NOVEMBER 4, 1996

Proton buys Lotus

AS we speculated last week, Malaysia's Proton car company has bought the Lotus Group - taking 64% of the British car company with Proton chairman Yahaya Ahmad buying a 16% personal shareholding. The deal is believed to be worth $85m to Lotus's owner Romano Artioli.

Proton says it will double Lotus's production of the Elise sportscar with factories in Malaysia expected to take on most of the work. The most valuable part of the Lotus Group, however, is its automotive consultancy business Lotus Engineering, which advises many of the world's major automobile manufacturers on advanced engineering projects. This body has recently finished development of a new Lotus engine, the first since the early 1970s, and Proton is expected to make the most of the advanced engine technology.

Artioli commented that he was delighted with the deal which will enable Lotus to continue in its three core activities: sports car manufacturing, engineering consultancy and motor racing.

Lotus is currently not heavily involved in racing. There is a sportscar program but no F1 activity. The sale of the company to Proton could lead to Lotus becoming an integral part of Malaysia's push into Formula 1 racing. The Sauber team - which is sponsored by Proton's sister company Petronas - is in the process of putting together a team of expert F1 engine designers with the aim of building a Malaysian government-sponsored V10 engine for the 1998 season. With Lotus in Malaysian hands the construction of such an engine is suddenly a much more viable project than it previously seemed.