10 year old footage ad am SO thrilled about it.

It’s Thierry Boutsen testing in his Ligier. The part that excites me is that we can hear his breathing and even his heartrate.

I’ve been telling people for years, that driving an F1 car is hard work. And I even managed to convince some sceptics, by showing them this video (on VHS unfortunately).

Is there any way, you think, we could have this kind of imagery from current drivers?

I would find it spectacular to hear more of this.

It really impresses people to HEAR the heartrate going up in fast corners, much more then telling them “well, on average their heartbeat is 160 during the race”.

Best regards

http://www.youtube.com/watch?v=hwkxJvXTpxU

4

You know what I noticed? He’s holding his breath in the corners!! Yes! Listen to it again!

5

Thanks for that.

6

James,

in your opinion who will win the legal battle between Lotus Group and Team Lotus?

And anymore, fernandes has bought Caterham cars in order to prevent the “damage” due to te lost of lotus brand? So ne next year renaul will be Lotus and Lotus Caterham?

Thanks a lot.

7

It’s a question of the law and anything can happen in a court. Hard to say, really. I’ve heard both sides. It’s down to the judge to decide how the agreements from the past stand up today

8

Thank you very much!…and do you know (approximately) the date of Hight Court’s sentence?

9

I love this new twist in the Lotus saga.. IMO, not only does it show that Fernandez can outwit Behar, but it also gives some really, really exciting scope for the future..

The Caterham 7 is motoring perfection, I’ve been driving them for 8 years or so, and nothing is more fun as a purists car. Meanwhile, the Elise is a brilliant hardcore all rounder, a great little toy that gives so much for those of us that can’t afford an Italian, but want more induviduality than you can get from a Boxster or S2000.

Overall, the 7 and the Elise are the 2 best roadgoing products Lotus have ever made (IMO). Behar wants to shun all that, for the ego trip of trying to sell Evoras and higher to people who want a Ferrari or 911 badge on their car. Tony Fernandez can now cater (sorry) for the market that Lotus should have never left – affordable British sports cars. Half of the internet was dreaming about a Caterham version of the Elise, now we might just get one…

PS – with a N/A F1 derived I4 perhaps? That revs to 10k with intervals of c. 10k miles? Oh go on tony, I’ll buy you a pint =)

10

I’ve got caterham on my list for next 2nd car so I fully understand where you’re coming from.

I have a few friends who’ve owned them and they’re fantastic (particularly round a track).

I must say though, I looked at the Elise when I ended up with the boxster and the Elise was so uncomfortable it made your ears bleed 😉

The other option I’m looking at is a gt40 replica (check out tornado sports cars). Better ring the bank manager and tell him to expect a kick in the …. 😉

11

Worth looking at the following link then Isn’t

http://caterhamformula1.com/Index.html

12

This came up on Twitter, where another journalist pointed out the mis-spelling of Sonagol, and the use of an old logo. I then did a WHOIS search, and it came up with the name of an individual living in Warminster. A quick Streetview check confirmed that this was a private address, and not that of a major business. To top it all, it was registered on April 22nd, the day after the Caterham link broke.

Hoax site, cyber squatter, who knows, but in no way linked to Team Lotus

13

Indeed. And I fell for it just like the guys I read it on. That individual might be getting a call today 😉

14

Hi James,

A minor point, but it was always said that Enzo Ferrari built road cars to fund his racing cars. Racing is what made Enzo tick, and from memory he had plenty of derogatory things to say about road car customers. The old saying that you bought a Ferrari engine and the car came free has some truth to it as the engines formed the basis of sports cars.

When did it change? Probably before I was born (1977), but after the Fiat takeover. Ferraris’ range of cars expanded and homologation cars stopped being made.

Cheers,

Martin

15

Always dreamed of racing super-7s, one day I’ll make it a reality.

