From: ChriSawyer <ChriSawyer@aol.com>
Subject: Autocar response (repost)
Date: Fri, 1 May 1998

In the interest of fairness, I thought I'd share the response Chris Knight,
Group Lotus CEO, had to the recent article in Autocar magazine.

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16 April 1998

Mr. Patrick Fuller
Editor
Autocar

Dear Mr. Fuller:

Autocar (15 April 1998) withheld no punches in its reaction to our
announcement that we intend to sell a number of classic Lotus cars and prototypes. What a pity there was no referee to ensure that the punches did not land below the belt of factual accuracy!

Autocar is entitled to its opinion but surely its readers are entitled to an opinion based on facts? Expert judgement of a car's or company's worth will always be a subjective thing, but basics like weight, dimensions and so forth are not, they are matters of fact. I value Autocar's expert judgements as do your readers but I assume, as perhaps many do, that these are based on fact. Please allow me to set the record straight on a few points.

Fact One -- "Stricken Lotus"

Lotus is not stricken. The company recorded the largest turnover, highest pre- tax profit and greatest level of capital expenditure in the whole of the company's 50-year history in the financial year to 31 March 1998.

Fact Two -- "The distressing sale has been ordered by Lotus's Malaysian owner..."

Lotus management decided upon this sale, not our Malaysian shareholder. To be specific, I, as chief executive, ordered this sale, not lightly but after considerable deliberation and consultation within Lotus.

Fact Three -- "a disastrous slump in ... consultancy work..."

It is true that, in common with many organizations which do business with clients in Asia, our revenues from this region have been adversely affected by events there, but that does not translate to a "disastrous slump". Our client base is quite diverse, and in fact the greatest proportion of our work has been until now, and remains, centered on Europe, where we have seen encouraging growth in our business. We are still, however, committed to expansion and the further development of our business in Asia where the present difficulties will, I am certain, be overcome by the energy and dynamism of the Asian economies and the people that drive them.

Fact Four -- "...Proton has suspended core projects...meant to compensate for European contracts lost...when Lotus was sold to the Malaysians..."

No European work (nor any other work) was lost as a consequence of the changes in Lotus's ownership. Work from Proton is highly valued precisely because it was, and is, an important contributor to our bottom line. We have more large clients and more projects from Proton than at any time in our past.

Fact Five -- "...Lotus's road car business also struggles..."

We now sell more cars than at any point in the last 25 years; this year we shall beat all records except 1969, thanks to our excellent Elise. It is true that our also excellent Esprit (have you driven our '98 version?) makes a bigger unit contribution to profit than the Elise, but at nearly 400 cars per year (not the 100 you mention), it still has some way to go before we are "...heavily dependent on the Esprit..." I wish we made the 20,000 (pounds) per car that you mention for the Esprit; I am glad we do better than the 2,000 (pounds) per car that you attribute to the Elise. We make a fair profit on each, but, as I am sure your readers will understand, I am not prepared to quote exact figures.

Fact Six -- "...100 Engineering job losses..."

Around a month ago we announced that up to 99 redundancies were possible. In part, this was owing to reductions in the level of work expected from countries in Asia, but mainly it was a consequence of the major programme we have embarked upon to streamline our business processes and to reduce our costs. To date, only 47 positions have been made redundant. Some further redundancies of overhead staff will take place within the next month, also as part of our restructuring programme. Significant and important improvements in our operation have already been made and further changes will ensure that Lotus will continue to deliver on its commitment to our customers to provide a responsive, efficient service and its commitment to employees to provide challenging, rewarding work.

It is commercial sense and a respect for our heritage which have driven our decision about the sale of our cars, not sentimentality. They will become the property of people who admire and value the Lotus product, people who will care for and display these historic vehicles to a far greater audience, more often and to better effect than we here in the factory could or would wish to do, we whose business it is to produce the classics of tomorrow.

Lotus looks to the future, not the past. We are rightly proud of our heritage and in this 50th year of our existence, I am happy that people should recall it. But the customers for our cars and the clients of our engineering business want something for tomorrow and that is what we shall give them. As many of our longer serving employees recall, it was an impatience with the past that drove Colin Chapman to his greatest successes. That same impatience drives Lotus today. Business today has to deliver quality at affordable prices as a matter of survival -- that is commercial reality. Lotus today, just like our founder was, is supremely realistic; now, not only in our technology but also in our business decisions, I intend that all decisions we take be underpinned by realism, commercial sense and a concern for those who pay us to take them.

Yours sincerely,

Chris Knight

CEO

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Also, in the 22 April edition of Autocar, this letter appeared:

No Room For Sentiment

Before the voices that shout "Lotus is selling the family silver" get too loud, may I remind you that Colin Chapman hated to even look at his past creations. By some subtle manipulations of the advertising budget, I started to build a Lotus collection in 1966 by buying a Lotus 11, a Lotus 18 and others, as well as persuading the company to "lay down" one of every model made.

One day we "borrowed" the original Mark III and got it running. We invited Chapman to drive the car. He went ballistic, declaring that he never wanted to see it or any previous model again as the future for Lotus was to be focused on new products. He said: "Once you start wallowing in nostalgia you lose creative desire."

Proton is only maintaining one of Chapman's decisions.

(signed) Graham J. Arnold President, Club Lotus and ex-Lotus sales director Dereham, Norfolk

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For those who have not yet had the pleasure of spending time in the company of Chris Knight, as I have, I can assure you that the company is in good hands. When he visited the North American International Auto Show in Detroit early this year, he proved to be a kind, generous, and intelligent man interested in learning as much as possible about the American market. He also knew what he liked, and disliked, in the vehicles that he saw arrayed before him.

Though formerly with Royal Dutch Shell, and without any previous experience in the auto industry, Mr. Knight brings energy, insight, and a strong business sense to his present position. Could Lotus realistically hope for more?

It is quite easy, especially from a distance, to second-guess the people, products, and processes that make up this organism we call Lotus. From federalization of the Elise to expanding Engineering and the company itself, Mr. Knight understands he must balance the competing needs of his company. I can assure you, his is not an easy task.

For example, should the Elise come to this country, it will arrive because the business case shows the car can be built and sold in numbers -- and at a price -- acceptable to the North American buying public. If it cannot meet these requirements, then it will not arrive on these shores. That would be be an extremely tough decision for him to make -- but a necessary one. This realism is essential to Lotus's continued health.

Until that decision is made, let us pray the numbers can be balanced in such a way that this exceptional automobile does make it to America. Then we can all thank Chris Knight for making it happen.

Christopher A. Sawyer
Communications Director
Lotus Cars USA, Inc.