16
Just A Bloke (Martin)

What a cracking “Plan B”

Well done to Tony and the team

😉

17
Just A Bloke (Martin)

Caterham could provide a cracking “entry level” sportscar imagine a sort of 7 for the 21st century perhaps something on the lines of the Vauxhall VX220/Elise penned by Mike Gascoyne powered by an “F1” derived 1.6 turbo pushing out say 250/300 ! Racing really would improve the breed.

The link to Lotus heritage is one the eye for Proton. Best of luck to team Norfolk……;)

18

I would not expect that legal victory for Fernandes would be anything more than a very handsome compensation. No judge would allow two companies to retain the same name due to a legal dispute (bar for some exceptions from WWII, where the Americans took control of German companies’ US operations).

So, Caterham it is, then. Clearly, he needs a brand to sell.

As far as affordable sportscars go, Caterham simply makes track day go-karts. One cannot park the car outdoors on a rainz day, as it will become full of water. It will require hunderds of millions of development, before it can even reach the stage of an Exige/Elise and even more to become a useable car. The current chassis is too simple. Porsche and Ferrari spent 20-30 years making usable sportscars and have been copied by most of their peers. Lotus is going down the same route in realization that a sports car needn’t be a second or third car, as this becomes too high a commercial hurdle. Caterhams and Exige/Elise tend to be bought as toys. (Having said that, the $100-200K sports car market is already fairly crowded and competitive.)

I am not sure that Fernandes really knows what he is doing. Ambition and hard work are not enough, though he seems to think so. Anyway, good luck!

19

– No judge would allow two companies to retain the same name due to a legal dispute…

Sure they would, if they were just *slightly different.

– Caterham simply makes track day go-karts.

What are you talking about? Its a Lotus super 7 in all but name!

– One cannot park the car outdoors on a rainz day, as it will become full of water.

Oh, please, don’t be daft.

– It will require hunderds of millions of development…

No, it’s *already “developed”. Its a successful, existing, “back to basics” sports car.

– The current chassis is too simple.

Why? Because it *works?

– Porsche and Ferrari spent 20-30 years making usable sportscars…

They’ve been at it a lot longer than that! “Usable?” You mean to take Grandma and the kids to the grocery? Get a grip!

– Lotus is going down the same route in realization that a sports car needn’t be…

Which Lotus?

– I am not sure that Fernandes really knows what he is doing.

I would bet money he knows more about it than *you appear to!

20

I thought Tony doesn’t own Group Lotus? How would he be able to make an offer to the Malaysian government if he doesn’t own it?

21

Ahh I see, got a little confused lol. Thanks guys 🙂

22

Hence the reason why he needs to make an offer. Why would Tony need to make an offer for something he already owns?

23
GoWebberGo(UNOC)

THe Malaysian Government OWNS Proton which in turn owns Group Lotus.

What James is saying is that Tony Fernandes’ plan was/is to make an offer to the Malaysian government (aka…. I am willing to buy Group Lotus from you for X million Malaysian currency).

He would then own the fledging car company and hopefully build it up like he has done with the then failing airline Air Asia

24

Caterham have been constrained by a lack of investment yet their market potential is enormous. If Tony Fernandes gets this right there could be big rewards.

But why is nobody speculating about Lola?

Their joint development on the SP/300.R may give a clue as to what might be an even more ambitious plan.

25

i truly hope that tony wins the court case. tony has done a lot for malaysian and his airlines really makes it possible for many ppl to travel because of the low price while on the other hand, GL or proton caused the price of cars in Malaysia to be so expensive as Government protects local manufacturer. if Bahar’s plan do not work out, who is gonna foot the bill for the loan? http://biz.thestar.com.my/news/story.asp?file=/2011/4/16/business/8495583&sec=business

ultimately it is still the government and the taxpayers’ money. just penny for your thought on who to support….

26

I dont think for a moment Tony has given up on buying Lotus.

Dany Bahar is taking incredible risks with someone elses money (the malaysian banks and indirectly the state), and I suspect Fernandes will be around to pick up the pieces at the end.

What we have to remember is there are world class people at Lotus in Norfolk (the cars division just to be clear). I hope things work out ok for them.

27

Brilliant!

28

Is this because he will loose the pending court case? He only has the rights to racing name “Team Lotus” will he be able to use it for his commercial interests?

Off topic James, will India be ready in time. There track record for completing construction work for sporting events are not very good.

29

No he cannot use Team Lotus for anything outside F1 as I understand it. There was a case a few years ago where David Hunt managed to retain the mark for Team Lotus in F1

30

That’s what I understood too James, however he has registered a few new company names recently including Team Lotus Hotels, Team Lotus Bikes,Jets, Merchandising, Enterprises, all of which are outside the original David Hunt owned registration.

31

Caterham: a car using an old Lotus design, but not a Lotus.

Team Lotus: a team using an old Lotus design, but not a Lotus.

Caterham’s the perfect choice for someone who really wanted to buy Lotus on the cheap, but couldn’t.

Ps – I never saw James Bond driving a Caterham. The point being, Colin Chapman never saw Lotus’ just for people who “couldn’t afford a Porsche” (great marketing statement, Tony). The Esprit was launched as a proper supercar, so it isn’t correct to say Lotus has always been in the lightweight sportscar market.

32
GoWebberGo(UNOC)

Almost always is probably correct term.

Chapmans idea of building a formula 1 car was to make it as light as possible.

Even if a part broke he would still make it thiner, smaller and lighter

33

I wonder if Tony would have bothered with LOTUS if he had been a native English speaker.

Did no one tell him about the acronym… Loads Of Trouble, Usually Serious

It has certainly given him a load of trouble!

I do hope he wins the court case and Caterham seems a great step forward whichever way the case goes.

34

All Fernandez does is

‘serve up yesterdays leftovers as todays specials!

35

not sure what this is adding to the debate moderators?

36

i see it as a good idea. But isn’t it sad that f1 engines are going so down in size that can be put in a small sports car? I like the car idea, but i hate the way f1 has to go to be able to achieve that.

37

You do know that BMW utilised standard road car blocks in their turbo engines back in the eighties? Secondhand ones at that. Small capacity, forced induction power plants, made from recycled materials? Well ahead of the game there then!!

38

i know, and i saw them race. But those were 1400bhp engines. Do you think they are going to be that powerfull in 2013? F1 isn’t searching for performance, it’s going to a place i don’t like.

39

I think you make a very good point here, but it could be argued that the cars of that era were the high water mark in terms of searching for performance. The teams simply got too good at finding it and since then it’s been about looking in smaller and smaller envelopes to claw back performance. F1 isn’t going to a place I like too much either, but it’s hard to see the alternative.

40

Wow. I didnt actually realise that. Any websites for the details.

Thats amazing…

41

I think this covers the basics, but doesn’t mention the ‘special’ treatment the blocks received courtesy of the mechanics! http://www.research-racing.de/bmwturbo.htm

42

I laughed when I heard this – Tony Fernandes has come up with a brilliant strategic move which no-one second-guessed; taking over Caterham surely has added spice as the maker of the “once Lotus” 7.

43

Am I the only one who confuses Danny Bahar with Dani Behr?

44

I think this is a brilliant move! I was one who said last year that Tony should probably best drop the whole Lotus thing and think of his own branding….. well this is better than I thought. I’ve always wanted a Caterham, it’s on my list of 10 things to do before I die, and this has got me even more excited to do it.

45

I have to go with the majority. It sounds like a great move for both Caterham and The F1 team. Fernandes seems to have a very sound business plan and seems to be able to integrate things together very well. He also, unlike Bahar, seems to know the value of effective communications. Even if he loses the court case I can see him winning long-term through what appears to be some strong business accumen.

46

The next step is to get Heikki into Q2 in a dry qualifying session!

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